Justin.tv Media econ Project

Justin.tv Business Analysis and Recommendations Scot Gurney Jesse Ricke Mary Trishman Media Economics Fall 2010

Justin.tv: Company Info Justin.tv is an online community for people to broadcast, watch and interact using live video. Founded in 2006, Justin.tvstarted out as a 24/7 live stream of Justin Kan, who broadcast via a camera attached to his hat. The web reality show became so popular that Kan and his partners realized there was a new business opportunity for a product that let others broadcast the same way. With more than 41 million visitors per month (self-reported) and over 500,000 channels broadcasting live video, Justin.tv enables users to create real-time connections with others around the world. Headquartered in San Francisco, Justin.tv is funded by Y Combinator, Alsop-Louie Partners and Draper Associates.

Justin.tv: Company Info Justin.tv’s live video platform scales to support massive audiences by measuring demand in real-time and intelligently replicating streams to additional servers to meet that demand. Constructed by a team of MIT and Yale graduates, the Justin.tv platform pushes more than 177 Gbps of video at peak usage – the equivalent of 16,946 standard DVDs per hour. Justin.tv is free to users, with an option to upgrade to a “Pro” account. This account costs $9.99 per month, or a discounted $25.99 for three months. Users can view and/or broadcast streams from a variety of equipment, including the recently introduced mobile applications for Droid and iPhone. Released in Fall of 2010, the mobile apps now account for around 20% of the live streams on the site.

Justin.tv: Company Info Integration with Facebook and Twitter, among other sites, has allowed Justin.tv to grow its audience exponentially. Sharing their API has also allowed other programming outlets to create new applications for Justin.tv’s streams, such as Conduit’s new browser application that allows users to view video from non-Justin.tv-integrated sites without having to leave the site. Justin.tv has expanded throughout its three years of operation, but there are still many opportunities for growth. In this presentation, we submit our analysis of Justin.tv’s business model and suggest methods for improvement.

Justin.tv: Value Chain Justin.tv operates within a newly created industry that streams live video online. It is one of a handful of companies, established within the last five years, which provide the technology for users to stream broadcasts that they create over its website and through their mobile devices. The industry is evolving, but competitors are moving to shift their focus from user generated to premium content to increase streams of revenue, while Justin.tv remains committed to both improving its technology to stream more and better user generated content and to strengthening its hold on that position on the industry value chain. The following slides delineate Justin.tv’s specific value chain.

Justin.tv: Value Chain Text template

Justin.tv: Value Chain Content Acquisition and Development Content is acquired to stream to viewers from: (1) Justin.tv users, in a cyclical arrangement, where users are broadcasters and broadcasters are users, that ultimately leads to building stronger communities within the Justin.tv system; (2) businesses, non-profits and others who provide content designed to promote a new business, launch a product, or a draw support for a platform; (3) organizations and businesses who provide content to promote or support an event or an industry, and (4); outside broadcasters, who include non-users that provide content on an occasional or discrete basis. For example, the White House recently used the system to stream a speech Biden made in Israel. Interactive Content: A chat component that runs concurrent with live streams allows users to interact in real time during broadcasts. Chat streams provide interactive content. Ads: Revenues for Justin.tv are advertising based. Ads combine with live streams and chat and are an integral part of the viewing experience. They are the third content component.

Justin.tv: Value Chain Packaging and Production Web Systems: Justin.tv has a strong engineering focus, with eighty percent of the staff working on programming and systems to make Justin.tv efficient, reliable, and easy to use. Until recently, the entire engineering effort has been on developing systems and applications for use on the website. Currently, all users need are a webcam and microphone, a computer with DSL or cable internet connection, and a Justin.tv account, to create and stream live broadcasts on Justin.tv. Mobile Systems: Justin.tv expanded its engineering reach beyond its web applications and created mobile applications for Android and the Apple iPhone and iPod Touch, which it recently released. The company sees mobile as an area for explosive growth and is working to engineer applications for other mobile devices and extend its reach further to grow its user base.

