PODCAST

The Network Is Us: Q&A With Metacafe CEO Erick Hachenburg

Two major factors that have spurred the rapid growth of online video include the increasing availability of broadband Internet access and Web 2.0 technology that allows user interaction with and control of content.

Those, according to Metacafe CEO Erick Hachenburg, are the main reasons online video is outpacing traditional TV in the contest for viewers’ eyeballs.

With 37 million unique monthly visitors, the online video network Metacafe is the second-largest online video site. Only YouTube has more monthly visitors.

Hungry for Video


Listen to the podcast. (21:59 minutes)


A few years ago, YouTube tapped into an emerging and voracious appetite for online video. Hachenburg and the market will continue to grow rapidly as more viewers trade TV time for online video.

Already, online video viewing has reached the popularity of online search, Hachenburg said. Despite such rapid growth, however, there are some key challenges facing the industry. They include freedom of speech issues, which will be important as a variety of content is created and uploaded to video sites; advertisers’ fear of being associated with the wrong content, and the struggle to develop revenue streams.

Despite some mergers and acquisitions in the sector, Hachenburg thinks online video is only about midway in the narrowing of the competitive field for video sites.

Other trends include the following:

  • The growth of online TV, where the old TV model is simply transferred to the online arena
  • The explosion of short-form video content, which will be driven by innovative content producers

In the coming years, Hachenburg expects that a small handful of players will dominate online video as large video aggregators but will co-exist along with niche sites that draw much smaller numbers.

Here are some excerpts of the interview:

E-Commerce Times: Could you define what the industry looked like three to five years ago, and how it evolved to what it is today, and what it is today?

Erick Hachenburg:

As you know, Metacafe is one of the largest video sites out there. In fact, we call ourselves the largest independent, because aside from YouTube, which is part of Google now, we are the biggest online video player out there, but when you look back at the history, we all realize that YouTube tapped into a really new and big phenomenon, a very important phenomenon, in the Internet space.

I don’t know if there’s a property that has grown to be a top-five Internet property worldwide as quickly as YouTube has — it grew faster than MySpace, I think it grew faster than Google in its day. It’s really a remarkable phenomenon. I think it speaks as much to the voracious appetite for video and the power of video — something we saw … when television became the predominant form of media and will continue to do in this century, but with the distribution being on the Internet.

YouTube tapped into that and showed that this is something everybody loves, everybody engages in, with the added dimension that you the user can start creating as well as choosing what you want to watch, when you want to watch, how you want to watch.

ECT: What spurred the growth of Metacafe?

EH:

There’s a lot of talk about what does Web 2.0 mean, and of course everybody has their own definition. But what I think spurred it is really a couple of things. First, broadband and the pervasiveness of broadband — the fact that broadband is available in 60 to 70 percent of households now, so video is possible to be distributed to everybody.

But Web 2.0 also brought interaction, meaning the consumer was given the power to upload what they wanted to upload, choose to see what they wanted to see — but even to take that video, I’m sure you’ve heard the concept of the embedded player, which is not a very common term, but the embedded player, meaning that you’re able to take a video that you watch on a site and bring it to your own site or your own Facebook or MySpace page and put it there so it feels like it’s your own.

The idea that you’re going to go to a station, a channel where you’re going to watch something is not a metaphor that works on the Internet. You go to your own page, you go to a friend’s page, you go to a page where an e-mail sends you. Web 2.0 enabled that. It’s easy to watch, it’s easy to upload, but most importantly, it’s easy to take that video where you want to go — and that changed the way media is being consumed.

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E-commerce Times Channels

Sports Betting Platforms Gambling With Substandard CX

Online gambling is at an all-time high in accessibility and popularity. But many betting app developers are rolling the dice blindly without addressing users’ customer experience (CX) concerns.

More states in the U.S. are legalizing sports betting with legislation pending in many others. Major sports leagues such as the NFL and the PGA Tour are adding legitimacy to the organized sports betting space by securing high-profile gambling partners. Sportsbooks like FanDuel, DraftKings, BetMGM, and Caesars are expanding in concert.

