Paul Bond of the Hollywood Reporter reports today on a new IBM study that provides more evidence that consumer content consumption habits are changing. Amongst the findings:

• 76% have viewed video online and 45% do so regularly.
• Of those who have watched online video, 15% say that as a result they watch “slightly less” TV, while 36% said they watch “significantly less” TV.
• Of those who watch online video, 70% prefer the ad-supported model over consumer-paid models.
• Almost 60% of the respondents said they were willing to provide to advertisers some personal information about themselves in exchange for something of value, such as access to high-quality music videos, store discounts or airline frequent-flyer points.

These findings align with the conversation held at last month’s Digital Media Innovation Forum, specifically Mike Gordon’s talk about the new world of fragmentation and panel discussion about mobile media consumption. You can read IBM’s announcement or watch a video about it by clicking here.

Limelight Networks will be involved in two speaking events next week, and we invite you to attend:

A webinar, produced by Streaming Media Magazine and featuring our customer Brightcove, entitled “Scaling Your Online Video Business.” Register here.

A presentation at AdobeMAX San Francisco, featuring an agency partner of ours, odopod, entitled “The Future of Digital Media.”

With the increasing amount of online content available on the internet, virtual components are beginning to find their way into classroom curriculum as a valuable resource for teachers and students alike to connect and interact with each other in new ways.

The phenomenal demand for online content that we’ve seen in the industry holds true for the Atlanta Zoo’s Panda Cam, which Limelight Networks is helping to deliver 24-hour coverage of its new panda cub, born just two months ago. The Panda Cam offers viewers a behind-the-scenes look at the panda cub from its actual birth and then through development until the cub is old enough to be presented in public.

We all know pandas like to lounge and eat bamboo. With the power of online streaming, less commonly seen moments like the birth of a panda cub or a young cub playing with its mother can be viewed by more than just Zoo staff. With pandas being found at only four zoos in the country, not only does online streaming offer more access to pandas and to these rare moments, but it’s also serving as an online tool teachers can use to get students more engaged with classroom curriculum.

“Though I don’t teach science, the Panda Cam has provided many an opportunity for me to talk to my teen students about something other than why they don’t do their homework,” says Jessie Oldham, a 9th grade English teacher. “Quite a few students have written the URL down and apparently check in at home or on their own time.”

Before the cub was born, the Zoo averaged about 8,000-10,000 hits a day on the Panda Cam. Since the birth, and especially since the camera went live 24/7 with Limelight Networks, there has been an increase to around 30,000 hits a day on average with a high peaking at 84,500 hits in a day. The Zoo was able to handle that increased traffic on their site without issue thanks to Limelight. The camera has attracted viewers from as close as Canada and Brazil to as far as the UK, China, Germany, Australia and more, helping the Atlanta Zoo bring attention to one of its most important programs.

The Panda Cam is available for viewing 24×7 from the Atlanta Zoo website.

We’ve been asked by numerous media and analysts over the past week: “Are you doing anything special for your customers that are expecting large amounts of traffic as a result of Election Day?”

The short answer: No.

Handling large audiences, and spikes in traffic, is exactly why our customers chose to do business with us. Its why we build our global network — to ensure that every day, our customers’ audiences receive a brilliant experience — without fail or or exception.

Known or expected events, like Election Day, are certainly challenging. And typically, when a customer is expecting a large event, we’ll have a planning meeting between the engineering teams to make sure that we are coordinated, and have our professional services team on-call 24×7. It is those unplanned events, when a piece of content instantly and virally captures the interest of millions of Internet viewers all at once, that are even more  difficult. But its those times that our customers rely on us the most, and its what we prepare for every day.

An example of this preparation was our recent announcement about the expansion of our network capacity to handle broadcast quantity audiences. Over 4 Nielson ratings points — 2 Tbps of capacity — and still growing. The scalability of our platform is what our customer relationships are based on, and events like Election Day are when those customers count on us the most to deliver a great experience to their audiences.

So no, Limelight Networks won’t be doing anything special to help our customers through Election Day. We’ll just be doing our job.

Much of the discussion at last week’s Digital Media Innovation Forum was around the continued fragmenting of viewership. As Limelight CSO Mike Gordon put it, ” We all pretty much have watched the same things, and used the same gadgets and tools. But today, convergence and conformance are shattered. Convergence is over and it isn’t coming back. Welcome to fragmentation.”

Two articles published this week provide even more backup for this very point. The Wall Street Journal reports that network viewing audiences are eroding, and the declining numbers aren’t being offset by DVR viewing. Quoted is Alan Wurtzel, president of research at General Electric Co.’s NBC Universal., who says that “The hard truth is that we are in a hugely fractionalized environment, which continues to become more fractionalized.”

