What is new with online video?
I feel that there are a few forces at work here. First, we are seeing a significant amount of content being made available on the internet and it is being more actively promoted for consumption (e.g. HBO, ESPN, YouTube). Fears of cannibalization are being replaced by audience expansion. Second, long tail or niche content providers are using the internet to cost effectively reach their audience which is helping to drive the total amount of content available. In the past, distribution costs would be too great to utilize TV as a delivery mechanism. Third, online video enables even better advertising options by placing pre-roll or embedded ads on the player itself to truly target consumers. Short clips can use specific ads to match the content more effectively than showing ads in a channel timeslot. Finally, consumer behavior is changing as more people are getting on the internet to view content, it is not such a tweener activity anymore.
However, online video creates a number of issues as well. The first being an interesting conundrum where the bearer of the broadband traffic typically does not benefit from online video consumption. It simply creates a larger burden on the network and the content owners do not have to pay for this additional burden which is the basis for the net neutrality debate in the US (Telco 2.0 blog does a good job dissecting this analysis for the BBC iPlayer http://www.telco2.net/blog/2008/02/bbcs_iplayer_nukes_all_you_can.html). The second issue is discovery of relevant content. Most users will not spend hours scouring for content to watch, but will go directly to destination sites for a specific show or clip they may have missed (NBC’s use of Olympic coverage is a good example http://www.nbcolympics.com/). This is where new entrants such as Videosurf are entering the market to incorporate visual discovery to make searches more relevant than relying on metadata tags put in place by an administrator.
In summary, online video is definitely on the upswing. The key will be to continue to create additional value by the content providers which complements their broadcast offering. The real issue will be the eventual showdown over payment for the infrastructure this video is delivered over. Stay tuned. Any thoughts on this subject?
Comments
I believe there are still challenges around the advertising models for Online Videos. For example, traditional ad placements like “pre-roll” may be more suitable for TV but when it comes to Online Videos, customers may not be willing to sit through pre-roll ads before getting to the video they really want to see. What are your thoughts on how traditional TV ad models like pre-roll will work for online video services?
Also, over the past few years, we have seen Social Networking going main stream commanding mass adoption. The traffic that social networking sites are generating and the frequency of visits to these online communities show that social networks are taking up a significant portion of the time spent by customers Online. It will be very interesting to see how Online Social Networks compete with online video services for the share of the time customers spend on the Internet. I would like to know your perspective on this.
Commented by: Sandeep Chandrasekar Seshadri | October 16, 2008 4:21 AM
Well Sandeep, there are no easy answers for this one. Currently, pre-roll and advertisements around the player itself are here to stay. It is also getting engrained with the watching experience so most users are actually expecting an ad before a free video is watched. I feel post-roll will be the most challenged since the user can simply stop the player so there is less chance for consumption. The next innovation will be for long form content on the internet or purchased VoD on the TV where ads will be dynamically inserted into that content. This will ensure a current ad campaign is displayed regardless of when the content is consumed.
In some instances we are starting to see the online video and social networking communities converge, we definitely sites like Hulu using web 2.0 technologies to form their own interest communities. At some point it does become a fight over consumer time spent on a particular portal since that will ultimately drive advertising value.
Commented by: Jeremy Kloubec | October 16, 2008 2:43 PM