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How Will Video Fragment? One VC's Take.

? Amanda Congdon to Work with TV Network, Develop Cable Show |


| NBC News Wakeup Call ?

October 19, 2006

How Will Video Fragment? One VC's Take.

Heather Green

I was speaking recently with Todd Dagres, the founder of VC firm Spark Capital, about the future of the video market and he had some interesting thoughts about how things will fragment. (He's an investor, along with Time Warner and Michael Eisner, in video service Veoh.)

One way he sees this happening is along the types of content.

First, he envisions companies trying to do exclusive deals for user-generated content. This won't just entail providing a business model for talented independents who attract big audiences regularly.

This means figuring out how to pinpoint the videos that are rising quickly to the top and showcase them early or pinpoint people who consistently have loyal audiences and help them break out.

Basically, he's talking about talent management, where you help people develop but on a much different scale, because the audiences can be smaller, but the costs are also smaller.

At the opposite extreme, he sees companies going after longer-form professional content. But not just the movies people are selling now. He sees people doing deals for old tv shows, pilots that never were shown, series that were shot, but weren't all shown. Or for foreign content that doesn't make it outside of their countries. So, people for instance, could pay $100 for a season pass for cricket in India.

And then, between these two extremes are content from semi-professionals, or folks who have had training or shot commercials.

Some of this bifurfaction is already happening. But there's one thing I keep having problems thinking about. As people license content, they seem to be doing it to anyone who wants it. So how does a site stand apart? With music, the answer seems to be you have to have a device, a la Apple. But maybe I am thinking too narrowly about this.

09:59 AM

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The niche video content strategy has worked for us brilliantly. Our online business TV channel, features video interviews and TV programmes to help people become more successful in their working life. What has been interesting is that for the first 18 months it was slow to take off as people struggled to understand what we were doing as there was no other reference point.The downside of being a pioneer I guess. However, in the last 6 months since Google video and You Tube became so high profile access to our site has increased over 1,000%. It taught us that whilst being the pioneer is exciting and interesting, it is also frustrating as you have to sit and wait for everyone else to catch you up. We are living proof that niche video based sites do work if you have the right target audience and we are now developing our new site specifically for the Asia market.It's all great fun but it's also a slower process than us entrepreneurs would like as we are very impatient by nature.

Posted by: Philip Crowshaw at October 20, 2006 04:22 AM

The BusinessWeek/Online article “Are Indians the Model Immigrants?,” (September 13 2006) is quite interesting. It is, however, perhaps more interesting in the vein of another example of “Shining India hype” as opposed to measured reality. Certainly there is no rational basis for the author’s conclusion that Indians have “become the US’s most successful immigrant group.”

The author, Vivek Wadhwa, draws this conclusion primarily on a special analysis of the 2000 US census that was published in December 2004 by the Census Bureau, “We the People, Asians in the United States.” (also attached as a pdf file). Of special import to the author is analysis showing that the median household income of Indians is “far above” the US national average (although on that measure alone, Indian’s would come in just behind the leaders, the Japanese immigrants.)

The fact of the matter is that the Census study is full of a wealth of fascinating demographic and economic information about Asian immigrants (both citizens and non-citizens.) Not surprisingly, it demonstrates how dissimilar are immigrant Asian populations from “the US national average” on practically every parameter one might choose to examine. For example, Asians as a whole, have median household incomes above the national average. This is not especially surprising when it is realized that Asian immigrants are generally overrepresented in the employable 18-50 age groups. (As an aside, a report some months back also cited a Census Bureau report that people of Arab descent were better educated and wealthier than the average American. No surprises here either). Asian Indian immigrants do distinguish themselves among other Asian groups in the proportion who have advanced (e.g. college) academic training and degrees although this is likely an artefact of the fact that a large part of their immigration has taken place in the last 15 years as well as the abundance of mediocre college training and degrees that is a part of the academic scene here. *1

If there is anything surprising for me in the Census analysis, I think it more relates to how well Asian immigrant groups like the Filipinos and Pakistanis are apparently faring in the US. These are not nationalities that I usually associate with economic accomplishment … if I may express a personal prejudice.

The bottom line here though is that “immigrants” to the USA (from practically everywhere and excepting special situations like the Hmongs and Vietnamese) are a very select group demographically. Comparing their economic performance with “the US average” is not especially informative or instructive.

Starting from a false premise though, Mr. Wadhwa compounds the error by immodestly offering “A Modest Explanation” of why Asian Indians are as apparently successful in the USA as he would like to lead the reader to believe they are. His sweeping generalizations however quite ignore another distinguishing feature of Asian Indian immigrants to the US. And this is that they are an especially select group of Indians, even by Indian standards.

In point of fact, if one were to analyze how “selective” is immigration from one or another Asian country, one could note that Indian (and Pakistani) immigrants to the USA are by far the most “selected” or unrepresentative of their national populations as any other of the Asian immigrant groups. Dividing the number of immigrants in the USA into the national population of selected Asian countries, it can be seen that Indian (and Pakistani) immigrants represent about 1:600 – 700. In other words, about 1 in every 6-700 of the national population chooses (and/or is chosen) to immigrate to the USA. In comparison, it can be observed that the ratios are 1:35 for Filipinos, 1:42 for Koreans and 1:100 for Japanese.

I ask, is it really prudent to extrapolate national characteristics from a highly selected sample of 1 in 600? It certainly makes for interesting conjecture if not especially informed analysis.


Recognizing that a suggestion that higher education in India may be sub-par, I refer the reader to an evaluation of India’s top engineering and medical schools that was published by Outlook (17 June 2006). The conclusion of that study of 1,346 engineering colleges and 242 medical colleges in India was, in essence, that something around 90% of them scored below 50% (below average) of the possible score on five parameters of analysis. The authors note further that even their highest rated IITs do not figure in the top 100 schools in global rankings.

Posted by: Robert Fischer at October 29, 2006 05:11 AM

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