• Ross Fadner, Sep 28, 2006, 11:30 AM
  • Cable Companies Stave Off Web Video Threat The Wall Street Journal (by subscription) Sure, it's all about video these days--but what about Internet TV? No one is really watching a lot of TV content on the Web yet, but cable and telecom companies, Web portals, movie studios, even electronics providers are taking steps toward offering TV on the Web. Will consumers cut back on their cable and satellite-TV subscriptions as Apple Computer's iTunes, News Corp.'s MySpace and AOL's In2TV ramp up their online offerings? Cable companies are responding to the ITV movement by bulking up on video on demand, putting more content online and giving advertisers better targeting services. A recent report from Toronto-based Convergence Consulting Group Ltd. says MySpace, iTunes, and Google Video don't pose any near-term threat to cable providers, but longer-term is a different story. In fact, the Internet is driving cable subscriptions through bundled package subscriptions offered by cable providers, like Comcast. Even so, video consumption on the Web is growing fast. Here's a little perspective: Viral video sensation YouTube attracted more than 34 million uniques in August, according to Nielsen//NetRatings. Cable provider Comcast has 24 million subscribers total in the U.S., and DirecTV, the largest U.S. satellite provider, has 15 million. Read the whole story...
  • Warner Bros. Shuts Down Online Unit Los Angeles Times It's a day of closings for the interactive units of certain media properties. Warner Bros., in an effort to slash its costs, is shutting down its online division, among the first ventures backed by a major studio to create original content on the Web. Warner Bros. Online is the latest victim of cost-cutting measures begun by the studio one year ago. As a result, 19 employees from its online unit will be laid off, and 40 people will be moved over to the studio's Digital Distribution units, or into other groups dedicated to emerging technologies. President Kevin Tsujihara tried to place a positive spin on the proceedings: "It's not really an elimination of what online has done or did do," he said. "It's really more of a realignment of and redeployment of people." Warner Bros. declined to mention how much the studio would save by dissolving the online unit, but Warner Bros. Online was always somewhat marginalized by the Time Warner-AOL merger; its resources and ambitions seemed to diminish steadily since the 2001 merger. Warner Bros.' Internet content will now be produced under the studio's TV and movie units. Read the whole story...
  • Disney Shuts Down Mobile ESPN The Wall Street Journal (by subscription) Mobile ESPN is the interactive world's other big closing of the day. The cell phone startup, backed by the Walt Disney Co., is closing down operations, hoping to reinvent itself as a content partner of bigger wireless carriers. The company had only been around since the Super Bowl, but was never able to attract enough demand to warrant the added cost per month of sports content. Mobile ESPN operated through an agreement with Sprint Nextel Corp., which it paid for wholesale access to the carrier's network, reselling a premium sports service to its subscribers. The company was one of many resellers in the cell-phone business, including Helio and Amp'd Mobile. The next step for Mobile ESPN will likely be to license its sports content to cell carriers providing their own premium content services. Weak demand for the Mobile ESPN product indicated that consumers just didn't want to pay extra for access to ESPN's content on their cell phones. Most of the same content could be accessed via one of ESPN's several cable TV channels, or on the Internet. The dissolution of Mobile ESPN has no bearing on Disney Mobile, the Walt Disney Co.'s other branded mobile-phone service. Read the whole story...
  • DSL Providers Abandoning Rural Areas The New York Times Believe it or not, you can't get high-speed Internet access in many areas across the country. Several small businesses in Northeast Vermont say productivity is suffering due to lumbering dial-up connections. A pair of dairy farmers who manage their payroll and other aspects of their business online say they can only reliably log on at around 4 a.m., a time when less bandwidth is being used. Instead of looking to upgrade its network in this remote area, Verizon, the local phone company, is looking to sell the 1.6 million phone lines it controls in Vermont. The move to sell is part of an internal plan called Project Nor'easter, which is basically a plan to give up many of the local landlines the company owns. Why? Because there aren't enough users in remote areas of the country to warrant the cost of a network upgrade. Instead, Verizon, AT&T and other telecom providers are focusing their attention (and dollars) on upgrading high-speed networks near cities, which hold a greater ROI prospect for them. Witness, then, the widening divide between the Internet's rich and poor: Our already high-speed networks in major cities across the country are poised for yet another upgrade, while rural areas are stuck in the Internet's slow lane. This comes at a time when a broadband connection is becoming more of a necessity to access the Web's content and services. Across the country, there is mounting evidence of major phone providers abandoning rural areas. In 2002, Verizon sold 1.3 million phone lines in Alabama, Kentucky, and Missouri. Most recently, Alltel spun off its local phone group, merging it with Valor Communications; and Sprint Nextel has also spun-off and renamed its network of 7.1 local phone lines. "We're not a Third World country. We shouldn't have to beg for service," exclaimed Maureen Connolly, a director at the Economic Development Council of Northern Vermont. "We have companies that lose money because they don't have broadband." So who will save the Internet's rural poor? Read the whole story...
  • MySpace Valued At $15 Billion Reuters MySpace, the social networking phenomenon that News Corp. purchased last year for $580 million, could be worth $15 billion in a few years' time, according to RBC Capital analyst Jordan Rohan. But note--that's in terms of the added value the News Corp. site will have created for shareholders. "$15 billion in a few years? It is possible," Rohan wrote in a research note to clients after coming away from a meeting with Fox Interactive, News Corp.'s online unit. Rohan said "media investors may not fully appreciate what has already been done with MySpace or what may lie ahead." Rohan later acknowledged he was making an "audacious claim," but justified his forecast based on MySpace's unprecedented usage (90 million-plus members), growth (hundreds of thousands of new users every week) and capacity to become a major international brand and "intellectual property distribution powerhouse." Rohan based his analysis on recent market valuations for other Internet properties, including YouTube and Facebook (each valued at around $1 billion), and Google, Inc., valued at $120 billion. MySpace is the No. 1 video site on the Web, according to traffic measurement firm comScore Media Metrix--showing 1.2 billion videos in July. Rohan said MySpace was currently sold out of video advertising inventory, whose CPMs go as high as $35-$40. Read the whole story...