Roger McNamee discusses Video on the Internet

by: David Strahlberg

In his blog titled The New Normal (also the title of his book), venture capitalist Roger McNamee posts an interesting 3-part piece called Video on the Internet.  Below is a synopsis of his thoughts, with some quick comments.

Video on the Internet: Part I

  • In the late 1990's, everyone assumed that the Internet/broadband would become the new distribution medium for television and video content
  • Unfortunately, no one could figure out how to do it; there were too many bottlenecks
  • Most solutions were hung up on "a slavish adherence to the broadcast/cable model of television"
  • Ultimately, he believes that Tivo like models (storing and cacheing info) will triumph over IPTV, which is impractical given current network constraints
  • Despite the limitations, he see promise in video over IP because of flexible network infrastructures, mature software platforms, massive storage and processing capailities
  • He sees the Long Tail impacting internet video, as thousands of smaller broadcasters take share from the traditional channels
  • He expects the current distributors of video content (cable networks, studios and broadcast networks) to be players in internet video, but not dominant

Video on the Internet: Part II

  • Hollywood sees the Internet as a threat, not an opportunity
  • To thier credit, the movie studios have been smarter than their counterparts in the music business (who continued to raise prices despite rampant piracy)
  • The music industry learned a hard lesson: "you have to give consumers
    what they want, when they want it, at a price they find reasonable"
    otherwise, they will steal it
  • Still, the studios insist on controlling content even as file sharing programs make distribution simple; some people in the business get it, but the studios and networks do not
  • He advises the movie industry to embrace technology and accept the notion of 'personal use license'
  • He criticizes the push for BluRay DVDs as merely having greater copy protection, but little consumer benefit
  • Hollywood need to recognize and adapt to the act that the internet is different than other media, even if that means new business models and new forms of content

Video on the Internet: Part III

  • He expects internet video to become to third pipe into the home, with content moving away from TV and to the PC
  • Akimbo is one service that may prevail, although it lacks content at this point
  • Longer term, this is not a hardware business, but a software one with software embedded into the PC and other devices
  • Currently, Akimbo's services looks lot like Tivo (ticker: TIVO); ultimately, it needs to develop a software based model in order to avoid the pitfalls that Tivo has fallen into.

Quick comments:  A fascinating article from a leading venture capitalist.  One beneficiary of Akimbo's service may be Image Entertainment (ticker: DISK).  Its Egami Media subsidiary recently signed an agreement  with Akimbo to distribute its exclusive content.