Vudu

Vudu is one of the many companies which started out offering a set-top box for serving Web video to consumers. When that strategy didn’t work, it became one of the many companies which switched to focusing on software rather than hardware.

This means Vudu’s service is now included on a number of other Web-connected devices instead, including televisions and Blu-ray players. The Wal-Mart deal will inevitably affect deals in place with Mitsubishi, Sanyo, Sharp, and Toshiba, but quite how isn’t clear.

Wal-Mart

Wal-Mart is one of the largest chain of department stores in the States. It also operates under different names outside of the U.S.

This acquisition of Vudu isn’t the company’s first attempt at offering video streaming. In 2007, Wal-Mart began to offer customers TV and movie downloads in partnership with Hewlett Packard. But it wasn’t successful, and the service was stopped just a year a later.

Wal-Mart Acquires Vudu

After months of speculation concerning an acquisition of Vudu, Wal-Mart has bitten the bullet and done a deal. The New York Times reports that Wal-Mart beat the likes of Best Buy, Amazon, Comcast, and EchoStar to grab Vudu.

No details of the deal have been revealed, but MediaMemo is claiming Wal-Mart will pay in excess of $100 million for Vudu. Vudu will become a wholly-owned subsidiary of Wal-Mart but continue to develop its App Platform.

Eduardo Castro-Wright, vice-chairman for Walmart, said:

“The real winner here is the customer. Combining VUDU’s unique digital technology and service with Walmart’s retail expertise and scale will provide customers with unprecedented access to home entertainment options as they migrate to a digital environment.”

Conclusions

Wal-Mart is taking a bit of a gamble with Vudu, especially paying the kind of money being reported. There’s no doubt this is a brilliant time to enter this market but whether Vudu is the right option remains to be seen.

What is clear, however, is that both companies will benefit from the deal, at least in the short-term.

Apple iPad

The iPad was rumored for a long time before it finally arrived, being unveiled by Steve Jobs at CES 2010. Designed to fill the void between smartphones and notebooks, the iPad is a touchscreen device costing from $499 upwards.

Apple hopes the iPad will change the way we consume media such as television, music, and games. But for that to happen, the company needs the backing of content creators and distributors.

Apple Hates Flash(ers)

As soon as the iPad was unveiled, many people saw Hulu as the perfect service for the device. Getting Hulu on board would be a big coup for Apple, and no doubt help the iPad in its quest for mainstream acceptance.

The big problem is Apple’s insistence on not supporting Adobe Flash, which has been its stance for a long time. Apple thinks HTML5 will become the new standard very quickly, and eschew the need for Flash altogether.

The one problem with that stance (aside from annoying potential customers) is that many of the services Apple wants to attract to the iPad use Flash. Including Hulu.

Hulu On The iPad

Hulu already encodes its files in H.264, so it would be possible for a Hulu app on the iPad. But that’s not the only issue at stake here.

MediaMemo reports that Hulu is indeed considering an iPad option. But it would first have to decide whether the iPad constitutes a mobile device, and if so, work out a new deal with the networks with that in mind.

Either way, Hulu on the iPad is likely to be a premium service, or part of a larger premium service, that Hulu has already indicated will be coming in 2010. It just hasn’t decided what form it’ll take, or how much it’ll cost.

CBS On 99 Cent Shows

Another way Apple hopes to kickstart the iPad’s life is by lowering the price of TV shows on iTunes to 99-cents an episode. We’ve already heard that some U.S. networks warmed to the idea after the iPad’s launch. And now we have a more concrete view from one of them.

MediaMemo (again) reports CBS CEO Les Moonves as saying, “There are certain shows that will be sold on Apple for 99 cents.” Though this shouldn’t be taken as gospel, it implies the network is heading in that direction. Which can only be good for Apple.

Conclusions

Neither of these efforts – Hulu on iPad, 99-cent shows on iTunes – are likely to be finalized in time for the March launch of the iPad. So, permanent deals could end up depending on how well the iPad initially sells. Which is still up for debate.

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Clicker has just raised $11 in funding, and must be hoping that traffic will now follow.

But Where Is It?

There are so many ways of watching television online now. YouTube, Hulu, Netflix, Amazon, iTunes, and the TV networks own Web sites are just a smattering. But with so many sources it’s sometimes hard to know where to start.

Each site usually has its own search options, but what happens if you want to search further afield? There are a number of search engines dedicated to online video, and search engines such as Google and Bing also provide options.

