Video: Avner Ronen on The Future Of TV
I am under the weather today. Not feeling too well. So instead of posting, I am embedding. I watched this video yesterday and thought it was a really good discussion of where TV is headed. Avner has had a front row seat in his role as founder and CEO of our portfolio company Boxee and his views on the broader TV industry are interesting and very insightful.
Feel better soon 🙂
Having just gone through one of the more difficut health months (back injury) since beating cancer back in college, (and as my girl friend (4th year medical student) says, “when your under the weather, proceed with caution”), meditate and let your body heal.
They deliver and their Matzo Ball soup is decent, not my mom’s but does cure what ails at times:www.kutsherstribeca.comFeel better.Boxee has been off my radar for a bit and Avner is a smart guy so this is cued for tonight.
Feel better, @awaldstein:disqus .
sunshine to you from durban
We are under the weather too in Toronto after a good snow dump from a cold air coming from ….Texas- blame it on JLM.Get well soon!
That was interesting, and fortunately I could listen to it in the background while I work, otherwise never would have watched 25 mins worth.Why does the community think the content creators are so insistent on going through the bundling companies (i.e. cable providers)? If I were a content creator, I would 100% want to work with anyone who could get whoever wants my content directly to someone willing to pay for it.
Hi Avi, I’m the journalist who interviewed Avner. I think the issue for content creators is that the “bundlers” continue to the be place where the real money is. We’re only just now seeing companies like Netflix breaking that model. And for live sports fans, as Avner points out, there’s still no alternative to the cable/regional sports network/league-owned channel trio. It’s a fair observation that when the big money deals for content creators can flow from other sources, the content creators will react accordingly. But not until.
Paul I recognized your name. Thanks for putting the interview on.Is it where the real money is, or is it where the short term money is? There has to be a lot of deadweight loss in the market. Lots of people paying for channels they don’t want means they aren’t paying for content they do want… and plenty of others are not paying at all, whereas they would if they could.What I do see – and perhaps you are saying this – is that if you break from the bundlers, next year your revenue plummets, but then if you have quality, climbs up gradually or rapidly, until you earn in excess of what you would otherwise, and have direct relationship with customer (and solid feedback) to boot. But that requires risk-taking, and knowledge that quality will be better filtered.
Well you just described creative destruction right there, Avi. Shumpeter, Foster, Christensen all understand and talk about that a lot more skillfully than I will be able to. 🙂
And a lot more skillfully than I, as well!
I’d like to see if academics are willing to risk their secure jobs, pay and tenure to destruct the great thing that they have going.
They soon may not have a choice.
But that’s exactly when people make changes. When they hit rock bottom. And when the scales tip so they have more to to gain than to lose.Netflix took a calculated risk based upon a perception of where there business was going. And if anything you could divine the risk they perceived based upon the chance that they took.
The strategic alternative for Netflix was…….. & that is why the took the risk.
They did the impossible. Go from free to $.01. Except they went to $8, wrote about that two years ago: http://justanentrepreneur.c…
This is a fascinating discussion. All along, most have assumed that great academics or teachers would leave the pack if only they could, because then they would shine. This is an argument that they may like it there, thank you very much.
People say that they don’t want bundling, when in fact they do. I only want to pay per movie, not for all the crappy ones I don’t want. See how that went via Blockbuster versus Netflix.
Wow, very interesting point.
See my article two years ago when everybody was blasting Netflix, listed below. Its human nature. I only want to pay for what I get. But if you have good margins all you can eat is a good model for the masses. I give you Golden Coral. (yuuuuuck, but they make a lot of money)It’s the same in software: just give me the lite version! Except everyone wants just the one feature they have to have. As a journalist, yours is word count.
“But that requires risk-taking”Why would anyone who works for someone and could lose their job for a wrong decision take a risk like that? It’s easy to suggest that others take risks but I can fully understand people not making drastic decisions or changes that could alter their future and keeping the status quo.Contrary to what might happen in the startup world or Silicon Valley in particular people in the rest of the country who take a path and make a wrong decision are not patted on the back and given a second chance. They are fired and looked down upon and it effects their future job prospects.As an aside look what happened with the radical changes that Ron Johnson (of Apple store fame) made at JC Penney. He took some risks and those risks haven’t paid off. Now the shine is off that apple a bit.
