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The convergence of digital media and social media?

Posted on | March 31, 2009 | Print This Post

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Since Facebook’s recent announcement for increased support of video, I couldn’t help noting an observation I had at the Digital Hollywood Media Summit I attended in NYC a couple of weeks ago and wrote about in a previous post.   While at the conference listening to various panelists discussing digital media topics, it occurred to me that they could have just as well been talking about social media.

For example, at a panel discussing ‘The Television Ecosystem’, Landel Hobbs, COO of Time Warner Cable, stated that Interactivity was key in digital media.  Voting using the remote was 10x more prevalent than using cell phones (ala American Idol).  He further stated that in digital media programmers need to give control to the audiences for what they want.

Rebecca Glashow, SVP Digital Media Distribution for Discovery Channel, commented that (it is important to realize that) the level of engagement offered is different for different platforms.  Roger Keating SVP of Hearst-Argyle Television, suggested that television 2.0 was about inviting users into discussion, learn about their needs and serve them better with this information.  The old days of scripted shows washing over audiences were passing.

Similarly at another panel discussing ‘Global Media and Advertising’, Eileen Campbell, CEO, Millward Brown Group discussed that brands need to become active listeners and develop an active response and add value to that conversation.  The future of advertising is based on focusing on the message and ideas as opposed to the platform, and finding ways to move with fluidity between platforms.

While social media nomenclature was not in use in these discussions on digital media, the general themes and concepts being discussed around the uses and benefits of digital media sure sounded a lot like conversations around social media circles to me.

Thisis a brief post, and frankly, only a thought nugget at this point.  As a profilic member of the digital media community and a newbie at social media, I can’t help but think this convergence will create some interesting new dynamics.  For example, would Facebook take the mantle as an important video platform and would YouTube (which I think is already an important social medium – topic for another day) serve as a community platform using its tremendous reach and attachment to create communities?

What do you think?  Start a discussion below.

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Category: Commentary, Social Media

Mobile Video still a Ways to Go; Who’s Watching Online Video Revisited

Posted on | March 25, 2009 | Print This Post

In my digital media Projections for 2009 earlier this year, contrary to predictions from some others, I proposed that 2009 is not the year for mobile video to gain momentum.  Recent survey results from Accenture supports this thesis with research. (I have not seen the report, but key highlights are publicly available, including here.)  Before I go further, let me state that this is not something I am thrilled about.  Mobile is a compelling platform for consumers, and like everyone else I would like to see mobile video growth.  I just don’t think the time for it is just yet as I covered in the earlier post.  At the same time, we are early in the year, and there may well appear a killer app to change this scenario.

Meanwhile, Accenture’s data adds some numbers to this thesis:

In cellular, Accenture found that 79 percent of all respondents surveyed in December view cellphones primarily as a way to communicate by voice, text messages and email. The survey also indicated that 54 percent of respondents don’t need or want video and video streaming on their phone. A total of 14 percent called the services too expensive, and 9 percent said video-capable handsets are too expensive.

When asked if the availability of mobile content would drive them to upgrade a mobile plan to add video services, 70 percent replied “to a very little extent.” 

Another interesting finding reported from the survey alludes to my earlier post “Who’s Watching Online Video”.  Accenture reports growing numbers of baby boomers compared to Gen Y adoption of mobile media.  It appears that my observations for online digital media (relating to viewer demographics) is also mirrored for mobile media.  The conclusions drawn in my earlier post (Who’s Watching Online Video - Part II) would seem applicable to mobile media.  To restate it, while the penetration among baby boomers is low compared to Gen Y, given the relative size of the Baby Boomer demographic compared to Gen Y, and the comparative rates of adoption, this older demographic should be important to mobile media programmers and service providers.  My experience has been that digital media companies tend to overlook this fact.

In another mobile-lifestyle finding, Accenture said baby boomers are adopting such Gen-Y habits as playing videogames on the go and listening to music on an MP3 player. The percentage of boomers playing video games on their cellphones grew to 13 percent from 9 percent, Accenture said, while the percentage of Gen Y consumers (ages 18 to 24) playing games on the go rose only 1 percentage point, to 45 percent. 

