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Sunday, August 12, 2007

Google Video Abandons the Cash Register ... While 'NewCo' Raises Coin

- Google is admitting that its strategy for selling and renting videos was a flop, closing down the cash register at Google Video.

The three biggest problems: Google never had a wide range of content for purchase. Google invented its own DRM system, so videos wouldn't play anywhere but Google's site. Google didn't let independent creators sell their content - only big media companies. And Google didn't promote the paid content; it was extremely tough to find.

And for some dumb reason, consumers will no longer be able to play purchased videos. You're telling me that Google, which spends about $1 billion on employee lunches every day, couldn't keep the necessary software up and running - to do right by the people who supported this service while it existed?

I still believe that people will pay for excellent content online. Google just made too many mistakes with this initiative.

- The NY Times reports that Providence Equity Partners is investing $100 million to buy 10 percent of the Fox/NBC video site that hasn't yet been named or launched yet. This values a company with no Web site, no viewers, and no revenue (but access to content from Fox and NBC) at $1 billion.

- And here's a bonus link, from yesterday's Times: a great piece on how comedians are using Web video to build an audience and generate interest among agents, networks, and studios.

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  • This is another example of a big company (Google) trying to jump into a market before it's looked at where it plans to land.

    Microsoft Zune? Philips CD-i? Even Google's own e-commerce Checkout service is under-supported by the company. So far, Google has been very ineffective in creating a brand or service that has significant consumer appeal other than their own primary search site and Google Earth (which was mostly a purchased application as well). They seem to be good at creating pieces of technology but not very good at making a marketable product. A lot like Mitsubishi in the consumer electronics world.

    Google Video failed because of a lack of any marketing support and a really lame name. It never seemed slick or cool in any way. It never got the community involvement of Youtube, and after Google's purchase of Youtube, Google Video sat like the ugly step-child - only wishing it could have been favorite.

    As for the "as yet not real" Fox/NBC site... it reminds me a LOT of the early studio ventures around the turn of the millenium. How much money did Imagine/Dreamworks lose on which never EVER launched, but somehow managed to pay a ton of money for shorts content licensing? Or does anyone remember Disney Interactive Group? I remember them losing over $600 million in one year alone on a site that had marginal traffic and near zero promotion from its parent company. If you have capital in Providence Equity Partners, I'd be worried. $100M is going to be spent quick with no revenue stream coming in...

    When you look at sites like "MySpace" and "YouTube" they were cobbled together with barely functioning software and code. They were made for pennies on the dollar because their creators had a passion for the idea. When big media companies like NBC or Fox step into the mix and try to come up with something from the ground up, they have to start at the infrastructure level and move up to content. That infrastructure (when done particularly well with security) is enormously expensive.

    In order to be something remarkable, the "next" video site is going to need to offer something that Youtube doesn't. A user experience that is superb. Otherwise, an inexpensive DVR is still the hands-down winner for serving up real video. Youtube is not a watchable replacement for television.

    What are your thoughts?


    By Blogger Steve, at 1:54 AM  

  • I think Google video failed when they bought YouTube.

    MCT Images Blog

    By Blogger MCT Images, at 9:42 PM  

  • While DRM is a requirement for big media companies, it doesn't not necessarily attract big media companies, but it does alienate small producers who want to ensure broad compatibility as a value add. Google Video would have done better to offer a DRM-free option from the outset. Incidentally, Brightcove used Windows Media DRM and faired no better in paid downloads.

    After downloading your "high-quality" mp4, Google provides instructions for manually importing the video into iTunes to sync with your iPhone/iPod (no Android mentioned)

    Apple (who's iTunes software incidentally already has a really nice way to buy video content) has an opportunity here to allow content creators to sell a season pass to independent web content for a reasonable price, and without all the import/sync mess. If Apple can sell 60 fart apps for 99 cents each, I think they could sell a season pass to The Guild for $4.99. The *automatic* subscription downloading and iPod syncing would provide more compelling value to consumers (essentially paid podcast subscriptions). Right now, the only value presented by YouTube is support for mobile devices (or, I guess, for people that aren't aware of FLV downloaders).

    By Blogger Sean Fitzroy, at 4:07 PM  

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