Justin.tv: Value Chain Packaging and Production (continued) User Tags: The system allows users to provide tags for streams that they broadcast, adding value to packaging by making search and retrieval from archived material more useful and efficient. Audience Package: Limited user statistics are collected to create audience packages used to sell to advertisers with an interest in reaching people in the demographics represented by Justin.tv users. Eighteen to thirty-four year old males are Justin.tv’s strongest demographic.

Justin.tv: Value Chain Distribution Web Users: The web is the main means of distribution for Justin.tv. Anybody with a computer and a DSL or cable internet connection can access the site, view broadcasts, and, if they are members, participate in chat. Revenues are ad-based and membership is free, although there are “Pro” packages available for ad-free viewing. Mobile Users: Mobile is a new means of distribution, and is responsible for a 20 percent increase in user base growth, within two months of the release of applications for Android and iPhone and iPod Touch. Mobile distribution represents a key area for growth and the company plans continued development to tap this potential. Access is easy and membership is free.

Justin.tv: Value Chain Distribution (continued) Social Network integration: There are applications available to web and mobile users that tie in with user’s Facebook, Twitter, and other social networking accounts. The tie in allows users to embed streams on their social network pages, invite friends to view, comment, and chat. They extend the distribution reach for Justin.tv and encourage growth of the user base and a rapid rate. Ad Sales: Audience packages are distributed to advertisers to attract those looking to reach viewers in the various demographic groups that Justin.tv serves.

Justin.tv: Business Model A privately held company, the leadership at Justin.tv have reported that they have no plans to go public. As such, there is no publicly available revenue information beyond the initial investment information. Investors Justin.tv received seed funding from Y Combinator, a venture fund which focuses on seed investments to startup companies. It offers financing as well as business consulting and networking opportunities for tech startups. According to its initial SEC filing (the only one publicly available), Justin.tv began operation with $50,000 in capital, which includes investments from Y Combinator, Alsop Louie and Draper Associates. As of October 2010, Justin.tv is reported to be staked with $7.2 million in venture capital funding.

Justin.tv: Business Model Revenue Model Justin.tv is largely criticized for not having a clear and effective business plan. With such an engineer-heavy staff, little focus is placed on cultivating relationships with advertisers. Advertising: Justin.tv’s revenue is primarily ad-based. They currently have a one-person ad sales team. In a recent interview, CEO Michael Seibel stated that bandwidth storage the company less than $0.036 per user hour, compared to an estimated $0.05 in advertising revenue per user hour. Subscription Fees: Justin.tv is free to users, with an option to upgrade to a “Pro” account for ad-free viewing. This account costs $9.99 per month, or a discounted $25.99 for three months. Proposed Pay-Per-View Content: Justin.tv announced in 2009 that they planned to enact pay-per-view content, wherein individual users would be able to charge viewers. Justin.tv would keep 30% of the revenue. This has not yet come to fruition.

Justin.tv: Business Model Sales Model Justin.tv employs on staff member to manage ad sales. On the Justin.tv website, the following statistics are published to attract advertisers: Audience Demographics: Usage Statistics: 1 new broadcast starts on Justin.tv each second 50 million hours of video watched each month 300 million videos watched each month 100 million chat messages each month Justin.tv recently self-reported 41 million unique visitors each month.