With money on the line, literally, with betting apps, these companies have a heightened burden to provide customer support. That could well be a survival requirement since many of their online bettors have never previously gambled on sports, let alone placed bets via mobile apps.

Appeasing Regulators

So far, sports betting platform rollouts in new states have been relatively seamless. Yet some obvious CX issues must be addressed before watchdogs and regulators step in.

Sports betting companies need to tackle four potential stumbling blocks:

  1. The product is still new to many customers. Gambling companies need to clear up confusion on the legal methods of sports betting and drive confidence that bets will be paid out.
  2. Most sports betting companies are pushing mobile apps for daily usage and interaction, leaving a strong need for tech support to help with logins and payment issues.
  3. Geolocation issues are a major factor. If users are near bordering states where sports betting is illegal, their phones might mistake them for being in the wrong location and their bets will not go through.
  4. Seasonality. Major sporting events such as the Super Bowl, March Madness, The Masters, FIFA World Cup, and the World Series amplify betting activity. As a result, gambling companies must have robust CX infrastructures in place to handle increased seasonal demand.

One of the biggest challenges is volume projection and staffing due to the sector’s rapid growth and lack of historical data, according to Chris Crowley, chief commercial officer for CX provider Alorica. A significant and continuous increase in users is coming from existing states, as well as new states legalizing sports betting apps.

“As the user base increases there is an increase in transactions across voice, chat, and email — especially from new users and novice users of sports betting apps. The ability to develop the appropriate staffing models and to train the staff effectively is crucial to delivering an exceptional customer experience,” he told CRM Buyer.

Betting on Digital-First Stability

Another big test for the sportsbooks, noted Crowley, will be finding the bandwidth to handle peak seasons when major sporting events drive a flurry of betting activity.

To withstand scrutiny from regulators and watchdogs, these companies require trained staff who can work with customers across voice, chat, text, and email.

“Like other digital-first companies that are born highly focused on product, sports betting companies may not yet fully appreciate the need for tech support and account management,” he cautioned.

For example, most sportsbooks rely on website FAQs to support their customers. Many of the new customers are gambling on sports for the very first time.

CX is critical to handle these concerns because money is involved. Customers rightly want access to a support person when they spend money to get something in return, such as a bet to win or deposit to get a bonus or free bet.

App Speed Risky Business

Logistically, the speed of the app interface makes betting easier. But it also increases the risk of mistakes, warned Crowley. That is why it is crucial to have knowledgeable and readily-available support offerings from live agents and automated channels.

Fierce competition to develop repeat customers makes CX crucial to this emerging market. Companies such as DraftKings, Caesars, BetMGM, and others are currently spending tremendous amounts of money to rapidly grow their user bases through aggressive marketing.

“To get the necessary return on this investment, they must develop user loyalty as it is so easy for users to jump to another app. One poor service experience can turn a novice bettor off forever,” said Crowley.

Another reason CX is important is sports betting has its own community and lingo. It can be unkind to newcomers who do not have a firm understanding of betting odds and how promotions work.

“A big issue surrounds where ‘free’ does not always mean free. Having a customer service team backed by a real CX strategy gives new users a lifeline to figure out the nuts and bolts of sports betting,” he explained.

Driving Factors

Social acceptance of sports betting is now common. State governments increasingly are becoming supportive of the industry.

Additionally, with the rise of second screens, sports fans have found new online communities that share their love of the game, Crowley noted. Fans today are often on Twitter and Reddit while watching their teams play, reading and reacting to what other people have to say about the game.

This further encourages fan engagement. Online sports betting has benefited from the influence of social media and, to an extent, cord-cutting, which has evolved the way we consume sports, Crowley observed.

“As sports betting gains wider social acceptance and state legalization continues, the industry will rapidly grow. For many, sports betting has become synonymous with watching and attending sports events,” he said.

In a short period of time, this will be an ingrained part of our social norms. The number of American adults betting on sports doubled in the last year alone. It is crucial that companies in this sector invest in a robust CX operation and explore strategic partnerships with vendors that can keep customer engagement impactful, secure, and scalable, urged Crowley.