So you view the content creators as a legacy industry? Lines up with what Paul said below.And people actually do take risks, and sometimes survive them, in the existing world. It isn’t divided between, “innovative startups” and “moribund monoliths” (no more Dr. Seuss today…). Remember the story (Jack Welch?) about the exec who failed and was told, “quit? we just spent $10MM educating you!”At the same time, “no one ever got fired for buying IBM…”
“Shine is off that apple”? Groan.
The press gave Ron Johnson the majority of the credit for the Apple store success. People work with other people. Nobody has any idea of what happens when you take someone with a success at one company and put them elsewhere (in a different industry) with a different group of people or maybe sans a key person that tipped many successful decisions. Forgetting the fact that he was working at Apple with Steve Jobs as well. He had success before at Target obviously. But business is not digital it’s analog. And it’s a team sport as well.Pitchforks:http://www.nypost.com/p/new…http://beta.fool.com/esxokm…http://dealbook.nytimes.com…
Agreed, it takes a team. But a successful team has a leader. And I have seen a great leader come in and turn around a slothful organization.And I have seen a good leader turned into a great one and turned around his existing organization when given sufficient help – great assistants/directs/staff, great consultant (self-promotion warning)… which partially reinforces your point.
Disagree.Its like saying you only want to pay for the features you use in a software product. We all agree that we only use 20% its just that the other 80% is used by everybody else.
it is very hard for content creators to get these alternate sources: content creators tend to try and multiply content types as income rather than something else
Bundling (aggregation) protects the content creators. Netflix isn’t breaking that model. They are an aggregator as well. You don’t pay by the movie you get all movies.The better creators will get paid more by each aggregator because they have pricing power. I give you ESPN, see analysis below. But Scripps who owns the food channel, etc, doesn’t do badly either. Certainly much better than if they were not bundled.If you think about it if all of the major newspapers NYTimes, LATimes, WashingtonPost, WSJ, Gannett etc only sold through aggregators you’d be pretty much forced to buy the “bundle” because the only alternative would be low quality. Same for magazines.Its like being in a herd. The herd protects the individual even though it kind of sucks to be in the herd. As soon as you break up the herd, the weakest will price their product at the marginal cost of distribution which is zero. So you have newspapers and magazines that are totally gutted.Think ESPN likes be “bundled” for those “the telco’s make too much money” I would take their business any day. 50% operating income on $3.5B of revenue this quarter. Fully a third of all Disney revenue and more than 100% of their operating profit.
I agree, Netflix isn’t breaking that model. iTunes is the closest I have seen yet, because it is truly a la carte.Your analysis is interesting. That the weakest prefer the herd is a given. That the *strongest* would prefer the herd is counter-intuitive. Not sure I agree (actually, my initial reaction is definitely disagree), but food for thought in this context.Would the analysis apply to labour as well? Very few in creative, “thought” professions are unionized (i.e. “herdized”) or want to be: lawyers, doctors, engineers, etc. Why wouldn’t it work there too?
I give you teachers unions and their pensions.The strongest prefer the herd because they know the weakest will get picked on, and they can be the bully. Back to CableTV: most people are willing to pay the $100/month (lets remember that 99.9999% of cable subscribers do not know what TechCrunch is much less AVC because the alternative sucks. ESPN can then use their position to bully TimeWarner.
You are absolutely correct…but this is today’s market truths not necessarily tomorrows.Not all college students read TechCrunch. Very few subscribe to cable and watch movies and TVs on their laptops and pads. And this will move with them. My son, over 30, doesn’t subscribe to cable but streams everything to the big screen.
Whht is he watching?If it is cable distributed content, is he, technically, breaking the law?
I agree the only constant is change. Although you can’t always extrapolate behavior saying if this age group does it eventually everyone will because they might be doing it because they are at that age group. I.e. its cool posting funny stuff to Facebook until I realize my employers and kids can see it, I don’t need CableTV until I’m married, etc. Just because I love posting bar checkins on foursquare in my twenties doesn’t mean I will in my forties.I have always thought that sports will eventually get “unbundled” and that is going to have huge ramifications. So far I have been very, very wrong on that call.
Me, definitely over 30, just cancelled his cable (it switched itself off yesterday), because he streams everything to the big screen.