Justin.tv: Business Model Statistics In addition to the statistics used to promote ad sales, other site statistics compiled by third-party companies are available. In an interview, Justin Kan admitted that the site’s statistic tracking is not optimum. The third-party site Compete lists the following statistics for Justin.tv’s main domain in the month of October: Unique Visitors 2.23 million (up 2.85% since September) Visits 11.93 million (up 3.05% since September) (Note: these analytics are for the main justin.tv domain only. Viewers who access their channels without going to the main site first are not included in this count.) Justin.tv self-reported the following statistics for the year 2007, the first full year of operation. They have not officially reported similar statistics on their site since then: 85,335,630 Pageviews 4,823,411 Absolute unique visitors 57 Years of archives 28,106 Total channels 356,197 Registered users 73,754 User created video clips

Justin.tv: SWOT Analysis Strengths Strong engineering base: Justin.tv is focused on building products that are more useful and easier to use to drive viewership leading to growth. The founders of the company are all recent graduates from Yale, largely with technical degrees. Eighty percent of the company’s twenty five employees work in building systems and product development. In an industry that is still new, with potentials that have yet to be defined, the strong engineering base at Justin.tv provides the company with the skills to respond to opportunities and the foundation for growing the user base and success. Strongly positioned early in life of new industry: Justin.tv was one of the first companies to recognize the potential opportunities that live stream broadcasting offered. Founded in October of 2006, Justin.tv was preceded by competitors, Stickam in 2005 and UStream earlier in 2006, and closely followed by Kyte.tv later that year and by LiveStream in 2007. Justin.tv grew its audience share through the attention it attracted by broadcasting the life of founder, Justin Kan. Although the definition and direction of the business is still not clearly defined, the company is positioned to take advantage of opportunities as they emerge.

Justin.tv: SWOT Analysis Strengths (continued) Rapidly growing user base: Founded in October of 2006, Justin.tv began with one broadcaster, founder Justin Kan, who carried a portable camera pack designed by co-founder Kyle Vogt and began broadcasting his life, 24/7. The stunt attracted the attention of the media and drew an audience. Justin.tv opened the platform up to viewers, early in 2007, to create their own broadcasts to stream live on the site. The company reported 40,000 unique visitors by May in 2007. In 2008, they reported more than 4 million unique visitors for the full year of 2007. Growing ad revenue: Internet advertising revenues in general increased 11.3% for the first half of 2010 with rich media and digital video revenues retaining an 11% share of all spending. The revenue model at Justin.tv is largely advertising-based, although revenue is not publicly available to analyze the specific growth at Justin.tv. With a rapidly growing user base to attract advertisers who are increasing their spending in the medium, Justin.tv is approaching profitability.

Justin.tv: SWOT Analysis Strengths (continued) Y Combinator Support: Y Combinator provides seed capital for start-ups in the Silicon Valley. In addition to funding, the company works with start-ups to set up, structure, and manage the business, provides opportunities to show their products to select investors, and sponsors events where founders learn from and network with other Y Combinator alumni. Y Combinator has been working with Justin.tv from its start and has enabled it to grow from an idea to an operation with the promise of becoming a self-sustaining business. Social promotion: The chat feature offered by Justin.tv enables users to engage other users while viewing streams in real time. Justin.tv also offers tie-ins with Facebook, MySpace, and other social media sites enabling users to embed streams there to share with friends off-site. Both features provide users with opportunities to make social connections while using the site and the social connections extend Justin.tv’s reach beyond the system and the opportunity to grow its user base more quickly.

Justin.tv: SWOT Analysis Weaknesses Small sales team and administrative staff: The revenue model at Justin.tv is largely advertising-based with one person currently handling all ad-trafficking and sales. A second employee, responsible for bringing in business-to-business offerings and large-scale events, left recently when the company made a strategic decision to shift its focus to consumer-driven live streaming. In addition, there are two administrative support people supporting a twenty-four person staff. With revenue streams primarily dependent of advertising and plans to grow the user base quickly, sales and administrative coverage may prove insufficient. Weak statistical training: Justin.tv offers very limited statistical data about viewers to broadcasters so they are not able to track who is following their broadcasts. Management is aware of the limitation and is looking for ways to correct it.