Morphing World of Rules and Regs

The regulatory environment is rapidly changing in the mobile sports betting industry and online gambling.

Overall, online sports betting platforms are progressing with new functionality at breakneck speeds due to the fast changes in state regulations and requirements. Most of the major sportsbooks and online sites are still in the process of obtaining required licenses in recently-legalized states.

The Supreme Court decision in Murphy v. NCAA gave states the ability to pass their own sports betting legislation. Some 30 states — plus D.C. — have legalized sports betting with 22 legalized for mobile and online sports betting. Twelve states have active or pre-filed legislation on the ballot for 2022.

State laws vary greatly. Regulations range from betting in onsite casinos versus mobile/online to the age of bettors. Restrictions cover the types of bets, such as collegiate sports versus pro contests. Tax rates vary by state also.

Some states allow tribal and commercial casinos. Others like Oregon, New Hampshire, and Rhode Island only allow one or the other, or a state lottery commission runs the betting.

“Like any consumer-facing industry, there are also protections around personally identifiable information,” Crowley said. “As sports betting and mobile/online wagering become more common across different state jurisdictions, the landscape will only continue to evolve.”

On Deck, Real-Time Customer Service

Online sports betting requires unambiguous fairness and transparency. The entire customer journey should be shepherded by a customer support offering that can resolve issues in real time.

The typical response time so far is 24 to 48 hours later for some betting companies, according to Crowley. This process includes accessing relevant information, placing bets, and collecting the winnings.

“The industry would be wise to establish a new CX standard, one that will give confidence in the integrity of this emerging business model,” he recommended.

Plenty of disclosures, FAQs and robust “help” systems with omnichannel functionality will become the norm in the mobile and online sports betting experience, he concluded.

Jack M. Germain

Jack M. Germain has been an ECT News Network reporter since 2003. His main areas of focus are enterprise IT, Linux and open-source technologies. He is an esteemed reviewer of Linux distros and other open-source software. In addition, Jack extensively covers business technology and privacy issues, as well as developments in e-commerce and consumer electronics. Email Jack.

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Play-To-Earn Gaming Faces Hurdles To Rapid Growth

Reddit co-founder Alexis Ohanian raised some eyebrows in the gaming world recently when he predicted on the “Where It Happens” podcast that play-to-earn gaming would take over 90 percent of the gaming market in five years.

“Ninety percent of people will not play a game unless they are being properly valued for that time,” Ohanian declared in the podcast.

“In five years,” he continued, “you will actually value your time properly, and instead of being harvested for advertisements, or being fleeced for dollars to buy stupid hammers you don’t actually own, you will be playing some on-chain equivalent game that will be just as fun, but you’ll actually earn value, and you will be the harvester.”

Play-to-earn games typically use cryptocurrency instead of proprietary tokens for in-game rewards and earnings. The most popular play-to-earn title is “Axie Infinity,” a Pokemon-style game where Axies can be bought and sold for Ronin cryptocurrency.

While play-to-earn gaming is gaining in popularity, most of the excitement and interest is tied to future opportunity, rather than changes to current gaming business models, explained Michael Inouye, a principal analyst with ABI Research.

“The larger opportunity comes from the hype surrounding the metaverse, where digital goods will be earned, bought and sold like real-world, physical goods,” he told TechNewsWorld.

“Gaming is a natural entry point because it’s already virtual and 3D and gamers are accustomed to dealing with virtual assets and items, so there is certainly strong growth potential,” he said.

Optimistic Forecast

Ross Rubin, the principal analyst with Reticle Research, a consumer technology advisory firm in New York City, explained that over the years, there have been a number of experiments with paying people to do all kinds of things, such as watching ads or playing games.

“Usually, payment is in a proprietary currency, which could be redeemed for prizes,” he told TechNewsWorld. “Play-to-earn gaming is an extension of that.”

