Web Video Reshapes DR Ads

Several new Internet broadcasters are entering the arena pioneered by Broadcast.com Inc., Dallas, with a variety of programming and interactive advertising models that herald a new era in DRTV marketing.

The latest generation of Internet broadcasters consists of FasTV Inc., Digital Entertainment Network Inc., Simply TV and TV onthe Web, which has produced video content for other programmers for several years, but last month appointed Tim Swift, formerly of Merv Griffin Productions, as president to oversee the development of original entertainment and event programming.

These new broadcasters – some of which prefer the term “narrowcasters” to describe their ability to reach niche audiences – rely on “streaming” technology developed by arch-rivals RealNetworks Inc. in Seattle, Microsoft Corp. in Redmond, WA, and most recently, Apple Computer Corp. in Cupertino, CA. Streaming describes a rapidly developing technology to send on-demand multimedia through telecom networks without a hideously protracted download time.

RealNetworks hosted a developer conference this month in San Francisco and introduced a test version of its new G2 Advertising Application, which allows programmers to insert video ads into the middle of streamed content. The ability to insert ads into streams is essential to lure advertisers to sponsor Internet video content.

While the picture quality of streaming video is not as good as television for most consumers today, the development of broadband connections into households is expected to transform how people use the Internet. The personal computer gradually will be replaced by televisions that are technologically equipped not only to interact, but also to transact.

Video in Six Minutes or Less

FasTV Inc., Los Angeles, offers a searchable database of video clips from cable and broadcast sources, including CNN and The Weather Channel. Targeted video advertisements can be inserted before the clips appear on a viewer’s computer. Interactive technology allows viewers to respond directly to ads with the click of a mouse button.

The company plans a relaunch of its Web site, fastv.com, May 20, that will extend its indexing and search capabilities.

“Our site is still in preview phase, but our launch will be supported by a significant amount of advertising through the summer months, when we have several marquee events,” said Chuck Ball, vice president of marketing, FasTV.

Ball formerly worked for Magnitude Network, an audio streaming pioneer that was acquired by CMGI Inc., a major holding company of Internet firms, including the portal service Lycos Inc. CMGI, Andover, MA, plans to invest as much as $100 million in a streaming video service provider headed by Neil Braun, former president of NBC Television Network.

Ball said his company is well-positioned to lure viewers who do not necessarily have a high-speed Internet connection and who are interested in watching on-demand video clips.

“We are focused on creating meaningful experience for the consumer in a mid-band world,” he said. “When you consider the average consumer has a 28.8 [kilobyte per second] modem, it’s difficult to find a meaningful video viewing experience on the Internet.”

He said he does not see significant opportunity for competitors that plan to stream long form video to consumers.

“The average viewing experience is about six minutes long,” he said, quoting a recent study by Nielsen Research, New York. “Consumers who try to watch something online are finding that after five or six minutes, it’s going to be painful.”

The average length of FasTV’s clips is 92 seconds. The company is majority-held by Prince Khalad Al-Nehayan, the Prince of Dubai, United Arab Emirates, who has invested about $15 million in the company since September. FasTV owns a worldwide patent on Video Processing System technology that was developed for distance-learning applications, but bandwidth restrictions stymied the prospect of streaming classrooms anywhere in the world.

Ball said the company recently invested a “significant amount of money” in its Web server farm, incorporating RealNetwork’s Real Server, storage technology from EMC Corp., Hopkinton, MA, and Infoserver indexing software developed by Infoseek Corp., Sunnyvale, CA. Ball declined to disclose the CPM range the company was targeting for ad prices, but quoted a study that indicated the range is between $75 and $125 because of the Internet’s targeting capability.

“People are not just passively watching video on our site,” he said. “They are actively searching for video clips. That kind of engaged viewer is very attractive to advertisers.” FasTV is represented by Winstar Interactive, New York, for ad sales.

He said FasTV was in discussions with a major database company that has developed a database of 6 million Internet user profiles. Those profiles, which do not disclose the exact identity of individual users, but do allow advertisers to target individuals based on their Internet surfing habits on 150 major Web sites.

The company also plans to develop its own opt-in, opt-out database of users who offer personal information in exchange for rewards and contest entries.

Generation Y, Because We Like You

Digital Entertainment Network, Simply TV and TV onthe Web differ from FasTV in that they stream lengthier original programming.

