Branded and Video Advertising Key to Future

Online ad spending will expand 28.6% this year, according to eMarketer CEO Geoff Ramsey. Next year, digital ad spending will increase 32%--amounting to nearly $28.8 billion.

Web videos are watched by 72% of Web users--or 135 million people--every month.
Ad spending around them is set to hit $775 million this year, and $1.3 billion by next year.

Asterpix Says Forget Hypertext, Think Hypervideo

One of the great things about the Web is the ability to link to a Web page, or a part of a Web page, from anywhere. Asterpix, a San Jose, Calif.-based startup, wants to bring that same ease of use to the world of video. The company’s technology -– which it calls hypervideo — gives authors the ability to link directly to objects displayed inside video clips.

These so called hotspots track the “objects” linked throughout the entire video clip. So for instance, when explaining the Coverflow features of the iPhone, one can link directly to the relevant point in the video right from the blog post. Hotspots are designated with blinking circles; click on them in the video to access the author’s notes, tags and target links.

The service doesn’t require you to download separate software on the desktop. Simply sign up and embed the videos as you would from any video source such as YouTube, MetaCafe, or Blip. Asterpix adds a separate invisible layer on top of the video that contains all the metadata (aka relevant linking information). Then just go ahead and drop it in your blog or on your MySpace page.

Asterpix is less than a year old and is backed by New Enterprise Associates; so far it’s raised $4 million in one round of financing. CEO Nat Kausik, who in his past life created a handful of successful networking-related startups, told us that in order to gain traction, the company will initially adopt a widget strategy. He feels that MySpace and other social networks are going to be fertile ground for his service. He was also candid enough to say that the business model of this company is evolving.

Asterpix’s technology could have big implications for online video-related advertising as it would allow advertisers to embed hotspots around products of high commercial value. For instance, Le Bron James videos could link his shoes to Nike (NKE) stores, or Tiger Woods clips could help push golf clubs or even apparel.

“Every object is now clickable and searchable,” says Kausik. Google AdWords, for instance can drive traffic right to the relevant spot in a video clip, giving people a sense of what they are buying. “We hope this will help unlock the monetization of video.”

Among the existing players in this space, Eline Technologies of Vancouver, B.C., is doing brisk business with its VideoClix software. We also recently covered Delivery Agent. Others, such as Tandberg and Microsoft (MSFT), are working on their own hypervideo technologies — all in hope of unlocking the ad potential of online video.

$15 Million For VideoEgg

San Francisco-based VideoEgg has raised $15 million in additional funding in a Series D round from existing investors WPP, Maveron, and August Capital, and led by Focus Ventures.
The video distribution and advertising company in April said it had raised an undisclosed amount from WPP. That was on top of a $12 million round raised last September from Maveron, August Capital, and First Round Partners, and nearly $5 million from the latter two firms nine months before that — which means that VideoEgg, since it was founded in 2005, has raised more than $32 million.

P2P responsible for as much as 90 percent of all 'Net traffic

P2P traffic is dominating the Internet these days, according to a new survey from ipoque, a German traffic management and analysis firm. ipoque's "preliminary results" show that P2P applications account from anywhere between 50 percent and 90 percent of all Internet traffic. The final survey results are not yet available and will presented at the Emerging Technology Conference at MIT later this month.
Leading the way is BitTorrent, which has surpassed eDonkey as the P2P protocol of choice. During the last year, BitTorrent accounted for between 50 percent to 75 percent of all P2P traffic, with eDonkey coming in second at between 5 percent and 50 percent. The wide variance in the figures is due to local preference, according to ipoque: in some parts of the world, eDonkey still reigns supreme when it comes to P2P traffic.
ipoque's data appears at odds with that of Ellacoya Networks, a company that makes deep packet inspection gear. The company said in June (see below in this post) that P2P traffic accounts for just 37 percent of North American traffic, compared with 46 percent for HTTP traffic. Of that 46 percent, over a third consisted of streaming video, à la YouTube.
Despite the differences in how the traffic is broken out, ipoque and Ellacoya's data both illustrate the degree to which users' desire for video is affecting the Internet. It seems safe to assume that much of the P2P traffic reported by both firms is video. Combine that with the surge in traffic to YouTube and other video sites, as well as the official upcoming launch of Joost, and it paints a picture that some ISPs will find disturbing: demand for high-bandwidth applications like video is increasing. That's why ISPs are so interested in deep packet inspection and other traffic-shaping tools.

********************************

Ellacoya Networks, makers of deep packet inspection gear for carriers, has pulled together some statistics on one million broadband users in North America, and its findings show that HTTP traffic accounts for 46 percent of all broadband traffic. P2P applications now account for only 37 percent.