However, these search the whole Web and can often get bogged down with videos that don’t fit your needs.

Clicker – What’s On Online

Clicker does things slightly differently. For starters, it only indexes professional content, be it TV shows or Web originals. And it searches 1,200 sources to find 600,000 episodes from 10,000 shows.

It’s a fast, free, and easy way to search for online video across the Web. And according to Media Memo, Clicker has recently secured $11 million in venture capital funding from JAFCO Ventures, Benchmark Capital, and Redpoint Ventures, the latter of which contributed in an earlier round.

Clicker began life last January but went live last November. It plans to invest the money in engineering and building partnerships.

Funding = Traffic

Clicker must now be hoping this leads to more traffic. ComScore reports the site only received 226,000 uniques in January, although company CEO Jim Lanzone claims internal numbers are closer to 750,000. Either way, Clicker must be hoping the site starts building momentum to warrant the funding.

Hulu U.S.

In the U.S., Hulu is doing phenomenally well. It hit the one billion video views in a month milestone in December 2009, bringing a great year to an even better close. And 2010 is likely to see traffic increase even more.

This year will also see Hulu likely experiment with a paid subscription model alongside its free model. However, Hulu is currently limited to the States, with those of use who reside outside America blocked from watching content.

What Hulu needs to do is move abroad and go international.

Hulu U.K.

Hulu has actually been trying to do exactly that for a while now. With the U.K. chosen as the testbed for a larger international roll-out.

In March 2009 it hired someone to oversee its international operations. And in May Hulu began negotiations with several British broadcasters and content providers. A September 2009 launch was envisioned, though that date came and went without anything happening.

An ITV deal was considered close in August yet Hulu was already extending its launch plan into 2010.

Talks Stall

According to The Telegraph, Hulu has now set its sights on June 2010 to launch in the U.K. But even that seems optimistic considering the state of negotiations with the main channels.

ITV is undergoing a “10 week strategic assessment” and will not be moving talks forward in that time. While Channel 4 and Five are balking at Hulu’s demand that it controls the sale of advertising around the broadcasters’ content.

Both want to be able to sell the advertising around their own content so that they control what advertising appears attached to their programs and retain the majority of the revenues generated. Hulu doesn’t think this will make a U.K. site a viable business for itself.

Competing With YouTube, SeeSaw

The problem Hulu has is one of timing. Channel 4 and Five have signed deals with YouTube and SeeSaw in the meantime, both of which allow them control of their own advertising inventory. Neither will want to give that control up to the new kid on the block.

The bigger problem is, of course, that Hulu has lost the chance to get Channel 4 and Five on an exclusive basis. And if the same content is going to be on the broadcasters own sites, YouTube, SeeSaw, and Hulu, it makes me wonder whether Hulu should even bother trying to get a foothold in the U.K.

Watch Instantly

Netflix’s ‘Watch Instantly’ is the streaming service that comes free as a part of the DVD-by-mail subscription. And it’s a growing entity, becoming more popular and being added to more devices all the time.

Netflix’s ‘Watch Instantly’, with its 17,000 movies and TV episodes, is now available through a number of source, including the PS3 and Xbox 360 games consoles, and it could be coming to the Wii soon as well.

The last we heard of the service was early in January when Netflix announced a controversial new deal with Warner Bros. that sees DVD releases delayed by a month but more titles offered up for streaming. Which suggests where the future of Netflix lies.

Indie Film Bonanza

Netflix today announced new deals with film distributors The Criterion Collection, Gravitas Ventures, Kino Lorber, Music Box Films, Oscilloscope Laboratories and Regent Releasing which will see around 300 independent movies added to ‘Watch Instantly’.

While 300 titles may not seem like much to write home about, Netflix CEO Reed Hastings has stated that it’s more about adding quality and longterm content than quantity for the sake of it at this point in the company’s history.

Approaching 50 Percent

These new content deals come just a few days after Netflix announced it had added over one million new subscribers in the last quarter of 2009, making a total of 12.3 million users.

Of these 12.3 million users, 48 percent now use the streaming service. This compares to 41 percent three months earlier, and 28 percent a year ago.

This is surely due to the number of prescient devices ‘Watch Instantly’ is now available on. In fact, this could also have had a big impact on the number of people subscribing to the DVD service in the first place.

