Sshhh!…what’s real reason why Comcast is buying NBC? TV Everywhere of course.

G.E.’s decision to sell NBC Universal reflects the shifts in fortune that are battering the media business, especially network television. The broadcast division of NBC Universal could lose big, a remarkable downturn for a network that had earned roughly $400 million in past years.

Problem: the Internet has fractured audiences and few viable business models have emerged for the distribution of content online.

What the new Comcast venture looks like: Comcast will contribute its own cable channels, which include Versus, the Golf Channel and the E Entertainment channel, and a modest amount of cash, about $5 billion, to a joint venture in which it will own 51 percent. G.E. will retain a 49 percent stake, and would likely reduce its ownership over several years and in theory, Comcast-NBC Universal will be a company separate from Comcast’s cable assets.

Some interesting possibilities could be:

It could use its power in film, with Universal Studios, to expand video-on-demand offerings by altering movie release windows to make movies available on demand the same day they are released on DVD.

It could use its power in film, with Universal Studios, to expand video-on-demand offerings by altering movie release windows to make movies available on demand the same day they are released on DVD to all active basic cable subscribers that buy HBO and SHOWTIME or purchase at least 1 on-demand film per month.

Buying Netflix: Stream movies through this service coupling subscription on cable with certain consumer benefits through Netflix, i.e. day and date with DVD or perhaps even a scheme to stream films just released in theaters 1 time only to ‘frequent flyers’ or renters of the service, but at a big ticket price on-demand.

But here is the real reason why Comcast is buying NBC: TV Everywhere. “TV Everywhere” model, which promises to give their subscribers exactly what they want: anytime, anywhere access to any TV content. They have to do this to keep their customer bases and compete. In a TV Everywhere world, the role of the multi-system operator is diminished. Your cable or satellite TV provider will no longer be your only (legal) means of watching the current episode of HBO’s Curb Your Enthusiasm. In a TV Everywhere world, Curb Your Enthusiasm will be available on literally thousands of websites and mobile apps, as long as you can authenticate yourself as a paying cable or satellite subscriber with the HBO package. Comcast risks becoming a “dumb pipe,” providing little more than bandwidth. To avoid that fate, Comcast recognizes that it needs to move upstream and own or control the content itself, thus NBC/Uni. More to the point, a consumer COULD elect to turn off his cable basic subscription and turn around and subscribe to TVE thereby allowing him to see his basic cable channels but on his PC, phone etc. Now that Comcast owns content and some of those channels it can monetize the consumer whether or not they subscribe to the cable in the house or not.

In a TV Everywhere world, it will be a terribly crowded space, with a ton of noise and websites with similar content. The sites that perform best will be the ones that create the best user experience for viewing TV content – and right now, that’s Hulu ( and who knows, maybe Clicker ?). If Comcast buys NBC, Comcast will own about 1/3 of Hulu, providing an ideal launching pad for TV Everywhere it has a very passionate and loyal audience.

This online world is a very splintered and exceedingly difficult to measure, especially when you are asked to sell advertising against the content. The real problem is a lack of tools to properly bring the right economy of scale to online which equates to buying media in a traditional way. Therefore, instead of trying to monetize a cable channel online one by one, with TVE, you can monetize the whole package in a similar way that cable already is monetized. Its a structure already understood by the consumer now. Bundle a bunch of cable channels for a small monthly fee and let consumers have access to them everywhere, including home or NOT.

The Internet while very big, does not yet command the equivalent kind of media rates and fees that Cable or Network gets today. No agreed upon means of measurement exists to give advertisers a definitive ‘rate card’ for the internet. There is no Nielsen for the web, (yet, although it was announced yesterday by Nielsen that eventually, there will be). comScore, even though they do a great job with data can’t extrapolate the data to equate to viewers ‘watching a TV set’. Making the comparison when placing an ad on a video online and the same ad on TV impossible to compare TODAY. Hulu streamed 855 million video stream last month. What does that really mean? Did all 855m viewers who watched those streams watch ALL of each stream or were many of them counted as they ‘surfed’ through Hulu clicking on various videos for a few minutes or even seconds – were they counted among the 855m? What does 855m stream equate to in Nielsen ratings/eyeballs? Does anyone really know? Nielsen despite its shortcomings has some measurable statistics for this, but its still not apples to apples.

Furthermore, Hulu still has a long way to go to prove it can monetize its audience as effectively as its parent companies can do with programs viewed on-air. Why? Its uniques are flat. Hulu’s uniques are scarcely better than they were 6 months ago. Unless the unique number jumps in the coming months (which I doubt it will), Hulu will have to meaningfully enhance its value proposition to grow its audience (can you say “Hulu to-the-TV-via-Xbox/Roku/Apple TV/etc?”) says Will Richmond of Videonuze (Nov 30th 2009). He goes on to ask “What happens to Fox’s programs on Hulu should Rupert Murdoch expand his focus beyond his newspapers’ online content going premium? What if Disney decides to launch its own subscription services? What if Google or Microsoft or Netflix (or someone else) decides to open their wallet and make a bigger play in premium online video?” And, these questions become somewhat less mysterious now that Comcast has bought NBC/Universal.TV will NEVER be the same again.

Comcast chart above courtesy of VideoNuze.com

Posted via email from williamsager’s posterous

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Googlenator*: The Rise of the Vertical Search Engine, circa 2010. (*apologies to James Cameron)

Google‘s google-logo.jpg chief strength–its dominance in the search advertising business–is also its main vulnerability. Currently, 99% of its revenue comes from search-related advertising. The remaining 1% comes from sales of its enterprise search appliance.

So what is a vertical search engine? Example: Let’s say you were looking to buy a house in another state, close to schools for your kids and under one million dollars. Of course it should also be nearby shops, walking distance to park maybe and a few other things that are important to you. Well, a search on Google would get you a house under one million in NC but how about those other amenities and essentials you need close by? Now, try that instead in Zillow. You can request schools within a radius of so many miles, shops etc. A much more refined and helpful search for what I need and in this case, I would only use Zillow.

These search dynamics exist in many other verticals — fitness, health, auto, dating, travel, legal, financial, etc.

Google has focused on the horizontal, generic search. However, as users get more and more sophisticated, they are discovering other brands that offer richer user experiences customized to the specifics and details required within one particular vertical or another.

And VC’s and other investors have noticed by investing in many of these verticals. Some of these are: Indeed.com – $ 5m (Indeed has over five million unique users), SimpyHired ($17.7 million from Foundation Capital and News Corp.), and Jobster ($48 million). The “online jobs” market is expected to be worth $10 billion by 2011.

In the travel section Kayak bought Sidestep, IAC bought several different web properties and now has several ‘verticals’ that they hold and foster including Dating, Travel, Local search and more.

Its been said that “Google will fail if they try to do separate vertical brands,”. “It’s like Wal-Mart vs. Tiffany. It’s about a deeper brand experience that Google can never offer.” says Gus Tai over at Trinity Ventures.

Verticalization has happened before. We saw this happen in ecommerce. Ebay, Amazon, etoys, overstock, and many others. There will be many vertical search engines behind Google and several will become very large companies and successful ones. Google’s continued torrid pace and revenues are just beginning to top out and growth will slow down. And growth of the vertical space will increase sending dollars to those efforts and taking dollars from Google coffers’. Pinpointing that will be hard but the numbers won’t lie. I believe that within the next 2 years we should be able to see the chink in Google armor. And for Wall Street, it won’t be pretty.