VeohTV and the Future of Online Video

By The Myers Report Archives
Cover image for  article: VeohTV and the Future of Online Video

DVR for Internet Television or Google for Online Video? Both.Online video is the Zeitgeist. Last fall saw Google snap up YouTube for $1.65B. Joost's debut clearly owned the winter hype. But what about the long hot summer? VeohTV.

In an exclusive interview with Jack Myers Media Business Report Veoh CEO Dmitry Shapiro discussed the VeohTV platform, while emphasizing how its proprietary recommendation engine is not only a benefit to viewers, but to advertisers.

Veoh received out of the box media coverage thanks to its storied investors, Time Warner, Goldman Sachs, Spark Capital, and Michael Eisner. While Veoh.com is a video hosting service akin to YouTube (claiming to be the largest independently owned video-sharing Website), consumer facing VeohTV is Veoh's recently launched beta. According to Shapiro the platform is built on one fundamental belief: "Video content lives on many places throughout the Internet. It lives on video hosting sites, content owners' own Websites, BitTorrent trackers, RSS feeds. Hundreds of thousands of Web sites. We believe that this fragmented amalgamation of content will continue to exist on the Internet. The consumer couldn't care less where it comes from - Veoh, YouTube, MySpace. They want the simplest, seamless experience."

It's Veoh's contention that the Web browser was never made for video; it's been retrofitted for that purpose. VeohTV connects like a browser to any Web site, creating a program guide that takes the clicking and scrolling out of watching online television. Offers Shapiro: "Both Veoh and Joost think of the world as a TV-like experience: Remote control, program guide, full screen. But that's where similarities end: Joost is about rebuilding a walled garden — privileged content developers — not what the consumer watches. Veoh brings democratized video to the Internet, the long tail of video content. VeohTV is to the Internet, as Joost is to AOL circa 1995."

While Joost's raison d'etre is providing vetted long-form and high-resolution content, Veoh's offerings, since they include user-generated content (UGC), vary widely in quality. Program content from NBC and Fox, for example, looks ravishing full screen. But Shapiro maintains that even YouTube video, which is highly compressed, is valuable to the consumer. "It's all about context. If subject value is of interest, the consumer will accept grainy and pixelated. So quality and production value is not the be-all."

With an explosion of tools, including digital cameras, video hosting and editing software, people that were complete amateurs are producing quality content. To that end Shapiro continues, "I believe that in the next three years there will be more compelling independently produced content than professionally produced content. Just in the sheer quantity of what you'll want to watch. This talent will fill a giant void existing in inventory in what consumers are truly interested in. Further, I fundamentally believe that network systems have a physics about them, and that online video will emerge in a similar way that print evolved on the Internet." Shapiro recalls that when online publications, such as Salon, first debuted that media critics complained that we had enough already to read with print. And then came the blogs. We made room for this content. It's his contention that just as print magazines comprise ten percent of our print diet, studios will ultimately provide only ten percent of our video content needs.

Shapiro is adamant that apart from producing one show ("Viral") that Veoh's business is in distribution, not content production. He maintains that consumers want to be able to sample content, and that they prefer advertising to pay per view. "Veoh's hosting allows for an ad-subsidized revenue model. You can use your own sales team or allow Veoh to sell advertising and take a larger share." Regarding price and revenue sharing for content owners: "The industry is experimenting: What are the models and the splits? How do you need to track and sell? All of these things are being worked out. "

Another distinct offering from VeohTV is its recommendation engine, created by Ted Dunning who achieved acclaim for his work at MusicMatch (now YahooMusic). This behaviorally-based methodology has earned early praise in successfully predicting a user's interaction with content. It's easy to see how the engine can be flipped for maximum value to advertisers. Shapiro: "Our recommendation engine is at the heart of our ad-targeting capabilities. We believe that if we make advertising relevant that it becomes content, even if it's an interruption."