Netflix expects to have its streaming service available on more than 100 consumer electronics devices by the end of this year.

Conclusions

Netflix is growing stronger by the day, both on the DVD side of things and the streaming side of things. And I can’t see the growth slowing down anytime soon. My only complaint is that Netflix is currently only operating in the U.S. If ‘Watch Instantly’ went global then I’d sign up in a flash.

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YouTube Progresses

YouTube is becoming much more than it once seemed it would ever be. Already by far the most popular online video destination on the Web, serving one billion videos a day, it’s now turning its attentions to professional content as well as the bread and butter of UGC.

YouTube has already done deals with a number of media companies which have added movies and TV content to the site. Channel 4’s 4oD being a prime example. Sporting events are also now being added to the roster.

Indian Premier League Deal

Google has announced a deal with the IPL which will see all 60 matches in the 45-day Indian Premier League cricket tournament broadcast on YouTube.

This is a big deal, as the Indian Premier League is the largest cricket tournament in the world, expected to generate $1.6 billion over the next ten years.

The deal sees YouTube showing the whole tournament in every country around the world with the exception of the United States. This is explained because “re-broadcast options will be available,” in the U.S. I can’t see too many Americans being bother though as cricket isn’t exactly a big deal in the States.

Advertising Revenue

Google and the IPL will share advertising revenue. But Google India clearly has big plans for this event and the sponsors it will likely attract, saying:

“The advertising options on YouTube will be available only for a limited number of sponsors over the course of the season. Companies will have the opportunity to sponsor live streamed matches, match re-broadcasts, and ongoing viewership of clips and highlights. Advertisers will be able to advertise on the YouTube homepage, the live stream page, video ads during the match itself amongst several other innovative formats.”

This is the first live sporting event to be broadcast on YouTube, and I’m wondering how much money Google has paid to secure these almost-worldwide rights.

Conclusions

Although YouTube carried coverage of the Beijing 2008 Olympics, it was only available to watch in countries not covered by television deals. And even in those countries, it was only highlight reels and daily wrap-ups.

This is something much bigger and much more telling for where Google wants to take YouTube in the future.

However, while Netflix is hoping to add another device to its distribution network, it’s still confident that physical media will last for another 20 years, with DVDs being mailed out until at least 2010.

Netflix Streaming

I’ve covered Netflix’s streaming service, ‘Watch Instantly’, quite extensively here on WebTVWire, because I believe it’s going to prove to be a major part of the online video sector going forward.

Netflix has recently caused controversy by forging a new deal with Warner Bros. which sees new releases held back on DVD by a month but more of the company’s titles being available to stream. Thus proving the way the company sees things going.

Games Consoles

Netflix’s ‘Watch Instantly’ is already available on two of the three major home games consoles. The Xbox 360 has full support, while the PS3 has part support by way of a streaming disc, with full support promised in the future.

And it looks as though Netflix will also be coming to the Nintendo Wii soon. Netflix CEO Reed Hastings hinted at a deal back in October, and confirmed this while talking to Peter Kafka at CES 2010 by stating the chances of a deal are “excellent” and that it should “work out over time.”

Physical Vs. Digital

However, that’s not to say Netflix sees the move from physical to digital media being a speedy one. In fact, Hastings stated he’s confident the company will still be shipping DVDs and Blu-ray for the next 20 years, which would be 2030.

I agree that it won’t happen overnight, and in fact, it’s already taken a umber of years to get to this point. But momentum is building and I personally can’t see physical media playing any kind of role in the world in 2030. Maybe I’m naive or just hopeful, but that’s a long time for the current status quo to continue.

Conclusions

Netflix is going to be a big part of the streaming future, and so are games consoles. And while the PS3 and Xbox 360 represent state of the art technology, the Wii is the mainstream success which Netflix needs to be a part of. The BBC has already managed it with the iPlayer, and Netflix is destined to be next.

Project Canvas

Project Canvas is the innovative and ambitious endeavor that emerged from the death of Project Kangaroo. The BBC is heading the charge, with backing from the likes of ITV, Five, Channel 4, BT, and TalkTalk.

Canvas is a user interface and set of Internet TV protocols that could provide a standard for everyone in the future. There are also plans to release an Internet-connected set-top box by the end of this year.

Canvas Competition

The problem for Canvas is that it’s by no means the only effort to provide a standard for on-demand Web TV viewed from the sofa in your living room.