Also reported this week is that Apple sold over 6.9 million iPhones, making the company the third largest cell phone manufacturer. What this means is that in the past three months alone, almost 7 million people can now access rich, streaming media on a handheld built for multimedia. Not only are they fragmenting their viewership, they’re untethered.

If you are interested in seeing the presentations from last week’s conference, they are now available on-demand by clicking here.

11:46 - Panelists onstage.

11:47 - Hatfield: We heard that the audience is fragmented…three screens, different types of segments. What are you going to do first when you get home?

11:48 - Person: Main issue is still how are we going to monetize things? What are we going to do with the data? If we were all monetizing these wouldn’t be issues, but we’ve got to figure out how to link all of the data together and makes sense of it.

11:49 - Sahadi: C0nsumers are moving to multiple devices. There are organizational challenges in these companies about aligning internally - platforms, etc - so they can integrate across plaforms and test it.

11:51 - Hatfield: We talked about sight, sound, motion - and all of the complexities of that. What can we do to help companies manage the complexity?

11:51 - Lorincz: We have to deliver a message with that content, and Accenture can help. Especially in enterprises, where they don’t care what the technology is, just the output. Its platform as a service that’s important.

11:53 - Hatfield: What explicity does a publisher like CBS need to see the industry have as priorities?

11:55 - Person: We are focused on monetization and building revenue, and a little belt tightening, too. There’s a lot of opportunity for vendors turn themselves into partners - showing us what their experience is and not just their service, which is replaceable. I want someone who understand our needs  and business, and then presents a way to help me analyse or monetize. At the end of the day, I can’t be everywhere. So I rely on my vendors to tell me where things are going to go - Limelight showing me where CDN is going. Then I can make better business decisions.

11:57 - Sahadi: Because there is so much technology and so much change, its sometimes hard to find the real story. But realize that no one can do it all - it works best where there’s a clear mandate and everyone works together.

11:58 - Hatfield: You mentioned that the numbver of projects aren’t going to go away completely, but from maybe 12 to 5. What are the characteristics of the surviving projects.

11:59 - Sahadi: The projects that can show immediate revenue will remain. Specific use cases - take a picture and show it up on your TV screen sounds easy, but there are a lot of lilly pads in that route. Flight to quality will be important.

12:00 - Lorincz: Its tough to sell technology, you need to sell solutions.

12:01 - Hatfield: What advice would you give small tech companies that are looking to go solve problems?

12:01 - Lorincz: Innovate. There’s room for everyone to play, as long as you know your tech is in the solution at the end. Don’t sit back - partner with your customers, and be smart about your ecosystem.

12:02 - Thank you!

10:58 - Mike Gordon onstage, introducing panelists.

10:59 - Culver - We call it “web scale” computing and are making available the best practices that are running Amazon.

11:00 - Brown: Cloud gives you massive scale and capacity in a dynamic fashion. Its about any small startup - giving them the tools they need to get them up and running. Cloud means having any product in development today, and have it in market tomorrow.

11:01 - Engates: We are trying to move our infrastructure offerings and turn them into a much more rapidly dynamic service for our customers. Same things we have always done, but better faster cheaper.

11:02 - Gordon: Most important question - what is cloud computing? We’ve heard software-as-a-service, IBM saying we can help you build your own. How should web presence really think about cloud?

11:02 - Engates: Its all of the IT resources you need - software, hardware, apps - offered as a service, typically over the ‘net, consumed as a service. Its a multitenant environment.

11:03 - Brown: Its about the dynamism and fluidity. The ability to consume as much as you need, and instantly turn the dial up or down as your business needs more or less. You have a much faster response time when you need to scale, which fits these massive, rapid growth curves.

11:04 - Culver: At a technical level, its XML web services, it is remote and you don’t need to know exactly where it is. You are giving up some element of control but getting a lot of productivity back because someone else is taking care of all of the infrastructure Its infinite scale - you self-provision your services, and and your needs/demands vary, you provision more servers, etc. When that need passes, you can scale back.

11:05 - Culver: The industry is shifting from purchasing fixed resources, to a fluid model where you pay for what you use and there are no monthy fees or utilities. Its fluid, like a utility model.

11:07 - Gordon: What am I giving up if I adopt a cloud component to my infrastructure?

11:08 - Culver: You are giving up a bit of control because its abstracted. But what you are getting in return is that you don’t have to run that infrastructure. For a little loss of control you are getting a big bang in return.