This is the thoughts of one content CEO yesterday on the dynamics of bundling and who it protects. Obviously biased and self-interested. The source is Adweek:”Chad Gutstein, COO of independent cable network Ovation, praised Cablevision for filing the suit. “The television market in the United States is not a free market,” he said. “Everything’s dominated by regulations.” Ovation was unceremoniously dropped by Time Warner Cable earlier this year, supposedly in response to the rising cost of cable subscriptions (though Ovation said now and then that Time Warner refused to negotiate). “They have the luxury to say no because we’re an independent and they’re a bully,” Gutstein said. “They’d never do this to a bundled player.””Every day, Ovation has to earn its distribution and its slot,” said Gutstein. “VH1 Classic doesn’t have to earn a damn thing. Logo doesn’t have to earn a damn thing. They’re bundled with Nickelodeon and with MTV.” – See more at: http://www.adweek.com/news/…
So it protects the incumbents, at the expense of the consumer.
The part I find hard to understand is why it is so regulated. Not the real, deep underlying why, since that is obvious: protect early entrants who became large, to the benefit of the regulating bodies.But what was the (at least pro forma) justification? It is just entertainment, not crucial to day-to-day life like power utility or telephone service. Or was it that this was an important news medium?
My guess is that the pro-forma justification was a combination of First Amendment/equal access/diversity concerns that stemmed from broadcasting over a limited spectrum and then cable, which was seen as a natural monopoly. Less reason for the regulation now given much greater ability to get your voice out.
It sucks to be the weak member of the herd, which is why I thought you have it backwards. You eat last (get paid the least) and when the going gets tough you are the one that gets thrown to the wolves.
Marginal cost doesn’t bother me, and shouldn’t bother the stronger players either. Sure, the Daily Rag is selling at $1.00/month subscription, but that doesn’t mean WSJ and NYT will.
NYT is essentially free if you are smart enough to run more than one browser which is a pretty low bar. Therefore the Philadelphia Inquirer can’t charge, and I won’t pay for the WSJ. If the top 20 papers were bundled and the only way I could get access was to pay. I would pay.
+ infinity!Holy cow Phil, the switchboard is on fire.Rupert on line 1, I think you know why he is calling.Line 2 has Prof C wanting to co-write The Monopolist’s Dilemma – he’s thinking its about pricing against substitutes without services component in restricted revenue environments.Line 3 is Warren Buffet – it sounds like you have touched a nerve there. The Oracle is talking about making sure you keep your mouth shut (he really is old, he’s using some language here that I am unfamiliar with, I think you would call it Longshoreman-ish). Anyhow, i caught “National buys are under attack from the web, but not the local retail ad base in a small market” & something about having a ‘(expletive) Blue Hen (deleted) that Golden Egg.’Nice.
You guys probably have the ingredients for this concoction at home. Hot ginger lemonade: drink and feel better!http://nyti.ms/XF7NRe
I *like* the bourbon cure…
manucka 20 + honey
Quercetin with Bromelain — which you can get at Whole Foods, GNC, or other health foods stores — has been a magic cure for me whenever I start feeling under the weather.Feel better soon!
two good natural anti-inflamatories
I’m right there with you in sick land. The only reason why I’m not asleep right now is because my sniffles jolt me awake every minute or so. That, and work to do. :o)Here’s to getting better!
Thanks for posting, Fred! I’ve been following Boxee for years and was really psyched Avner agreed to be on with me. I would love to have you come on and do a similar video.
what’s the topic?
The future. Through your eyes.
Let me expand on that. Through your portfolio companies you’re making educated bets about what the future will look like. I’d love to understand your latest thinking on how that vision comes together in your head, and maybe what’s next. I bet a lot of other people would, too.
And if it doesn’t appeal to you to talk about the future through your companies, I’d love to talk about the current state of VC. You’ve said for years there’s too much money in it, or it’s imbalanced. Seems like the industry’s finally catching up to you. So how is that changing what you do?
We can do better than that. I kind of like having this discussion in public but happy to take it to email if you’d prefer
Well, my third proffer was going to be: “What do you want to talk about?” Let’s do it in public!
