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In October of 2007, Netflix CEO Reed Hasting spoke to analysts about convergence and digital movie distribution.   In the remarks, he defined three long term goals for the company: “to expand the content [Netflix] offers online.”  “To make it inexpensive and easy for consumers to view that content on the television,” and lastly, “to understand what the financial model for the hybrid service will be in the long term.”  Throughout 2008, the company made progress on all three, especially one and two.  Heading into 2009, the company looks poised to keep pushing forward.

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If you missed the headlines, Warner Music Group, the first of the Big 4 record labels to partner with YouTube has pulled off the site.  Accounts and press releases differ over culpability – whether YouTube bailed or Warner Music punted – but the material fact is the same.  From Bad Company to the B-52’s, James Blunt to Jane’s Addiction, the videos are down.  The reason is simple: money.

For several months, the two companies have been trying to renegotiate their expired license agreement.   Under the prior terms, its reported that Warner received either a fraction of a cent per video play or a share of any ad revenue generated alongside their content, whichever was greater. 

Neither, it turns out, was great enough. According to the New York Times, in 2008 less than one percent of Warner’s $639m in digital revenues came from YouTube; that despite the fact that music videos are among the most watched content on the site. 

According to Ad Age “Forty-seven of the top 100 most-watched creators on YouTube are musicians or labels.”

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Last April, in a surprise announcement, Lions Gate, Viacom (Paramount) and MGM announced plans to launch their own, then unnamed, premium cable channel and video on demand service.  Soon after, Business Week reported former Showtime exec Mark Greenberg was set to take the helm.  Besides those two tidbits of information, there’s been speculation (including talk of Blockbuster joining the group) but limited detail.  In November, a 10Q filing revealed the first small peek into project, specifically, detail on some of its costs.  Now, another tiny piece of info has snuck out: its name.

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In the U.S. NBC Universal and News Corp’s joint video on demand service, Hulu, has proven to be a big success, drawing both audience (Quantcast data) and advertisers.  In the U.K., BBC Worldwide, ITV and Channel 4 had hoped to follow a similar path with their own web service, Project Kangaroo (also known as UKVOD).  Their route now looks complicated, if not potentially impassable.

Wednesday, after a prolonged review, the U.K antitrust authority, the Competition Commission (“CC”) issued a provisional finding that the joint venture would unfairly restrict competition. Specifically, the CC believes, as currently defined, Project Kangaroo will lessen essential competition in the supply of UK TV Video on Demand programming.

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Raising money in a tightening venture climate can depend on who you know as much as what you’re company is doing.  Based on these factors, set top box developer Sezmi may be in a pretty good place.    The company aiming to potentially reshape television distribution counts among its board members a past president of the National Venture Capital Association, a prior president of Bell Labs and another executive whose resume credits include roles as CEO of NBC and Sony BMG music.

According to regulatory filings reported at PEHub, since August, the company has drawn $28m out of a possible $50m in Series C financing.  Prior investors including Morgenthaler Ventures and Omni Capital Group both participated.

UPDATE Nov. 25: Sezmi has confirmed the financing and issued a press release. A total of $33m was reported. Click to Read More

If you want to irritate consumers, one way is to try and interfere heavy handedly with how they can use the product’s they’ve purchased.  An even more surefire way to rankle them and draw their wrath is to fail to disclose your  practices or cover them up.   

Sony BMG found this out the hard way with their now infamous “root kit”  music DRM fiasco in 2005. That violation of consumer trust brought them a tremendous amount of bad PR and plenty of time in front of a judge before the lawsuits were settled.  Electronic Arts currently, though to a lesser degree, is dealing with a similar parade of customer backlash thanks to their own poor disclosure over DRM. EA’s facing down a handful of class action lawsuits.

Now, it seems, Apple and other PC vendors could, if they’re not careful, get a foot partially snagged in a similar but far less toothy version of the same kind of bear trap too.

According to reports from Wired and Ars Technica, new Macbook computers have quietly been gifted a restrictive anti piracy technology called High Bandwidth Digital Content Protection (HDCP) (or a related system called Display Port Content Protection (DPCP)). These technologies are DRM systems that add a layer of encryption to the distribution of some content between its source (your computer) and certain peripherals and displays (your external monitor).

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Chalk up another Web 1.0 movie delivery service to the fire-sale files.  Last year, it was Blockbuster stepping in to salvage Movielink for pennies on the dollar, $6.6m  to be precise.  This year it’s Sonic Solutions sweeping up CinemaNow for even less.

Announced Thursday, the media authoring software company known as a leading maker of DVD and Blu Ray encoding tools is buying the assets and assuming the liabilities of the movie download service for a reported $3m.

Cinema Now was founded in 1999 to offer online movie rentals.  As studios became more accepting of Internet delivery mechanisms, downloadable sales were added to the mix.    CinemaNow was the first website to offer pay-per-view movies from major studios. They were also the first broadband distributor of HD content.

Investors including Menlo Ventures, Cisco, Transcosmos and Lions Gate fueled the company with more than $40m in funding.  A fifth round totaling more than $20m was closed in 2006. 

The investors money helped build both the delivery mechanism and a catalog of TV and film titles more than 6,000 strong but it wasn’t enough to buy a sizable audience.  Consumers never really embraced the service.  Click to Read More