Digital Entertainment Network Inc., Los Angeles launched on May 10 with a mixture of multimedia content intended for a Web-savvy teen audience. The company is overseen by CEO Jim Ritts, former president of the LPGA and of network affairs at the Channel One Network.

It plans to air 30 programs by the end of the year, each one targeted at a segment of the Generation Y audience. Story lines follow the travails of Hispanic youth in Southern California, aspiring rock musicians, extreme sports fans and other teens with special interests. The bi-weekly episodes will be about six minutes in length, but interactive elements that give background information on the characters prolong the running length.

Video advertisements are inserted in the episodes, while banners are linked to marketing sites. The site has an e-commerce capability, also.

“Our first major sponsor is Ford Motors,” said Kurt Sharp, a former network programming exec who joined DEN to develop Internet broadcasts. The company, which was founded by Chad Shakely and Marc Collins-Rector, expects to earn between $12 million and $15 million in advertising this year.

Down With the Network Hierarchy

It would appear somewhat ironic that a technology startup such as RealNetworks would quote Gil Scott-Heron, poet and black pride revolutionary, in a brochure with the phrase “the revolution will not be televised.”

While RealNetworks is not the first company to co-opt the phrase for a marketing purpose – Nike did it years ago – the company is helping to foster a revolutionary spirit in the hearts and minds of video producers who are ready to buck the oppressive hierarchy of cable and broadcast networks and distribute their productions directly on the Internet.

Perhaps no one captures that spirit better than Krystol Cameron, founder and CEO of Simply TV, New York, which is due to launch in July. The 120-employee company started in 1995 and has conducted several programming test runs in the last few years.

Cameron, who has been described as “the Spike Lee of Interactive TV,” purchased 50,000 hours of programming in 12 major categories for Internet broadcast and has a stable of 70 video content providers who have grown disillusioned with the traditional networks.

“We’ve got a lot of independent producers who are tired of being let down by mainstream television,” he said. “With us, they can be more creative and more experimental with what they do, as long as the programming meets a certain standard. They love the opportunity.”

The series programming consists of biweekly half hours intended to appeal to niche audiences. Cameron said the cost of the shows ranges between $3,000 and $50,000 a half hour and that 100,000 households watched the network twice a month.

While FasTV delivers short video clips, Simply TV broadcasts half-hour programs. Cameron said the average viewer watched more than 23 minutes of each half hour program in test conducted in September. It has a database of 1.2 million subscribers who have logged on to the network.

Simply TV is building demographic profiles of those subscribers by asking them one question each time they come to the network.

Six 30-second spots are available each half hour. Unlike most DRTV advertising today, Simply TV’s ads do not require consumers to pick up the phone to order or ask for more information.

“Viewers can interact with the commercial,” Cameron said. “When they click the 30-second spot, they are taken to more information about product and can make the purchase.”

He said the CPM ranges between $70 and $120, depending on the volume of viewers and the degree of targeting. Advertisers can request that their ads be delivered to highly selective demographic groups. Citibank is one sponsor that will appear during the launch, seeking people that may be interested in opening an account.

Simply TV uses a Windows Media Server to stream content, but is planning to implement its own proprietary streaming technology later this year.

It also is developing a technology called 4-D Television that would place products throughout the sets of its shows. A prop such as a cereal box would be filmed in blue-screen, but the viewer would see a brand superimposed on the box.

The product placement would be based on the viewer’s demographic profile. A child viewer may see Kellogg’s Froot Loops, for example, while an adult viewer would see Kellogg’s All-Bran. Soft drinks, sneakers and packaged goods are all products that could be placed in this manner.

“There are thousands of products that could be placed throughout the show this way,” Cameron said. He planned a September introduction of the technology.

Narrowcasting to the World

TV onthe Web, Reston, VA, carries a variety of eclectic channels that target highly focused niche markets. Its programming is mostly funded by special interest groups, but the company intends to offer more original programming and special events.

Its channels include The Equestrian Channel, funded by The Horse Exchange, Washington, DC, an online horse trading Web site; The politically conservative Right Channel, supported by the Free Congress Research & Education Foundation, Washington, DC; and The Speakers Channel, which features motivational speeches and is funded by Successful Meetings magazine. There are 21 channels now available for streaming from TV onthe Web’s site.

Video advertisements can be placed before and after streamed content, while interactive banner space is also available, said Lisa Amore, the company’s director of advertising. She said its site is sponsored by Metrocall cellular service, PSINet, Bell Atlantic and Mobil Oil.

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