Justin.tv: SWOT Analysis Weaknesses (continued) Competition within a growing industry: Justin.tv faces strong competition for position in a new industry from UStream, LiveStream, Stickam, Byte.tv, and other sites. Claims to the largest number of unique visitors vary by service and report, but UStream and LiveStream appear neck in neck with Justin.tv for the top spot. While UStream and LiveStream are shifting some of their focus to premium content to generate additional streams of revenue, Justin.tv remains committed the primarily ad-based revenue model and broadcasting content generated by users. All sites continue to offer users the opportunity to broadcast content they create. Cyclical pattern of ad revenue: There is a cyclical pattern for ad revenues each month where revenues are weak at the start of the month, when advertisers are cautious, and strong at the end of the month, when advertisers dump their budgets. The pattern is bad for cash flows and stability, particularly for a start-up.

Justin.tv: SWOT Analysis Weaknesses (continued) No extended archiving: Past broadcasts are saved as a clip for seven days and deleted unless users specifically select them to be permanently saved. Archived material represents an opportunity for additional revenue streams that is compromised when materials are deleted. Inconsistent stream quality: The quality of content on Justin.tv is inconsistent. Streams are ranked and placed on the opening page of the site by number of viewers. Quality is not a factor. Poor quality streams, particularly if they are prominently placed, limit the ability of Justin.tv to keep the interest of visitors to the site and who may ultimately become registered users.

Justin.tv: SWOT Analysis Opportunities Mobile applications: Mobile streaming applications represent a substantial opportunity for growth for Justin.tv. The number of broadcasts on Justin.tv has jumped twenty percent within two months of the company’s release of applications for Android, and iPhone, and iPod Touch. Live streams created with mobile applications tend to be shorter but broadcasters are making better use of the social features that Justin.tv has built into the applications. Strategic partnering: Justin.tv partnered recently with G4tv.com to stream live coverage of E3, the gaming industry’s annual gathering. They have also partnered with Weather Decision Technologies to offer streams of tornados and other extreme weather, and partnered with TechZulu to promote Southern California’s technology industry. Additional partnerships for content and promotion provide opportunities for Justin.tv to provide streams of particular interest to users, to position the company as the go to site for information about specific topics or promotions for particular products, and to improve the quality of content offered at the site. Other partnerships forged to share and expand technology could provide operating efficiencies and are worth exploring as well.

Justin.tv: SWOT Analysis Opportunities (continued) Live stream viewing increase: According to statistics recently released by comScore, the amount of time American audiences spend viewing live video streams online increased 648 percent since last year. Live stream sites are known to hold viewers longer then static video sites and are 72 percent more likely to deliver the 18-34 year old male demographic than other sites. Justin.tv reports its overall growth rate at 1,800 percent according to internal Google Analytics reporting. Most of the growth is generated outside of the United States. The impressive rate of growth places Justin.tv in a stronger position when dealing with advertisers and opportunities to offer an international audience to advertisers who market products globally.

Justin.tv: SWOT Analysis Opportunities (continued) Expand user package options: Increase number and varied price levels of user options like ad removal, favorite videos, suggest related streams. The ad revenue stream through the course of a month is inconsistent creating cash flow problems. The offer of subscription services, tiered to remove ads or recommend streams, would provide Justin.tv with an additional revenue stream from users that is steady and would reduce the threat posed by inconsistent cash flows Increase user statistical/demographical analysis: Justin.tv is weak in its collection of statistical data regarding users. With better data, the company could offer greater value to advertisers by aggregating more closely defined groups of users and targeting ads based on a group’s demographics and related interests.

Justin.tv: SWOT Analysis Threats Ineffective self-policing - copyright issues: Justin.tv and its live stream competitors are starting to face challenges from copyright owners regarding pirated content offered on their sites. A lawsuit was filed recently against Justin.tv and competitor, UStream, by the Ultimate Fighting Championships for streaming UFC pay-per-view events to viewers on their sites. The league is seeking the IP addresses of the users who made the content available citing lost revenues approaching $4 million dollars. Justin.tv complies with the Digital Millennium Copyright Act takedown notices and has developed fingerprinting technology to help identify copyrighted streams automatically. The company has also retained law professor Eric Goldman, an expert on the application of copyright law to user-generated content, in response to mounting criticism and the threat of additional legal action. Live stream, however, is a new industry in which copyright issues are yet untried. Those issues compromise the trust of advertisers and pose a threat both to the business and the industry until they are satisfactorily resolved.

