Canoe Ventures re-sizes, focuses on VOD, TV Everywhere

The headlines spoke of “capsizing,” “sinking” and “abandon(ing) ship.” The bigger news may be that the U.S. cable-industry advertising consortium Canoe Ventures, which announced a reduction in staff from 150 to 30 last week, is still afloat.

Dismissing 80 percent of one’s crew—and the captain—is a major hit. The decision impacts Canoe itself, as well as its national programming partners in the interactive TV arena, the business that Canoe is leaving. (Interactive campaigns that individual MSOs are running remain unaffected.)

That the company lasted this long surprised some. Its June 2009 decision to abandon local addressability was an early admission that one of its original goals was out of reach. The board’s decision in July 2011 not to renew the contract of ad-buying veteran David Verklin was another sign that the venture was off course. But the downsized company lives to fight another day.

“Canoe Ventures is evolving to focus its business on providing a platform for MSOs and national programmers to monetize on-demand content across multiple platforms—both video-on-demand (VOD) inside the home, and TV Everywhere outside the home,” said the newly appointed CEO (and former CTO) Joel Hassell, in a statement.

TV Everywhere would seem to be a less promising near-term goal for Canoe than VOD. Programmers such as ESPN and the companies backing catch-up TV provider Hulu (News Corp, NBCU, Walt Disney) have pressed ahead in multi-screen advertising without Canoe thus far, and the business model of TV Everywhere pioneer HBO excludes advertising. IP-enabled display devices are by definition addressable, but the IAB’s Digital VAST (Video Ad Serving Template) standard serves the Internet ecosystem well.

On the VOD side, Canoe has worked within the advanced advertising framework of the recently ITU-T approved SCTE 130. That standard has enabled the ongoing deployment of dynamic ad insertion (DAI) technology in the U.S. Announced last summer, Comcast’s DAI launch has now reached about 80 percent of its footprint, or 16 to 17 million homes, according to Nick Troiano, President of Black Arrow, a technology company that is partnering with Comcast in this effort.

Troiano is bullish. “What you saw in 2011 and will see in 2012 is significant investment by other operators,” Troiano said. “We expect the marketplace will be 30 to 40 million homes by the end of 2012.”

The underlying driver—the growing appeal of VOD—extends beyond the U.S. In its earnings report in February, Virgin Media announced that its TV customers were averaging 90 million VOD views per month, adding up to more than 1 billion in 2011, or 14 percent more than in 2010. In a recent Videonet report on advanced advertising, Virgin Media Commercial Director of Digital Sales Mark Brandon emphasized the high value of dynamic VOD advertising, a proposition that Virgin has been running on proprietary systems for two years.

Going forward, operators such as Comcast and Virgin are likely to continue with their own VOD advertising initiatives, and collaborate with others when it makes sense. In early February, Virgin announced that it was joining the commercial TV marketing body Thinkbox as an associate member. “We look forward to bringing our knowledge, on demand expertise and business perspective to Thinkbox,” Brandon said, in a statement.

What precise role the re-sized Canoe plays in driving national VOD and TV Everywhere advertising remains to be seen. As the company closes its New York offices, claims Denver as its new base and advances under the leadership of its former CTO, it is literally stepping away Madison Avenue. Troiano thinks the priority for VOD now is defining the appropriate business model. “From a technology and infrastructure perspective, there’s not much more to do,” he said.

(See these posts on TVexchanger.com for interesting collections of views on Canoe’s re-org and the prospects of VOD advertising.)