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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!

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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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On Wednesday, Yahoo! and Akimbo announced a new partnership to bring the most popular selections of Yahoo! Video to the Akimbo video-on-demand service. This announcement comes on the heels of the launch of Apple TV, a set top box that wirelessly transfers digital media from user’s computers to their TVs. Both announcements highlight, the increasing convergence of video platforms. As Jeremy points out in his “2007 Consumer Internet Predictions”, time spent consuming videos both online and on the TV are increasing. Not only are people watching more videos than before but they are also watching videos in many more ways. Television/video viewer behavior is in the middle of an evolution.

A number of factors are driving this change:

1) There is the increasing adoption of TV/video technologies such as digital video recorders, video on demand and video downloads/streaming, not to mention Apple TV and iTunes/iPods. According to Forrestor, “DVRs have entered the hypergrowth phase, reaching more than 13 million households, including 17% of digital cable subscribers and 19% of satellite subscribers. DVRs will surpass 50% of homes within four years.” DVRs and the other technologies are enabling the “time shifting” of programs, the skipping of commercials and the ability to consume videos in smaller chunks and in different locations.

2) Decreasing costs of bandwidth and storage are removing the economic and practical barriers of having and distributing videos for both content owners and consumers. Broadband is dramatically improving the user experience of watching streamed videos. Peer-to-peer networks only increase the ease of distribution and access.

3) As everyone knows, alternative video platforms such as YouTube and other streaming videos sites (NBC Rewind, CBS Innertube, ABC.com, Fox On Demand…) are proliferating. The major studios saw what happened to the music industry and are trying to find ways in which they may embrace these changes without losing control over their assets. They are making more and more content available on their online destination sites and iTunes. For the consumer, this equates to more types of content and in more places.

These fundamental changes in the way people can watch videos are shifting mindsets to an “on demand” mentality. People are becoming the programmers of their own personal television network, dictating what they want to watch and when they want to watch it.

In recognizing this shift, two areas of opportunity come to mind.

1) Search/navigation/discovery of content. With so much content coming from so many different sources, the networks and cable channels are no longer the ones telling you what you “must see TV” is. Interesting content can now come from anywhere. However, more video options mean more videos to sort through to find something of interest. Some companies such as Blinkx and CastTV address the problem through improved video search relevancy. While others, such as CozmoTV and StumbleVideo, focus on video discovery through the votes of the community of users. Convergence of platforms and media types only promises more complication.

2) New advertising models that will capitalize on these shifts. As many people have predicted, TV advertisers will to continue to see their 15 and 30 second commercials go increasingly unwatched. Brand advertisers, who spend the $60B a year on television advertising, will still need to find a way to reach their target consumers. Advertisers still don’t seem comfortable associated their brands with the unpredictability of user generated content. While I agree with Jeremy’s assessment that the shift will take time, this advertising budget will go to new ad models that reach consumers in a more targeted and relevant way. One such model is that of broadband television networks, such as Revision3, which produces serialized content targeted towards specific interest groups at a fraction of the cost of mainstream television programs. Brand sponsorships are embedded into the programming itself and can be targeted toward the specific demographic of the show. Revision3 makes their content distribution platform neutral, allowing users to choose how and where they watch each episode.

These are only a few of the many new models bubbling up. I believe there will many opportunities for entrepreneurs who understand the evolution in user behavior and recognize the power of the different players in the value chain.

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There has been some vigorous comment discussion on the post of 2007 consumer internet predictions, mostly about the lead gen prediction. Firstly, its wonderful to get comments – thank you. When you first start blogging it feels like shouting out …

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A couple of posts on Techcrunch, one on Filmloop entering the Deadpool, and another on a rumor that Slide took $20m in funding have sparked some lively debate in comments about the business models for widgets. I don’t pretend …

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Several recent articles (NYT, Richard MacManus, etc) on next generation search and the questionable wisdom of backing businesses with a mission to displace some or all of Google’s current market domain caused us to do some of …

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I got a really interesting email in response to the 2007 Consumer Internet Predicitions post from Iggy Fanlo (CEO of AdBrite, ex President of Shopping.com and a guy who knows a thing or two about CPC advertising!):

You talk

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First – Happy New Year! The Lightspeed Team is very excited about the prospects for 2007. We’re just getting rolling with our blog here and hopeful it can be a positive resource to let you know how and why we …

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The WSJ (subscription) has a good article this morning on a new set of networking sites for investors. Techcrunch separetly has a review of stockpickr.

We’ve seen a few of these stockpicking sites over the last little while. I …

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Happy New Year everyone.

It seems to be the season for consumer internet predictions, so here are mine:

1. Ecommerce 2.0 arrives. Google‘s search revenues continue to grow at 70-80% growth rates. Yet the public ecommerce companies

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