Chalk it up to YouTube and other Internet video sharing sites. The surge in HTTP traffic is largely a surge in the use of streaming media, mostly video.
Breaking down the HTTP traffic, Ellacoya says that only 45 percent is used to pull down traditional web pages with text and images. The rest is mostly made up of streaming video (36 percent) and streaming audio (five percent). YouTube alone has grown so big that it now accounts for 20 percent of all HTTP traffic, or more than half of all HTTP streaming video.
Looking over all the numbers, one of the most surprising result is the continued success of NNTP (newsgroups) traffic, which still accounts for nine percent of the total. Clearly, newsgroup discussions (and, ahem, binaries) are still big business.
The data may provide some ammunition for companies that favor traffic shaping on their networks. Between P2P, newsgroups, and streaming HTTP video traffic, the vast majority of Internet traffic is non-critical (i.e., no one's going to die or lose $20 million if they don't download a YouTube clip or a new song in under a minute). Networks that want to ensure priority transmission of VoIP calls, traditional HTTP web browsing, medical imaging, etc., have a strong incentive to throttle back that flood of non-critical traffic when the network is experiencing heavy loads. That could bring them into conflict with proponents of strict network neutrality, though, who don't want to see any sort of packet prioritization.

Thomson Acquires Distributor

Thomson SA has acquired SyncCast Corp., a wholesale distributor of online movies, music and other entertainment, as part of an effort to boost its own digital-services businesses. The price wasn't disclosed.
Through its Technicolor services division, Thomson is trying to win more business from studios and distribution companies as they increasingly move toward digitization of key processes such as creating masters and delivery.
Thomson, of France, has been building an end-to-end system to cut the time and steps required to prepare movies, television shows and other content for distribution. Using the company's new arrangement, preparing a movie for TV, for example -- including changing proportions to fit a TV screen, adjusting the resolution, and making the appropriate number of copies -- might take 25 hours, compared with 100 hours without the integrated digital processes it has put in place.
The new system, which officially begins today, "allows studios to distribute their content faster," says Chris Carey, chief technology officer at Technicolor. Acquiring SyncCast, Anaheim, Calif., which delivers content on behalf of online retailers such as Microsoft Corp.'s Xbox Live Video Marketplace, will help Technicolor bolster its offerings in consumer-targeted businesses.

Ad-Supported Music Service SpiralFrog’s Financials: Losses; Financing Needed; Plans

Ad-supported online music service SpiralFrog, one of 2006’s candidate’s for most-hyped new product, and still half-vaporware (it has launched a closed beta), has filed its detailed financial with SEC.

On the financial side, the company has already shelled millions to license materials from Universal Music Group, according insider reports. In the filing, the company warned that buy-in from other majors is hardly guaranteed. "In the event that we are unable to enter into agreements with most of the other major and independent record labels, it is unlikely that we will be able to attract and keep users to our site," the company stated. SpiralFrog did not mention heavy, upfront licensing costs frequently demanded by majors, though financial aspects remain daunting.

In the filing, the company disclosed losses of near $12 million over the two and one-half years, as well as significant costs ahead. "We anticipate that we will require up to approximately $18 million to fund our continued operations for the next twelve months," the group disclosed.

SEC Filing

ProSiebenSat Buys Remaining Stake In German Video Sharing Site MyVideo For $26 Million

ProSiebenSat.1 Media, Germany’s largest commercial TV broadcaster, has bought 70 percent of MyVideo.de, a German video sharing site that it already had a 30 percent stake in, thereby buying out the site completely. The 70 percent stake cost the company about $26 million...this follows the initial investment it did last year.

Video Funding: Dailymotion Gets $34M

PARIS -- Dailymotion SA has secured $34 million in venture-capital funding that will allow the French start-up to expand its video-sharing Web site as it competes against larger rival YouTube, owned by Google Inc.
The company's new funds come from venture-capital firms Advent Venture Partners LLP of London and AGF Private Equity of Paris, a division of Allianz AG. Dailymotion already had raised about $9.5 million in October from venture firms Atlas Venture and Paris-based Partech International.

In April, Dailymotion had 4.7 million unique video streamers in the U.S., while Metacafe had 3.7 million. By contrast, Google sites (including YouTube) had 131.9 million unique video streamers in May.

News Corp. and NBC Universal name joint venture

News Corp. and NBC Universal have revealed the name of their new online video venture — the so-called YouTube killer, which Google had already dubbed Clown Co., will officially be called “Hulu“.
“Hulu” will launch as a private beta in October 2007, however, interested users are able to sign-up for invitation from today.