Beyond Binary

CARLSBAD, Calif.--NBC Universal's chief executive said the changing economics of television means that networks have to change the way programming is done.

There's room for hits and there's room for inexpensive programming, Jeff Zucker said Thursday, speaking at the D: All Things D conference.

"What's gone is the middle," Zucker said. "You cannot sustain just average programming."

NBC Universal CEO Jeff Zucker

(Credit: Ina Fried/CNET)

That also means shows have less time to mature, he said. Zucker noted that "Seinfeld" would probably not make it in today's environment, noting it did just so-so in an initial four-episode summer run.

"That doesn't happen anymore," he said. "It would be gone."

Zucker said that doesn't mean the era of hit shows is over. "There can still be hits in network television," Zucker said. "They don't last as long."

Asked about the fact his network is in third place, Zucker said that's obviously not where he wants to be. "We haven't done a good enough job of creating programs that people want to watch," Zucker said.

Broadcast is more challenging than cable, he said, because it only has advertising as a revenue stream. Another change, Zucker said, is that broadcast networks used to show episodes multiple times. Now the reruns are on Hulu and other places.

"We're at our core a cable company," Zucker said. Sixty percent of its cash comes from cable, he said. "The cable model is just a better model."

As for the economy, he said, "There is some light at the end of the tunnel."

Asked about Hulu, Zucker said it is ahead of plan and should be cash-flow positive soon. "The first 18 months was getting it up and not getting laughed at," Zucker said. "The goal over the next 18 months would be increased monetization." Hulu is a Web video service from NBC Universal and Fox Entertainment Group.

Zucker was also asked about his well-publicized spat with iTunes.

"We've always loved Steve," he said, referring to Apple CEO Steve Jobs. "It wasn't personal." But Zucker said NBC didn't agree that a library copy of the "Rockford Files" should sell at same rate as a new episode of "Battlestar Galactica." "The pricing wasn't fair."

"About a year later, Steve decided he was open to tiered pricing," Zucker said. He noted that 15 percent of NBC content sells at $2.99, the price consumers pay for HD content on iTunes.

Zucker said that iTunes, Hulu, and other digital businesses are small individually for NBC. "You do have to have 10 businesses like this that make up for the one you've lost."

He has said that the industry is replacing analog dollars with digital pennies. "I was just trying to be honest. I don't regret it at all because it was the truth."

"What I have said is we are now up to digital dimes. I think that's progress...We still have a 90-cent gap. Hopefully I can come back and in a year or two we will be at digital quarters. The more people understand where we are, the better," he said.

Zucker was asked whether he would put his shows on Facebook. "We'll put our shows anywhere, frankly. We want to be paid for it. That's what will allow us to keep producing shows like "The Office" and "30 Rock." If we can't get paid for them, we can't afford that cost structure."

As for teaming up with rivals on Hulu, Zucker said he wasn't worried about antitrust issues. "Half the day we spend bashing each others' heads in. Half the day we spend in business together."

Zucker said it is important for the industry to embrace technology so as not to end up where the music industry did. "I don't think you can put the genie back in the bottle." He said that if the company tried to air its content only on its network, people would find more ways to pirate the shows.

"You can't stop progress," he said.

Asked about Hulu's efforts to keep its service off TV sets, Zucker said: "Right now we are committed to Hulu being an online experience. That's where our vision is today. That will continue."

Note: CNET News is published by CBS Interactive, a unit of CBS.

Updated 9:20 a.m. PDT, with comments from conference call and at 10:20 with additional comments regarding Silverlight and the iPhone.

Microsoft on Monday announced, as expected, that it is ready with a final version of its Silverlight 2 media player.

Silverlight 2 will be available for download starting Tuesday, Microsoft said. Among the new features are support for digital rights management technology, improved cross-platform support and deep zoom technology. Microsoft also announced a range of new partners including AOL, Blockbuster, CBS College Sports, Toyota, and Yahoo Japan.

Microsoft also disclosed some numbers for the Olympics work it did with NBC. Over a 17-day period, Microsoft said NBCOlympics.com had more than 50 million unique visitors, resulting in 1.3 billion page views, 70 million video streams, and 600 million minutes of video watched.

Overall, Microsoft said the Olympics helped boost Silverlight's U.S. penetration by 30 percent, the software maker said.

"We launched Silverlight just over a year ago, and already one in four consumers worldwide has access to a computer with Silverlight already installed," Microsoft developer unit VP Scott Guthrie said in a statement.