Now that everyone's getting aboard this train – Cisco, Apple, Intel, making boxes that include microprocessors, network connections, and a hard disk to sit next to the TV set. "What all of these boxes need is a killer app to create the interface to the consumer and the interface to the content. We believe VeohTV is a foremost leader – the software that powers the set top box."

So, what about the software? VeohTV, like Joost, is easy to download and offers great content. Its program guide is superior to Joost's, resembling an interactive TV Guide, literally transforming your PC into a TV. But where it truly shines is its nod to Web 2.0: While Joost is still building out its community offerings beyond a bulletin board, RSS, and instant messaging, VeohTV has truly embraced the notion of making your TV viewing experience personal and interactive. You can grab stock exchange tickers, a feed for your eBay auctions, your wish list on Amazon. The menu to choose from, and build, is vast. And while Joost has a "walled garden," according to Shapiro, what of VeohTV's content? Since it acts like a search engine, the content is formidable as well.

But therein lies the rub. VeohTV is offering an iTunes for online video content, if you will. The problem is that content providers such as NBC and Showtime have struck formal partnerships with iTunes. They in turn have decided to make NBC Nightly News available as a free download, while The Office is priced as a $1.99 download. VeohTV, then, is tracking more like YouTube, than Joost with regard to the foreseeable legal landmines on its horizon.

As Brad Stone reported in the New York Times: "Veoh does not ask for permission to play material from other Web sites […] Veoh does not think that it needs consent because VeohTV is doing nothing more than playing what is already online, including any commercials shown during the programs."

Veoh does not dispute this claim. Rather, it positions itself in the vein of Google, as a search engine for online video. Legally, this makes for muddy waters. According to Shapiro: "[Veoh] streams content directly from the content owner's website and therefore all of the content is cleared by the content owners themselves."

Sidestepping this legal quagmire, the Future of Television is owned by neither VeohTV nor Joost. Or Blinkx or any of other upstarts that are around the next bend. The space remains embryonic. Joost is still in beta, certainly VeohTV's aggressive move to build out its interactive component will affect its next release. At this stage, tens of thousands of early adopters-cum-beta testers are investing their time and effort on these new platforms. It's worthwhile for both content providers and advertisers to leverage this as an opportunity to get to know the next generation of TV viewers and to heed their advice.