I want to talk about Bitcoin, Google Glass, machine learning as a service, or Regulation 2.0Let’s see what the AVC folks think is most interesting
In some bizarre way, all those topics seem interrelated. Someday you’re going to transfer Bitcoin to the person you’re looking at through your Google glass, because an API is going to tell it that you owe them money. And the gov will find a way to be in the middle.I’m being glib. But they go together. Still, we need one to frame everything around. Regulation 2.0 seems right to me. I’d love to hear from the AVC community. And I’d be happy to set aside a block of tickets for them to attend. (They are free, but the studio only holds about 25, so it’s first come first serve.)
Aha. You got me back to the future through my glasses. As they say around here “well played”I’m game. Might want to reshape the topic a bit but we are getting to somewhere good.Let’s take this offline and get a date scheduled
Ha – skillfully done, Paul.
Ro, you’re definitely invited to attend. Will let you know when we have a date. 🙂 Hope all is well!
Definitely, from my perspective, Regulation 2.0 (not just the state directly, but also private organizations that the government has ceded regulatory power to like professional licensing organization).Lots of interesting tradeoffs to be made, lots of strong opinions about asking permission or begging forgiveness, but if you can figure out how to navigate the tradeoffs, it really opens up disruption of the real world and many stagnant industries with trillions of dollars at stake.USV’s and AVC’s next mega-thesis!
“Machine learning as a service” would be fascinating.
I know. See below.
Thanks for sharing, Fred. I’m still sticking it out in the cable industry and I’m glad to see Avner and Boxee are looking to us as potential partners. Roku is really reaching out to the industry.Programming costs are driving people to our broadband solutions daily, but the big ones are still driving people to cable to see their live sports and access to on demand content that’s much easier to access than online.
Fred, what is your thoughts on Aereo? I used it to watch the NFC Championship game while at a Starbucks (I had just moved to DUMBO and was not set up yet) and I thought it worked fabulously.Also: feel better!
I love it as a user. But I don’t like to fund lawsuits. There are plenty of investors who do.
So you’re saying that I shouldn’t send you an investor deck of my idea for a two-sided marketplace for illegal drug and firearm importation?I guess I’ll just have to stick to sports.
That’s called Tor+bitcoin+silk roadAll of which I am fascinated by and repulsed by at the same time
there is some bad stuff being sold there
marketplaces for things you don’t like will migrate to places unseen. That doesnt mean they are bad per say (though I dislike drugs, I can’t call them bad – the difference between poison and medicine is sort of minute and arbitrary)
guns, prostitution, heroin. i think these things are bad.
Wait, what about the illegal torrenting of those drugs and firearms? You’re not being very inventive.
That was a stellar interview. Fred, I think you slightly under-sold it in your intro, maybe because you were under the weather 🙂 It’s more than insightful. He touches on all of the issues and factors facing the moving sands in the treacherous TV/content broadcast ecosystem. Not only does he have a front row seat into the industry, he’s right in there dancing with the big boys and doing a wonderful job at not stepping on anyone’s toes, rather totally serving the end-user.Kudos to a startup CEO like Avner who not only has to figure out how to run his startup, but also has to figure out all of the industry dynamics around him, because this whole industry is like a chess game. Players make slow moves, but each move is well measured and could affect a bunch of things around it.The more content goes online, the better for Boxee. More places are funding content, and that new content isn’t all going to cable TV. Even Yahoo! has been funding short movies and stories that are only available online.Yes, cord cutting is a content driven decision, and it is so liberating whether it’s for a telephone line or a TV cable.The TV sensing who is in the room is kind of creepy,…but let’s see what happens there.Brilliant interview!Everybody who didn’t watch it, WATCH IT. It is about the future of TV, and we all need to understand it.
Hi, Paul, the journalist who conducted the interview, here. Just want to say thanks for the very kind words. Avner was indeed very, very insightful.
In my cue.Used to know Boxee and the space well.Big fan of both Boxee and Avner.This is a world though where you are dancing with the giants and hard not to get crushed. Really tough space.Your comments has enthused me to want to look at it sooner.
I know far less than you do about the TV space,- but this interview helped me better understand the lay of the land.