Yahoo launched its Connected TV service at CES 2009, while at CES 2010, which Chris Tew is covering in great detail here on WebTVWire, others have launched similar efforts.

TV On Demand On TV

CES 2010 has seen the launch of DivX TV, DivX’s latest attempt at reinventing itself. Rather than a set-top box, DivX wants to be the premiere Web TV platform on all manner of different devices.

Vudu has also announced a streaming movie service available on TV sets and Blu-ray players from the big-name manufacturers such as Sanyo, Samsung, Sharp, Toshiba, and Mitsubishi.

And let’s not forget Boxee, which has just entered its full public beta. This is the open source offering that already has a massive range of content, although most of it is geo-blocked outside of the States.

Conclusions

I’m not suggesting it’s too late for Canvas to establish itself. Certainly, in the U.K. at least, it stands a very good chance of doing so. I just wish the BBC worked in a slightly different way so that everything didn’t have to go through committee after committee to get approved. Vital months have been lost as a result.

Netflix’s Core Business

Netflix’s core business has always been movie rentals by post, and it still, at least for the time being.

However, Netflix is a forward-thinking company and knows that the world is moving away from physical media and towards a future where digital media rules supreme. Both digital downloads and streaming will likely be the norm within a decade.

Netflix has offered a streaming service to subscribers, named ‘Watch Instantly’ for a few years now. But it has recently started promoting it quite heavily, and seems to be heading for a time when a streaming-only subscription will be available both in the U.S. and beyond.

Netflix’s Warner Bros Deal

Netflix yesterday announced a new deal with Warner Bros. that has mixed implications for its customers.

In a compromise on both sides, Netflix loses the right to rent out Warners movies on the same day as the DVD release, instead having to wait 28 days. In exchange, Netflix has secured a lower per-unit price on discs, meaning it will be able to spend more money on the new releases, securing more copies of each film.

Even more importantly, Netflix has managed to squeeze three times as many titles out of Warners for its streaming ‘Watch Instantly’ service. Which is going to become more important to the company as each year passes.

Bad For The Company, Customers?

Some commentators, most notably MG Siegler of TechCrunch, have intimated that this is a bad deal, both for Netflix and its customers. But I disagree, as do many of the commenters on the article, and other people in the video business.

Pure and simply, Netflix has taken the path of least resistance. It has chosen a long-term relationship with Hollywood which will ensure a healthy streaming business in years to come, and only given a very insignificant thing away.

What About Piracy?

Some people have argued this will increase the rate of piracy. But I can’t see it. Will waiting a month for a movie really mean people cancel their Netflix subscriptions and turn to less legal means of acquiring content? I doubt it very much.

Netflix The Player

Netflix has, partly by accident and partly by design, put itself in a great position to be the premier choice for video streaming.

Its core business is still DVD rentals by-mail, but its ‘Watch Instantly’ feature, which started as nothing more than an additional draw for would-be subscribers, could provide an assured future for the company.

Indeed, it could make the company an attractive acquisition target for big players such as Google and Amazon over the next few years.

Watch Instantly

Netflix’ ‘Watch Instantly’ is available on a range of devices, from the computer, obviously, to games consoles such as the PS3 and Xbox 360, the Roku box, and TVs and Blu-ray players.

Netflix has already started to push the streaming side of its business more strongly, and subscriptions that offer streaming only, with the DVD-by-mail option removed, could be close to reality.

Acquisition Target

According to Video Business, this makes Netflix a possible acquisition target. With a growing customer base (up 28 percent over the past year) and an impressive customer retention rate, both Google and Amazon could come sniffing around.

In a note to investors recently, Susquehanna Financial Group analyst Marianne Wolk wrote:

“Netflix has a video offering that users love. We see a multi-year window of opportunity for Netflix to build a larger, more significant presence in the digital video market.”

Hollywood Spanner(s)

There is one possible spanner in the works. For Netflix to truly become a streaming video behemoth it’s reliant on consistently fresh content from Hollywood movie studios. And that is far from assured.

Netflix Chief Content Officer Ted Sarandos told Bloomberg:

“We have to fight against their fear that we’ll destroy the ecosystem. We’re not destroying anything. We’re creating a new opportunity.”

This is patently true, because whether the major movie studios like it or not the world is going digital. If it fails to embrace those companies making businesses from streaming then it only opens the door for piracy to reign supreme instead. And then it won’t see a penny.