Still, that means Silverlight continues to have a very long way to go to compete with Flash, which is installed on nearly all Windows PCs.

On a conference call, Guthrie said that in some countries, Silverlight already has 50 percent penetration. He said he expected deployments would "accelerate quite nicely" as some of the sites that require Silverlight 2 get up and running. In all, he said he expects hundreds of millions of PCs to be running Silverlight 2 "very quickly."

"Certainly coming out with a new browser plug-in is an ambitious project," Guthrie said. "We knew it was going to take a couple of years to get where we need to be."

Guthrie said he feels pretty good that Silverlight is already at the one in four number and said that the company will continue to do deals to boost penetration, as it has with HP which includes Silverlight on its PCs.

Existing users of both Silverlight as well as the Silverlight 2 beta will be automatically be upgraded to Silverlight 2 over the coming weeks, he said.

Later in the call, Guthrie reiterated Microsoft's interest in trying to see Silverlight running on the iPhone.

"We have talked with Apple," he said. "We are very interested in being able to run on the iPhone."

However, he said that Apple ultimately controls what types of software run on the iPhone and right now they are not looking to enable browser plug-ins of any flavor. "They might in the future," he said. "Right now that isn't an option for any vendor"

Google's G1 Android phone is another story, Guthrie said. "That is an open platform," he said. "That is something we are going to look at."

As for compatibility with Google's Chrome browser, Guthrie said the initial release had a couple of issues with Silverlight, but he said that in the latest developer release of Chrome, Silverlight 2 works "fantastically well."

Disclosure: CBS College Sports is a unit of CBS, as is CBS Interactive, which publishes CNET News.

Stage 8H is best known as the place where Saturday Night Live is filmed. This week, though, it's been turned into an ad-hoc data center as part of NBC's efforts to stream thousands of hours of live Olympic coverage over the Internet.

Instead of the usual crop of comedians, NBC will have dozens of people watching every hour of the games, looking for highlights that it can chop up and make available on-demand. It's just one piece of an elaborate arrangement that shuttles the events in Beijing back to the U.S.

From each of the dozens of Olympic venues, a high-definition video feed is delivered over fiber-optic cables to the International Broadcast Center that has been set up in Beijing. A bunch of encoders and Windows Media servers get the video into an Internet-ready format. From there, it travels via satellite to NBC's headquarters in New York.

There, NBC actually adds a one-minute delay, allowing its cadre of live bloggers in Stamford, Conn., and elsewhere to write their text and have the video and commentary synchronized. Once ready, it goes from NBC to Limelight Networks, a content delivery network, which has 1,000 servers just for the live events sending the content to various Internet service providers, who then shuttle the content directly to their customers. (See chart below)

(Credit: Susan Dove/CNET News)

Making it play
Limelight Chief Strategy Officer Mike Gordon said his company is prepared for this to be the biggest live event the Internet has ever seen. "I would not be surprised at all to get 1 million viewers," he said. "We're certainly prepared for whatever the audience turns out to be."

Mike Gordon, chief strategy officer, Limelight Networks

(Credit: Limelight Networks)

That said, there is clearly an element of risk in all this, considering NBC's history of live Olympic streaming has been limited to broadcasting a single game, the gold medal ice hockey match in Torino, Italy, two years ago.

"NBC has always taken risks and is always trying to do more than it has in the past," said Perkins Miller, the NBC senior vice president in charge of the Internet push. "It does keep me up at night when I think about streaming 2,200 hours (of live coverage)."

The massive effort has come together in a remarkably short amount of time. Microsoft's deal to power NBCOlympics.com dates back only to January.

NBC had a pretty good idea what they wanted to do and had built some mock-ups of the player prior to deciding to partner with Microsoft.

Initially, they expected to use Adobe's Flash, given that is the standard for video delivered over the Internet these days. But, as they began to hash things out with Microsoft during a series of all-day meetings at NBC's 30 Rockefeller Plaza headquarters, Microsoft was able to show NBC some ways it could do more using its homegrown Silverlight technology.

Silverlight, Microsoft said, would be key to enabling NBC's vision of a "control room" in which a viewer could watch multiple live streams at once.

Perkins Miller, senior vice president, NBC Universal

(Credit: NBC)

Even within Microsoft's team, though, there was some apprehension of whether it was doable.

"Can we actually pull this off?" Senior Technical Evangelist Jason Suess recalled thinking. "Is the user's machine going to be able to maintain four connections at one time?"