“Cryptocurrency, though, is more widely accepted than proprietary currencies,” he continued. “It also allows something to be done that was very difficult to do in the past. It enables micro transactions. That may make play-to-earn gaming more practical than it might have been in the past, but there’s still a lot of challenging dynamics.”

He asserted that Ohanian’s prediction was “extremely high.”

“So much of the market is made up of casual gamers — people playing a game on their mobile phone waiting for a train or in an elevator or waiting room,” he said.

“It would represent a fundamental reversal of what has been a very profitable model — in-app purchases — where the money has been flowing the other way, to developers and game companies,” he observed.

“It’s too optimistic,” added Chirag Upadhyay, an industry analyst with Strategy Analytics, a global research, advisory and analytics firm.

“Developers and gaming companies are trying to make money from software,” he told TechNewsWorld. “This will take away from that.”

“There won’t be a large interest in the model from developers and gaming companies unless it presents them with a large opportunity to make money,” he said.

Developer Resistance

Mark N. Vena, president and principal analyst at SmartTechResearch in San Jose, Calif., called Ohanian’s forecast “wildly optimistic.”

“I’m highly skeptical of the 90 percent figure,” he told TechNewsWorld.

“Most of the gaming community is on consoles and mobile devices,” he explained. “The guys who write the titles for those platforms are very reluctant to change their business model.”

“Play-to-earn gaming requires those developers to get on board with it,” he continued. “To do that in five years would take a really heavy push.”

The use of cryptocurrency could also be a problem. “Its instability could be a headwind to game developers getting on board with play-to-earn gaming,” he noted.

What’s more, he pointed out that five years is still within the lifecycle of the new Xbox and PlayStation gaming consoles, which are not built for NFT and cryptocurrency implementation.

“Microsoft and Sony would have to have to do things at the platform level to make that work,” he observed. “I don’t see them doing that.”

“Future platforms may support the trend,” he added, “but I don’t see that happening in the short term.”

Paid To Play

Lewis Ward, research director for gaming at IDC, voiced concern over what may be the underlying driver of play-to-earn’s popularity.

“I don’t think these play-to-earn games are great games, driving gamers to play them because they’re great games,” he told TechNewsWorld.

“My understanding is that a large chunk of the Axie Infinity user base is being paid to play the game,” he said.

“People in the cryptocurrency world are paying people to play games in order to drive up the valuation of the cryptocurrencies and their relationship to NFTs,” he asserted. “In that world — if you have a lot of liquidity, a lot of people buying and selling what you have to offer — it makes other people confident it’s going to rise in value over time. So the companies behind the cryptocurrency have a vested interest in driving up the transaction volume.”

“My concern is that what’s been driving interest in play-to-earn games is a form of self-dealing,” he continued. “Companies in and around this space are effectively paying people to play these games to drive up the value of cryptocurrencies that they can monetize. It becomes a money-making operation.”

“This can create a raft of legal issues, once you get into children and the extraction of cryptocurrencies into fiat currencies,” he added.

“That’s why play-to-earn games are not in the Apple App Store or in Google Play Store,” he said. “The platform owners don’t want to get in the middle of something so unsettled from a legal perspective and potentially open themselves up to lawsuits down the line.”

Inouye noted that there will certainly be value in digital goods and NFTs in the future, but there is a great deal of work and experimentation that needs to happen before it becomes the dominant revenue generator for the gaming market.

“In this context, pay-to-earn should be viewed more as a way to reward gamers for their efforts and virtual collections, but it’s going to take a significant lift to shift the revenue streams away from premium and advertising,” he said.

“I’m not saying it’s impossible within five years — we’ve seen some unexpected changes happen in short time periods — but the probabilities I would say, are really low,” he added.

John P. Mello Jr.

John P. Mello Jr. has been an ECT News Network reporter since 2003. His areas of focus include cybersecurity, IT issues, privacy, e-commerce, social media, artificial intelligence, big data and consumer electronics. He has written and edited for numerous publications, including the Boston Business Journal, the Boston Phoenix, Megapixel.Net and Government Security News. Email John.

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