Justin.tv: SWOT Analysis Threats (continued) Ineffective self-policing – Inappropriate behavior of users: Allegations of live streams involving underage broadcasters and adult viewers encouraging inappropriate behavior were reported in an online tech. blog and gained some traction on the web. Justin.tv has a terms of service policy that prohibits nudity and obscene behavior and broadcasters who are flagged for term violations are banned. Regardless of the veracity of the allegations, left unaddressed, they threaten the trust of users and advertisers and put the reputation of Justin.tv at risk. Ineffective self-policing – Competitors with stronger copyright protection: LiveStream issued an open letter to potential customers announcing its zero tolerance piracy policy earlier this year, and comparing its policy to those offered by UStream and Justin.tv. LiveStream limits the number of concurrent streams a user can offer until the user is verified by the team, thus limiting the amount of pirated content that can make it onto the LiveStream site. The announcement seeks to position LiveStream as the industry leader regarding copyright protection and questions the commitment of Justin.tv and other competitors to protecting owner’s rights.

Justin.tv: SWOT Analysis Threats (continued) Larger competitors entering live streaming industry: YouTube began to test live streaming earlier this year. With its scope, experience, and resources, YouTube poses a significant threat to Justin.tv and its competitors. Dependence on Net Neutrality: Justin.tv depends on a free and open internet to draw a wide range of broadcasters and viewers to build a vibrant, live streaming community. Threats to net neutrality limit the ability of Justin.tv to build the audience required to build community, draw advertisers, and indeed threaten its very existence.

Justin.tv: Recommendations Focus on User Base and Increase Support Staff Justin.tv's current focus is its infrastructure, but for the foreseeable future its focus should be its user base. Audiences are changing with new technology, asking for more flexibility and specificity in the content they consume. This is an aspect of the phenomena known as long-tail economics, where interests fall less on the few most consumed media and more on the many obscure media available through digital technology. Justin.tv is well placed to meet the new demands of audiences with its well engineered infrastructure. The company has hired extraordinary talent to accomplish the task of developing this platform for live user generated content (UGC), a distinct format with breadth enough to embrace a variety of uses. The ever increasing size of the company's audience is a tell-tale sign of this success. This surge of users is the next challenge for Justin.tv, but the company does not face the same audiences that media companies have dealt with in decades past. This new audience will necessitate continuous analysis and the empowerment for self definition. Justin.tv should increase staff to deal with these responsibilities.

Justin.tv: Recommendations Improve Tags, Filtering and Integration with Social Networks The most striking facet of Justin.tv content is its unpredictability, as demonstrated by the user generated content (UGC) that defies copyright and decency standards. There is also the problem of packaging for searches, as users must be able to easily sort through UGC for what they want. But as the empowerment of users to define the content is the company's most valuable asset, unpredictability must be allowed. To mitigate its difficulties, filters will have to be improved and expanded beyond numbers of viewers watching and content categories like sports, pets, etc. Channels are already tagged for content but this filter can be expanded through social parameters. A user should be able to know if a friend on Facebook or an author of their favorite Justin.tv content likes a channel. The live video experience would become a social experience, open for self definition by users through their online social connections.

Justin.tv: Recommendations Improve Copyright Protection Standards Monitoring by the company will also be necessary to avoid expensive liabilities. Justin.tv has been a forerunner in pro-copyright technologies such as digital fingerprinting and their Copyright Protection system. But regulations are not fixed and various interests - cable companies, producers, free information activists, etc. - will continue to debate the issue. Justin.tv should work with these interests and position itself with its community to protect the interests of UGC broadcasters, made vulnerable by the unpredictable nature of their content. Justin.tv should expand its staff to handle these requirements.

