Watching video over the Internet was a major theme at SXSW this week. Today, a panel of industry leaders gathered to discuss why Hulu is so popular, how Netflix can make money, and whether the IPTV processing power should be built into your TV or set top box. They also addressed the looming issue of how to make money when audiences are increasingly streaming, downloading, and time-shifting their entertainment.
"Free works, Hulu is proving that," Colin Dixon, an analyst with the Diffusion Group, who moderated the conversation, said. "The problem is that the revenue that is being generated from advertising is not enough to make it work anyone's worthwhile."
The good news is that there are more products than ever that can download IPTV, ranging from your Apple TV to your PlayStation 3. "The XBox 360 is a classic Trojan horse box, explained Richard Bullwinkle, Chief Evangelist for Macrovision."You buy it because you want to shoot aliens and then you realize it can stream Netflix."
Bullwinkle is encouraged by the sheer range and variety of hardware devices that are on the market now. Although he cautions against investing too much in HDTVs with built in IPTV support because the technology is changing so rapidly. "Do you really want your HDTV to change as fast as all these Internet technologies?" he says.
On the content side, perhaps the most important step for the networks is to get their videos on as many platforms as possible through syndication. That means getting it on iTunes, Hulu, Netflix, whatever it takes. "We are in a world where syndication is all important," according to Jason Meil of Initiative, an advertising agency that works with IPTV projects. He said syndication is part of any plan Initiative puts together, and even the aggregators with huge scale have challenges.
"Even when you get something the front page of YouTube, it doesn't mean you are going to get 500,000 views like you used to," Meil says. "It is hard to break through the clutter."
IPTV has always had to deal with an overabundance of video formats and codecs, and the problem persists today. Although MPEG4 is very popular now, NetFlix, Amazon, and Hulu all have their own proprietary flavors. Supporting multiple video formats, and potential future ones, it requires some significant processing power which can drive up the cost. This isn't a big deal for a powerful system like the XBox or PlayStation 3, but for a small box like the Roku Video Player it can be hard to keep up.
Although the entire panel agreed that there were too many competing file formats to be effectively supported, none thought this would change any time soon. "It would be less distressing if we were moving toward a more converged world, but we are not," said Marcia Zellers, a panelist and Digital Media Strategy Consultant based in Los Angeles. "We are in the same place we were years ago."
Ah yes, but we have much, much more to watch.
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