Toby Coppel recently posted on the Y! corporate blog with his thoughts on interesting startups. He calls out some companies he finds interesting (one of which Y! has since acquired!), talks about how this wave of startups is different from the late 90s, and talks about how many of Y!’s acquisitions were about attracting visionary talent. It’s well worth reading
Patrick wrote a post on “The New Must See TV” on Friday and I know that he wanted to include some information on The Venice Project but was unable to say much because of the NDA that we signed. However, it looks like Om was not under the same constraints as his excellent and informative NewTeeVee post goes into a lot of detail about the company. Both Om and Mike Arrington at Techcrunch comment that they see two key hurdles for TVP which I think are surmountable, but I believe that a third hurdle exists that will limit TVP’s eventual scale.
1. TVP lacks compelling content
I haven’t seen the NDA material so my thoughts here may be way off base, but I don’t think that a lack of compelling content today is likely to be a long term hurdle.
Much has been written about the long tail of video content, all of which is legitimate. However, its no accident that Youtube is now pursuing licensing agreements from the major TV networks, music labels and movie studios. Long tail notwithstanding, as even Chris Anderson says, “Hits aren’t dead”.
Furthermore, the major studios and networks seem to have turned a corner on their willingness to license their content. When startups like Guba, Wurld Media and Bit Torrent can get licensing deals done with major studios, its pretty clear that the policy rubicon has been crossed, and now the only haggling to be done is on price. As soon as TVP is willing to pay the prices asked, it can get content.
2. TVP requires a download
Requiring a download is certainly a hurdle, but not an insurmountable one, as the founders of TVP have demonstrated twice before, with both Skype and Kazaa. However, both Skype and Kazaa are clients that benefit from obvious network effects, as do many other successful consumer clients such as AIM, ICQ, Y! Messenger, Bittorrent, Limewire, Morpheus etc. Other successful downloads that do not benefit from the network effect have mostly been focused on security concerns, including the Firefox browser and the many anti Adware/Spyware products. One of TVP’s challenges will be how to balance making its network effects obvious with the likely desire of content owners to keep some level of control over their content. The social aspects that they’ve built into the product are certainly a good start. I haven’t peered behind the NDA curtain on this issue so don’t have any further PoV on the matter.
3. High quality video is too bandwidth intensive
The issue that I think may be underestimated is that of bandwidth. Om alludes to this issue in his post and seems to give the benefit of the doubt to TVP, although he points out that TVP would require 250MB/hour which is enough to violate many ISP’s terms of service. Video is an incredibly bandwidth intensive application, especially at higher quality levels. At high levels of penetration, even p2p solutions are not sufficient to support high quliaty video streaming because of asymmetries in the upload/download bandwidth for most consumer’s broadband connections. If TVP is successful to Skype like levels, then there simply isn’t enough upstream bandwidth from peers to fulfil the downstream bandwidth demand from users who are trying to watch high quality video. Most upstream bandwidth pipes are only 1/5 to 1/10 the size of downstream bandwith.
Now this only becomes a problem at real scale, but it may put a cap on how big TVP can become before video quality becomes degraded or expensive server farms need to go into place to supplement peer delivery. Jeremy Riemer makes a similar point at ArsTechnica.
None the less, althought there is likely no VC investment opportunity here, this will be an interesting company to watch!
Download Squad reports on a rumor that Safari might be released for Windows, citing Mary Jo Foley who found the speculation on Mozilla’s Firefox 3 requirements wiki. (The speculation has since been removed form the Mozilla wiki.)
The comments discussion largely focuses on how Safari’s features stack up against those of IE and Firefox. I think one other important factor comes into play, the power of the default.
Like many other’s in the tech industry, I have a weakness for overthinking features. But my experience as a former General Manager of Netscape taught me that feature comparison is not how the general public makes its consumer technology selections. Very often, the general public will go with the default technology choice, only looking for an alternative if the default is obviously inadequate in some way.
The best example is the story of how IE won the first browser wars against Netscape. Microsoft worked with the PC OEMs to ensure that IE was the only browser shipping on new PCs and that eventually caused market share to tilt overwhelmingly in IE’s favor. (Microsoft eventually settled the anti-trust case with AOL for $750m.)
When Firefox came along, IE was starting to show obvious signs of inadequacy in the security arena. Even the general press was reporting on virus outbreaks and other security threats, and they were blaming IE. This was raising the level of attention of the general public – it helped Firefox grab and hold the “IE Alternative” mindshare in the US. Interestingly enough, this is geography dependent, with Maxthon holding 30% market share in China, and Opera strong in some countries in Europe.
At Netscape we found it very hard to create a “third alternative” in the minds of the general public. It seemed as though there was only one slot available in people’s minds as the alternative to the default. Although I haven’t tracked browser market share by geography much recently, I suspect that this may also be true in Asia and Europe, and that there is still a strong power law to market share distributions among browser vendors in each continent. Our primary mode of distribution was through our own portal, where we had the “default” position.
Safari is the most popular browser on Macs because it is the default. But I suspect that it will run into the same problem that we did if it is released for Windows. There is really only room for one “default alternative” and so they will find themselves fighting with Firefox instead of fighting with IE in the minds of possible users.
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