11:08 - Brown: For those of us propeller heads, we are always into the physical. But in this model, its like the Model T: You can have anything as long as its black. You are allowing someone else to control the availability of the service, and the servicing of parts on the back end. You lose a window into what’s actually happening.

11:09 - Engates: The “server-huggers” of the world like to know what patch software things are running on, we hear there is a security concern. You have to trust your cloud vendor to handle all of that and protect your information.

11:10 - Brown: Security is going to be a big differentiator in the future.

11:11 - Engates: Its like people are afraid of flying, but they are more statistically in danger in a car. But they like the control they get in a car. So there’s a tradeoff.

11:11 - Gordon: Is this yet another area where IT is asking us to “trust them”?  How do we enfore things?

11:12 - Engates; We make sure everyone inside our customers that have a stake in the project is involved. Doing this already, extending that capability into the cloud. Also make recommendations of what ought to be in the cloud, too.

11:13 - Brown: You are going to hear transparency a lot. Its about what you can do to make sure your customers can trust you…third party auditors, goos information, etc.

11:14 - Culver: I think that over time we will see the rise of various certification standards for the data center.

11:14 - Gordon: How should potential consumers think about what cloud means for your company’s agenda?

11:15 - Engates: I urge people to think about who they trust doing business with. Rackspace has a history of customer service - we are there 24×7 to help customers whenever something goes wrong, which it always will. We are building services that could potentially replace our current infrastructure, or they could compliment them. The benefits of the cloud plus our current market solutions go hand-in-hand.

11:17 - Brown: Its interesting that Microsoft, Amazon, Rackspace, we are all converging on this space. We are building the largest data centers in the world, and getting really good at it. At Microsoft, we have a history of chasing tail lights, but once we catch up, we usually pass and move forward. Our agenda is that since Windows is the big platform, why don’t we do the same thing in the server place.

11:19 - Culver: We have ability and expertice in operating very high-scale web applications. And now we’ve rolled some of those things out and made them available to our customers. One of the key learnings of Amazon.com is that the entire data center is replicated, so we can’t go “off the air.”

11:21 - Gordon: How real is this?

11:21 - Engates: Its early. We still see outages and hiccups in the cloud space. But there are people willing to try it out. Companies that have the developers that are willing to get their hands dirty. We have a platform today - Moso - a place to put a web application and a database that you can scale up or down without worrying about the hardware. So when traffic goes through the roof — we had a blogger who wrote on the debate who’s traffic went up during the debate, then right back down — we can scale. This blogger isn’t a tech person, and if he had to figure it our he would have missed his window. We help.

11:24 - Brown: Changing very rapidly. For Myanmar disaster, we were able to spin up capacity in-region to help out in less than an hour. Ability to help customers locally is important. Where you want it, as quickly as you need it, and scale up, scale down.

11:25 - Culver: Its a little bit about where the company is on the curve. Startups think about how to operate on no cash — this is a way to help them do that. Worked with a company that built a Facebook app that went viral, and they autoscaled to 3500 servers in a day-and-a-half. And when the wave passed they scaled down again.

11:28 - Culver: Also seeing a wide variety of enterprises adopt this, and the curve is faster.

11:28 - Gordon: Interesting, because the enterprise is a fixed set (or predictable set) of users.

11:29 - Culver: Yes - they are questioning why they need to operate a data center.

11:30 - Engates: Agree. Its in stealth mode now, in the way Linux made its way into the enterprise. You have a developer that can use cloud to get access to resources today, buy them on their own credit card, and deploy and show it off next week — without waiting for corporate IT to purchase things.

11:30 - Culver: Interesting that things go in circles. That’s how Windows got onto desktops, because users didn’t want to wait for IT to set them up.

11:31 - Gordon: Where is it going? 18-24 months? 10 years?

11:31 - Brown: Security - transparancy and compliancy. But also interoperability between these services - almost as a business-to-business connector. How can enterprises exchange data - easy if they have systems that share common formats. Also business continuity/disaster recovery. Makes the business federated, replicated and accessible from anywhere.

11:32 - Engates There’s a shift in computing from IT closets to data centers. This is the first time I felt that utility computing is actually happening and enabling that thing they all promised 5 years ago. Its really a way to use computing resources differently, and the direction things are going. People don’t want to be in the weeds with their hardware.

11:33 - Culver: I see one megatrend that will shape user experiences-  utility computing, or pay by the hour. Rent software or their operating system by the hour. Users don’t want to buy a monolithic licence that’s not portable - they want to buy only what they need, when they need it.

11:35 - Engates: You are not buying a thing, or a license. You are buying access.