We were having the conversation about bundling recently in connection, I think, with Fred’s post about HBO Go, so I though I would point out what might be an important development yesterday. Namely, Cablevision filed suit against Viacom, apparently for bundling its little-watched channels with its “must-have” channels and forcing them on Cablevision.It’s not absolutely clear what is going on here since the Complaint was filed under seal. But until very very recently, Cablevision was lined up hip to hip defending consumer lawsuits challenging bundling.So, depending on what is in the Complaint, this might mean those companies that are more distributors than content producers may be breaking against the bundling model because they are starting to see cord cutting hurt them as monthly bills squeeze customers too much.Or, alternatively, perhaps Cablevision (thinks it) has found a clever way to argue that it is not ok for the content producer to force distributors to purchase bundled content but it is ok for the content roducer/distributor to force bundling on the end viewer.It will be interesting to see when the Complaint is released in some redacted form.
all I can say is mazel tov. This suit is long time coming because of unsusainable prives. Kudos to cablevision
I don’t like forced bundling any more than the next guy, but why shouldn’t Viacom be able to bundle its content? From a legal/liberty perspective, Viacom owns 3 pieces of content, it only wants to sell it in a package. It can exercise its property rights.How is it any different if a startup approaches you and says, “I want to hire you 2 days a week,” but you want a “full-time job”, i.e. 5 days a week (really 8 days a week 🙂 ). Should you not have the right to bundle your labour?It might not be wise, if you have multiple great offers for 2-days and 3-days, and very few offers for full-time, but that is your choice, isn’t it?
thanks for posting… i am planning on cutting the cord in the coming week(s) to save $$/ we don’t watch much tv… havent really researched boxee yet..can any of you experts give me some advice? apple tv seems to be an early leader because beside netflix/ hulu, they also have a scalable NBA package which seems pretty smart (it appears MLB does as well but I’m not a big baseballer). Wondering if other sports/ networks will be jumping into that model?any suggestions/ advice would be awesome.
Apple TV is quite good, but isn’t very hackable if you’re in to that kind of thing. For ‘alternatively’ sourced content there is Handbrake which has some nice transcoding presets for Apple TV.
This is a great interview. Boxee seems to change its goals frequently, It’s nice to see Avner so focused. Hopefully he takes part of that focus and listens to his users’ feedback.
Feel better, Fred.Look forward to watching this — when I’m not having a “phone day.”
Avner is so declarative and clear when he speaks.As someone loaded up with too many adjectives, adverbs and creative means by which to punctuate my ‘Native English’ language, I look to English-as-a-Second-Language colleagues and envy their parsimonious use of language and ability to use as few words as possible.I was most impressed by Avner’s ability to speak calmly amidst what must be a storm of emotion, ‘Incumbent vs Upstart’ and other disruptive-anxiety feelings that must swirl around Boxee’s future. Great share and I hope you feel better.
Yup. That’s what impressed me as well about him.He sees clarity through the fog, which is an amazing virtue to have as an entrepreneur.Yes, foreign metaphors spoken in English are powerful descriptors. I’m guilty of that sometimes.
Feel Better Fred. I have a former client that believes hot water and lemon will cure the under the weather on rainy days feeling
It was disgusting day in the NYC area today and a good day to lay low.Take care.
FEEL BETTER, FRED!EAT BACON UNTIL GERMS GIVE UP AND LEAVE.
Trying to watch on my Nexus 7android does not support this plugin
Hot Toddy…an age old elixir, will do ya good.
And the title is “thinking outside the ‘box’ with Boxee”- can’t think of a more fitting pun than that.
The biggest challenge driving the entertainment business today is sports rights. Today, he who has sports sights has a profound influence on entertainment.Live sports powers a bundle that has a guaranteed base of at least 50% of the US population (in the DOWNSIDE case).The result is selling entertainment content at a guarantee of $1/subscriber across 50% of the US is more attractive (and less risky) than trying to get $10/subscriber for 5% of the US……especially when there is a high likelihood that the actual results will be $10/sub for 1% of the US (sounds like venture capital, right?).
I worry that Boxee is a little bit in trouble. I don’t think saving shows to the Cloud is relevant anymore because you can find them online from anywhere. Having a Nexflix app is hardly a value proposition. These days the only devices Netflix is not available are probably washing machines. I don’t want to be restricted to 5 channels, either. I feel like Boxee is waiting for a change in the industry to happen but they are not themselves driving that change. They are more like hoping that it happens. And what that change might be is not very clear to me either.Obviously, I don’t have access to sales figures or anything, they might be selling millions of these boxes for all I know, but my guess is they are not.Am I the only one thinking like this here?