Streamticker 2006: The Deals That Reshaped the Online Video Space
The one negative that Google will have to wrestle with is the attention of the mainstream music labels and movie studios. Hours before the deal was announced, YouTube announced a series of deals to license content from key record labels, including Universal Music Group and Sony BMG, offsetting the likelihood of a major set of lawsuits against its deep-pocketed acquirer.
YouTube’s CEO Chad Hurley, explained the licensing agreements as a balancing act. "YouTube is committed to balancing the needs of the fan community with those of copyright holders," said Hurley.
For its part, Sony BMG seemed pleased with the licensing agreement. "The enormous popularity of these video sites made it clear that a large number of people absolutely love these sites, and so connecting artists with their fans using this viral video platform is incredibly important to us," said Thomas Hesse, Sony BMG’s president of global digital business.
Another less visible victim of the Google/YouTube deal is Yahoo!. While Yahoo! acquired JumpCut and is considered by many to be the natural suitor for Facebook—which might be a necessary acquisition to maintain parity with rival Google—the pending retirement of Yahoo!’s CEO and an uncertain succession plan has given rise to a Yahoo! "dead pool" of sorts. In late November 2006, an internal Yahoo! memo surfaced in the mainstream media that called for drastic reductions in Yahoo! staff and a repositioning of the company to offset falling advertising revenues. So it’s quite likely that Yahoo! will be in the market for a consumer-driven media content site to help it stay competitive.
Adobe Acquires Macromedia and Serious Magic
While the Macromedia acquisition was completed just prior to the end of 2005, it was a sizeable enough restructuring of the digital media content creation space that its repercussions are only now being felt. Adobe had for years held dominant positions in print, graphic, and photo markets with its PageMaker/InDesign, Acrobat, Illustrator, and Photoshop products.
Adobe had experienced limited success in two areas that it needed to master to provide robust content suites: HTML/web content creation tools and video tools. In the video-editing realm, Adobe had an early lead with its groundbreaking Premiere product, but had lost ground in recent years because of the remarkable market growth of Apple’s Final Cut Pro. Unable to best Apple with an NLE alone, Adobe has focused its attention on acquiring useful complementary products such as Syntrillium’s CoolEditPro (now Adobe Audition) and developing well rounded and tightly integrated suites of postproduction and creativity tools. Ironically, after pulling Premiere out of the Mac market in 2003, Adobe announced in January that the newest version of its Production Studio—including Premiere Pro—will be cross-platform.
On the HTML/interactive content creation front, Macromedia’s Dreamweaver and Director (and then Shockwave/Flash) products were the dominant players. Macromedia FreeHand had sparred with Adobe’s Illustrator, and its Fireworks product was intended to be a still-image editing tool that would round out a suite of products that competed head to head with Adobe.
In the end, though, neither company could gain significant traction in the other’s core competencies. Until Flash.
Once Flash broke away from its Director-influenced reputation as an offline interactive tool and began to make inroads into online content delivery—coupled with the killer combination of MySQL/PHP with a Flash graphical interface—Flash began to threaten Acrobat Reader’s position as the dominant third-party plug-in for Internet Explorer and Mozilla-based web browsers. Macromedia’s Dreamweaver continued to dominate HTML content creation and tightly integrated Flash content creation into its services. Then, in late 2005, the addition of the On2 VP6 codec under the label Flash Video 8 pushed the Flash player into a powerful position that made both companies realize that a combined Acrobat/Flash delivery model held the promise for robust interactive media delivery that MPEG-4 had touted but never delivered.
The past year has been one of revitalization for Adobe. Its first response was to provide interim bundles of the most popular Macromedia and Adobe products, which it followed up with mid-year announcements of updates to Captivate—Adobe’s elearning product that now integrates Flash interactivity and video capabilities—and a repackaging of Macromedia’s Breeze into the Adobe Acrobat platform under the name Adobe Connect.
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