11:35 - Time for Q+A

11:36 - Do you see overlap between could computing and traditional CDNs?

11:36 - Engates: Funny. I was going to mention that Limelight is a cloud of sorts. CDNs have a relationship that co-exist. Most clouds today are not as tuned - its a lot of work to make a CDN hum. Some people are starting to use CDN as the origin for their cloud.

11:37 - Brown: I agree. There’s so many ways to bind up utility and dynamic computing with rich media delivery.

11:37 - Culver: There are many use cases that if you don’t have delivery, you won’t have the user experience they have come to expect.

11:38 - Gordon: I think it depends on how CDN services continue to evolve. Cloud raises the bar for us, and it makes us continue to raise our game.

11:39 - It makes sense for corporations to do this. But from a consumer perspective - AT&T turns over phone records w/o asking customers, MS wants my health info, Amazon had outages. Why should I trust you with my privacy?

11:40 - Culver: Amazon has a strong track record of protecting customer information. They way we have architected things, you get root access to your virtual servers, and we don’t. We need to all be super passionate that your data is safe, and that in being safe, you come to trust us. Trust, but verify.

11:41 - Brown: Transparency is important. You can point at any big company, and at some point, you have seen them make decisions that go aginst common opinion. Interoperability can help - if we make it easy for you to move from one to another, then we are all have incentive to do the right thing.

11:42 - Engates: Do detective work on your own before you dive in. Use low-risk information before you put critical information.

11:43 - Thank you.

From the show floor: Jeff Lunsford, Limelight Networks chairman and CEO, talking about 2009 (32 seconds).

Listen here (MP3 download)

8:47 - Mike Gordon on stage, welcoming everyone back for Day 2. Walking through agenda.

8:50 - Mitgang on stage: We are at the precipice of being able to create value.

8:55 - The Internet is the 4th act and the consumer is leading the resolution. Average viewer watches 56 minutes a week. The “:Kleenex” of video has been defined as YouTube, butits not just snacking.

8:53 - Four acts:  (1) Search — “The Web”; (2) Desktop search — “My Web”; (3) Communities — “Our Web”; (4) Site, Sound, Motion — “Media Web”

8:55 - Online video serves up a market of engaged viewers who pay more attention and are more receiptive to ads. Mitgang is going to walk through a survey Veoh did with Forrester Research. So lots of stats to follow…

8:57 - Engaged consumers - make up only 36% of all online viewer consumers, but watch 74% of videos. They spend 2.5 hours a week watching 6.1 different types of videos.

9:01 - “Passive engagement” - the stuff they are watching isn’t going to make or break them. So its not about search, its about browsing and finding something interesting. Since there’s engagement, they pay more attention. 37% say they pay more attention to online video.

9:04 - The Pyramid of Online Viewing

9:08 - Watchers - beyond showing up to view, this segment is less connected to the experience than the rest

9:08 - Controllers - >go on to exercise much more control over their online video experiences

9:09 - Connectors - They don’t just watch online video, they rejoice in it. Account for 20% of all online views.

9:10 - Since connectors are more engaged in the video, they also seem to be more cognizant that someone is funding the video. They act as ads more often. 48% of connectors notice a product or brand advertising, and 12% of them click on an ad, as opposed to only 34% of watchers and controllers.

9:13 - This is a highly empassioned group of people. If we abuse the opportunity we will lose it. So we have to be really smart as advertisers to use it.

9:14 - How does long form engage viewers? It attracts the most sophisticated engaged viewers, and it generated unique levels of enagement.

9:16 - Veoh has 35% more  connectors and controllers than any other video site. That’s because we have more long-form video than anyone else, which is why they come here. We see a spike right before a new episode airs on broadcast channels, we think that’s about catchup. We see one right after, to find out what they missed. This really is becoming your DVR.

9:20 - We have to prepare for these viewers. We advise networks and studios to get more content online. Advertisers should not repurpose as it doesn’t take advantage of the medium. Give it depth and dimension. An active mindset = greater action so deliver the message to a participant, not a recipient.

9:24 - Thank you. Time for Q+A.

9:25 - Are you seeing bilingualism carrying out in the web?

9:25 - The trends we are seeign are everywhere, but its all about size of the audience. By  localizing service and marketing message we believe we can get growth - maybe another 10% or 15%.

9:27 - How do you negotiate license agreements and have the pricing be condusive for the Internet, when the networks are used to working with the finances of cable MSOs?

9:28 - All of them are different, but they all want partners to help them figure this out. No term wasn’t something that we couldn’t deal with.

9:29 - How much of the content is web-only? What about the gaming sector?