Justin.tv: Recommendations Empower the Audience Using Research Results The Justin.tv user base is global and intensely diverse, making it difficult to develop generalities about its demographics. Yet, distinct communities do tend to develop around content. The future of the live video audience can be discerned from the viral video phenomena of YouTube and the gaming channels already popular on Justin.tv. Empowering these shifting communities to define themselves is the single most valuable goal for which the company can strive. That means varied subscription levels, continuous development of mobile and social tools, and the agility to take advantage of emergent phenomena. Justin.tv will need to hire sophisticated public relations staff, as well as social research consultants and a few deft promoters to adapt to this highly dynamic user base.

Justin.tv: Recommendations Empower the Audience (continued) Justin.tv can empower its users through the following strategies: Channel: Different channels offer different programming, unique and marketed towards specific audiences with shared affinities. Justin.tv already offers this system but other ways to define channels should be made available. Partnership: Collaboration with other organizations can allow access to content prized by niche markets packaged in new ways. A partnership with Netflix would give Justin.tv access to the content users want and earn Netflix wider market share. Select content from the Netflix archive could be offered to users to enjoy as a community. Chat functions synchronized with video feeds would be instrumental in this effort. Scene specific searches: Excerpts of video streamed by Justin.tv is not itself analyzed and tagged for searches. While channels are a viable method of differentiation, narrowing in on unique moments in a video would add user empowerment. Users should be able to capture select moments of video for wider broadcast, effectively creating personalized highlight archives.

Justin.tv: Recommendations Mobile Development, Strategic Partnerships and Improved Audience Analysis Justin.tv has a strong hold on the live online video market, but the audience transformations predicted by long-tail economic projections will require increased staff and resources, and therefore increased revenues. Depending on the political climate, there is also the risk of loss net neutrality which will mean higher overhead to pay for scarcer bandwidth. Among the most pertinent threats to Justin.tv is YouTube's recent foray into live video streaming. While YouTube is an internet behemoth with extensive resources, Justin.tv's UGC centrality could give it the upper hand in a long-tail market. Giants like YouTube, Facebook, and Google have become such forces because their services are universally applicable, allowing them to become world wide utilities. With further mobile development and partnerships with social media companies, Justin.tv could conceivably achieve this scale on the UGC front. The company could offer pay-per-view and curated content, but that would not distinguish it from its competitors and would not take real advantage of the fluctuating niches common to long-tail audiences. As live streams become more familiar and applications more assumed, the user base will expand, followed by ad content. Advertisers will want to approach these niches, and so Justin.tv's future depends on their understanding through advanced analytics and transparent data to earn the revenues needed for increased staff.

Justin.tv: Conclusion Justin.tv is well-positioned within a growing industry, and is prepared to handle the technological tasks required to maintain competitiveness. Justin.tv will need to structure its products to allow for emergent value that is easy to access and self-define. These needs can be met through continuous application development and continuous analysis of users to empower user-defined experiences. Now that the structure is in place, its this fluctuating user base on which Justin.tv needs to direct it's focus.

Justin.tv: Appendix Justin.tv Website Screenshot (Sample of User Channel)

Justin.tv: Appendix Justin.tv Mobile Android App Screenshot

Justin.tv: Appendix Sample of Emergent Value – User-Developed system for live mobile interviewing with noise-canceling system.

Justin.tv: Appendix Sample of Emergent Value – Justin.tv ‘Lite’ beta version with social media integration

Justin.tv: Appendix Primary Sources and Additional Information ,[object Object]

Justin.tv Media econ Project

Recommandé

Recommandé

Contenu connexe

Tendances

Tendances (20)

Similaire à Justin.tv Media econ Project

Similaire à Justin.tv Media econ Project (20)

Dernier

Dernier (20)

Justin.tv Media econ Project