The key, Suess said in an interview at Microsoft headquarters last week, is using an approach known as adaptive streaming in which the player has the ability to customize the bit rate of the video stream based on a computer's connection and processing power.

By Valentine's Day, they were ready for a test. It was pretty important that the test work out, given that NBC was getting ready to crate up the gear to ship it off to Beijing.

"That was the first time the player came to life," Suess said. "Obviously the player was extremely crude."

Making it pay
One of the last pieces to fall into place was the advertising. Initially, NBC and Microsoft were hoping to be able to insert full video ads into the live streams, but doing so is tough work.

"You don't have any way to pause a live stream," Suess said. "Trying to deliver a video ad on top of that, you hit the limits of a user's bandwidth."

As of mid-April, they were still struggling with what to do and began considering that perhaps they would have to just rely on companion advertising around the video stream. Then they came up with an idea. Rather than insert full videos into the live streams, what if they stuck a display ad into the video, particularly during dead times in the action.

Jason Suess, senior technical evangelist, Microsoft

(Credit: Ina Fried/CNET News)

That, approach, which is ultimately what's being done, solved several issues. It was less bandwidth-intensive than video ads, but still got the advertiser directly in front of the viewer, all without interrupting any of the coverage. The amount of advertising will vary, Suess said; "It depends what is happening in the sports. We just wait for a dead space."

By early May, NBC made the basic player available on the Internet, using a variety of prerecorded Olympic video, and by early June the enhanced Silverlight player was made public as well. The Olympic Trials, at the end of June, offered the companies and the public a chance for a test drive.

At this point, it's come down to a triage of the few remaining known bugs. Each day, the bar is being raised in terms of what is a big enough deal to warrant such a late change. Suess, meanwhile, sent his wife and kids to visit family in New York so he could work 18-hour days.

In an interview last week, Suess said he had been at work until 1 a.m. the night before and gets in every morning by 8 a.m., so he can chat with the folks in Beijing before they sign off for the night.

"If I am not online and pushing things along, then I am introducing delay," Suess said.

An admitted type-A personality, Suess is a stickler for organization--the kind of guy whose desk is always clean. (His wife would probably use the word "compulsive," Suess said.)

Suess said he hopes things will be enough under control that he can actually watch some of the games, particularly sailing, of which he is a big fan. "I sure hope so," he said. "When I got involved in this project, that was one of the reasons."

Click here for more stories on tech and the Beijing Olympics.

The New York Times suggested Wednesday that future versions of the Zune might come with a tiny cop capable of catching digital lawbreakers.

And no, I'm not talking about some sort of bundled action flick.

In a blog, the Times' Saul Hansell said that, as part of Microsoft's deal to get NBC TV shows, it had agreed to look into the possibility of adding technology into the MP3 player that would scan a user's collection for unauthorized content.

The blog cites Microsoft spokesman Adam Sohn as saying that the software maker is exploring antipiracy measures with NBC. Microsoft issued a statement on Wednesday denying that there was any agreement to filter content.

"Microsoft has no plans or commitments to implement content filtering features in the Zune family of devices as part of our content distribution deal with NBC," the software maker said in a statement.

Sohn echoed the sentiment. "We've agreed to work with these guys on a number of issues, but we have no plans or commitment to put filtering technology as part of this arrangement with NBC," he told CNET News.com.

Microsoft launched its Zune video store this week with about 800 TV show episodes, including content from NBC, which earlier pulled its content from iTunes in a dispute over pricing and other issues. Despite the apparent coup with NBC, Microsoft is still lagging Apple badly on the sales front.

Maybe Brian Williams just needed a better GPS system. Or maybe, after appearing in Bill Gates' keynote video, he was busy hanging out with the Microsoft chairman.

In any case, NBC Nightly News has postponed its live broadcast from the Consumer Electronics Show, originally scheduled for Monday, until Wednesday, a show representative said in an e-mail.

The actual reason for the switch was not immediately available.

Aiming to draw some attention to a redesign of its Web site, NBC plans to broadcast its evening newscast from the Consumer Electronics Show in Las Vegas on Monday.

While he will probably be able to avoid the long cab lines, anchor Brian Williams will brave the CES crowds to do NBC Nightly News live from the show floor. It will first air at 3:30 p.m. PST--evening for the East Coast audience.

In part, NBC is hoping to parlay the unusual locale into some attention for the NBC Nightly News Web site, which is getting a makeover. "While at CES, we will announce and debut a new and improved Web site for the show," an NBC representative said, declining to say what the new site will feature.