9:29 - Eisner, or our board, believes there will be web-only hits. I just don’t believe that we can program or predict them. In terms of gaming, there are people that have uploaded their attack scenes or sequences which are watched a lot. I have to believe that since these users are passionate, that there’s an opportunity there.

9:30 - How do you classify genres of videos (beyond long- or short-form)?

9:32 - We see nothing dominating. Skew towards animation, but after that, music videos, gaming, comedy, news, sports. None of it is “mainstream” stuff because, well, that stuff is available mainstream.

4:27: Mike Gordon is moderator. Panelists introducing themselves.

4:30 - Gordon: What behavioral or contextual technologies are working today?

4:32 - Scherer: I don’t think there are enough technologies or data to make a truly rich experience. The targeting that will prove to be successful is basic geographical targeting. If you have scale in your platform, you will generate revenue.

4:33 - Carpenter: Our first attempt at addressing contextual advertising problem was in giving a customer the ability to skin a player with their brand. Now, what contextual ads give you the ability to address the brand, as opposed to just click-throughs. We’ll see CPMs go up as this shift happens. Contextual ads are relatively nacent today across our customers, but those that have used it are generating more revenue from it.

4:36 - Gordon: Are the ad sales teams ready to sell this?

4:36 - Carpenter: Very real, but the thing about contextual is it gives you the ability to target.

4:37 - Karnes: We are evangelists for this medium, and we have an ad sales team. It is a catch-22 - if you want the social web to take hold of your content, you have to let go. We have customers that want to only target negative keywords. The technology isn’t there yet to soft through keywords enough.

4:39 - Gordon: What are advertisers looking for in n contextual technologies?

4:40 - Scherer: Difficult to answer. At the end of the day, advertisers want to reach users on differing platforms. They have the budgets, but are losing share because their audiences are migrating. There’s a lot to lose. When there is enough standardization from site to site, the servers are ready to go. Publishers that enable their media players to accept IAB tags are going to benefit.

4:43 -  Karnes: Last year, web portals started losing dollars to smaller sites.  Advertisers want us to get them to their audience.

4:44 - Scherer: Publishers want us to integrate the systems in the backoffice so we can beenfit from the interaction, for example with upsell.

4:44 - Gordon: How is this broader than just advertising?

4:45 - Carpenter: Users are there for some sort of experience.  Five years ago, video was in its own section of a site. The contextual methodology is more about put video where they might be, not where they might look for it. From a publishing standpoint, its about getting the video embedded in some aspect of the experience, and in a spot where contextually it makes sense that it is there. If its done properly, you can increase inventory, traffic, views, search optimization, for your site. In doing that, you enable more opportunities to serve up more relevant ads.

4:48 - Gordon: Are we going to feel like someone is in our houses experiencing this with me?

4:48 - Karnes: Targeting needs to be a consumer choice. They need to be able to turn off the data transmission if they want. Also - advertising is becoming a story, not just a break from the content. As the ad experience improves through creative storytelling, the market will improve and mature.

4:49 - Scherer: The horse is out of the barn. Advertisers are already tracking us, but from the user perpective its about having choice. But a targeted environment is an opportunity for brands to connect at the right time and place. Its early, but users are apt to seek out content from brands they have affinity to. Its multidimensional, but there are discussions on Capital HIll, awareness of the issues, but nothing to worry about. We will find the happy medium.

4:50 - Q+A Time

4:50 - Is opting out still meaning opting out of the entire site?

4:52 - Scherer: We see each publisher set their own policies, and they need to be sensitive that they could destroy their user experience.

4:53 - Carpenter: Its a delicate balance a publisher has to manage, but the IAB has standards that help guide. If you ahve 2 minute clips with 30 sec ads in between, you hurt the user experience. But if you sell the right ad length, and the experience right - not sending the same ad all the time, getting the ad to view time ration - it will work.

4:55 - Do you see a StumbleUpon model - fill out a profile of what you are interested in, and we’ll serve ads only based on that?

4:56 - Karnes: Still a question of accuracy with that information, especially with younger viewers. Takes a lot of tech smarts to get through that. But for the user, if they provide that, its much better information that decyphering all the automated info out there.

4:57 - Scherer: We also see a focus on branded content that’s dicoverable and promotable to their targets.

4:58 - Carpenter: General guiding principle is for the publisher to sell their audience, and not the text on the site.

5:00 - Thank you!

5:00 - Gordon: Summing up today. We have hit a few key themes: The world is fragmented, and it is requieing us to be a lot smarter about how to address that world with our businesses. And, there are human beings on the other end of that experience, and we have to address that before any of this other stuff matters.