Online video is the . Last fall saw snap up for $1.65B. debut clearly owned the winter hype. But what about the long hot summer? . In an exclusive interview with Veoh CEO Dmitry Shapiro discussed the VeohTV platform, while emphasizing how its proprietary recommendation engine is not only a benefit to viewers, but to advertisers. Veoh received out of the box media coverage thanks to its storied investors, Time Warner, Goldman Sachs, Spark Capital, and Michael Eisner. While Veoh.com is a video hosting service akin to YouTube (claiming to be the largest independently owned video-sharing Website), consumer facing is Veoh's recently launched beta. According to Shapiro the platform is built on one fundamental belief: "Video content lives on many places throughout the Internet. It lives on video hosting sites, content owners' own Websites, BitTorrent trackers, RSS feeds. Hundreds of thousands of Web sites. We believe that this fragmented amalgamation of content will continue to exist on the Internet. The consumer couldn't care less where it comes from - Veoh, YouTube, . They want the simplest, seamless experience." It's Veoh's contention that the Web browser was never made for video; it's been retrofitted for that purpose. VeohTV connects like a browser to any Web site, creating a program guide that takes the clicking and scrolling out of watching online television. Offers Shapiro: "Both Veoh and Joost think of the world as a TV-like experience: Remote control, program guide, full screen. But that's where similarities end: Joost is about rebuilding a walled garden — privileged content developers — not what the consumer watches. Veoh brings democratized video to the Internet, the long tail of video content. While Joost's is providing vetted long-form and high-resolution content, Veoh's offerings, since they include user-generated content (UGC), vary widely in quality. Program content from and , for example, looks ravishing full screen. But Shapiro maintains that even YouTube video, which is highly compressed, is valuable to the consumer. "It's all about context. If subject value is of interest, the consumer will accept grainy and pixelated. So quality and production value is not the be-all." With an explosion of tools, including digital cameras, video hosting and editing software, people that were complete amateurs are producing quality content. To that end Shapiro continues, "I believe that in the next three years there will be more compelling independently produced content than professionally produced content. Just in the sheer quantity of what you'll want to watch. This talent will fill a giant void existing in inventory in what consumers are truly interested in. Further, I fundamentally believe that network systems have a physics about them, and that online video will emerge in a similar way that print evolved on the Internet." Shapiro recalls that when online publications, such as , first debuted that media critics complained that we had enough already to read with print. And then came the blogs. We made room for this content. It's his contention that just as print magazines comprise ten percent of our print diet, studios will ultimately provide only ten percent of our video content needs. Shapiro is adamant that apart from producing one show ("Viral") that Veoh's business is in distribution, not content production. He maintains that consumers want to be able to sample content, and that they prefer advertising to pay per view. "Veoh's hosting allows for an ad-subsidized revenue model. You can use your own sales team or allow Veoh to sell advertising and take a larger share." Regarding price and revenue sharing for content owners: "The industry is experimenting: What are the models and the splits? How do you need to track and sell? All of these things are being worked out. " Another distinct offering from VeohTV is its recommendation engine, created by Ted Dunning who achieved acclaim for his work at (now ). This behaviorally-based methodology has earned early praise in successfully predicting a user's interaction with content. It's easy to see how the engine can be flipped for maximum value to advertisers. Shapiro: "Our recommendation engine is at the heart of our ad-targeting capabilities. We believe that if we make advertising relevant that it becomes content, even if it's an interruption." Now that everyone's getting aboard this train – , making boxes that include microprocessors, network connections, and a hard disk to sit next to the TV set. "What all of these boxes need is a killer app to create the interface to the consumer and the interface to the content. We believe VeohTV is a foremost leader – the software that powers the set top box." So, what about the software? VeohTV, like Joost, is easy to download and offers great content. Its program guide is superior to Joost's, resembling an interactive , literally transforming your PC into a TV. But where it truly shines is its nod to Web 2.0: While Joost is still building out its community offerings beyond a bulletin board, RSS, and instant messaging, VeohTV has truly embraced the notion of making your TV viewing experience personal and interactive. You can grab stock exchange tickers, a feed for your eBay auctions, your wish list on Amazon. The menu to choose from, and build, is vast. And while Joost has a "walled garden," according to Shapiro, what of VeohTV's content? Since it acts like a search engine, the content is formidable as well. But therein lies the rub. VeohTV is offering an for online video content, if you will. The problem is that content providers such as NBC and Showtime have struck formal partnerships with iTunes. They in turn have decided to make NBC Nightly News available as a free download, while is priced as a $1.99 download. VeohTV, then, is tracking more like YouTube, than Joost with regard to the foreseeable legal landmines on its horizon. As : "Veoh does not ask for permission to play material from other Web sites […] Veoh does not think that it needs consent because VeohTV is doing nothing more than playing what is already online, including any commercials shown during the programs." Veoh does not dispute this claim. Rather, it positions itself in the vein of Google, as a search engine for online video. Legally, this makes for muddy waters. According to Shapiro: "[Veoh] streams content directly from the content owner's website and therefore all of the content is cleared by the content owners themselves." Sidestepping this legal quagmire, the Future of Television is owned by neither VeohTV nor Joost. Or Blinkx or any of other upstarts that are around the next bend. The space remains embryonic. Joost is still in beta, certainly VeohTV's aggressive move to build out its interactive component will affect its next release. At this stage, tens of thousands of early adopters-cum-beta testers are investing their time and effort on these new platforms. It's worthwhile for both content providers and advertisers to leverage this as an opportunity to get to know the next generation of TV viewers and to heed their advice.
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