On top of that, the number of baby boomers who listen to music on an MP3 player increased to 31 percent from 21 percent, while the percentage of Gen Y listening to MP3 players grew to 76 percent from 68 percent. 

In non-mobile endeavors, baby boomers were also increasing their adoption of new technologies at a faster pace then Gen Y. For example:

· the percentage of boomers reading blogs or listening to podcasts grew to 28 percent from 18 percent, while the percentage of Gen Y doing so remained flat at 45 percent;

· the percentage of boomers watching and posting of videos on the Internet grew to 36 percent from 26 percent, while the percentage of Gen Y doing so dropped 2 percent; and

· the percentage of boomers using social-networking sites grew to 28 percent from 18 percent, while the percentage of Gen Y doing so rose to 82 percent from 80 percent.

What do you think?  Start a discussion below.

 

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Category: Commentary, Mobile Video, Predictions, Projections
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Traditional Media on the Move in Digital Media

Posted on | March 23, 2009 | Print This Post

 

logo-interiorThere has been a longer gap in my post than usual on account of travel.  Last week I attended the Folio: Growth Summit in Chicago and the Digital Hollywood Media Summit in New York.  The Folio Growth Summit is a magazine publishing industry event, and a co-located event held at the same time is E-Media Summit focused on digital media strategies for the magazine industry.  Attendees are from small and large magazine publishers spanning business and consumer publications.  Digital Hollywood Media Summit New York is a conference on Broadband, Mobile, Advertising, Television, Film, Cable & Satellite, Publishing, Radio, Magazines, News & Print Media and Marketing.  

282x42summitslugDigital media is an active topic of discussion these days in general.  Much of the themes at these conferences were around sea changes taking place in all forms of traditional media, and digital media the bridge to the future for all elements the industry, be it magazines, newspapers, broadcast, advertising, or others.  But you already know this.  So, I’d like to summarize some common threads that I hope represent broad strokes of the discussions and views that I heard being expressed. 

Digital media is going to be a part of, and not usurp traditional media

While digital media is transforming traditional media, it is by no means going to usurp the role of traditional media, making it irrelevant any time soon.  In my opinion we have all seen the upheaval in the newspaper industry, and much talk of cutting the cord with cable.  As panelists pointed to recent reports from Nielsen and others, television viewing is up, even as Internet video consumption is on the rise.  While print media is being affected the most from audiences moving to the web, there are some print publications that are doing well at the same time.  News related publications are faring the worst, but the role of news gathering agencies is still relevant.  One panelist at Folio pointed out that most of the ‘news’ blogs are in fact ‘repurposing’ news from major news agencies.  I for one think there is some merit to this argument, but the jury is still out on some aspects of digital media impact on print media.  

Cover of "Convergence Culture: Where Old ...
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At the same time, the idea that digital media will not only augment traditional media, but also influence its direction was mentioned.  I for one think this is a powerful concept, one that is best captured in one of my favorite books titled Convergence Culture by Henry Jenkins.

It bears mentioning that demise of certain forms of media has been predicted before in the face of new technologies.  If those predictions were accurate, we would not have movie theaters or radio today.

Traditional media companies are opening the throttle on digital media initiatives

It was apparent loud and clear that traditional media companies consider digital media as much a color on its pallet as anyone else, and are aggressively embracing it.  While digital media gives upstarts an opportunity to enter the media industry with a more level playing field than before, they are by no means appropriating digital media.  Traditional media companies while starting from a reactive position, are nevertheless on the move.  My opinion is that they can leverage digital media to their advantage.  The question is how quickly can they gather steam and purpose their assets and resources towards this.

Digital media is not a single pronged initiative

Most traditional companies are looking at digital media as multiple prongs within a growth strategy.  According to one panelist at Folio, they expect multiple digital media initiatives to address different opportunity spectrums, multiple revenue streams and strategic goals.  Another aspect of this is that digital media can help them expand their businesses in new ways as opposed to digital media itself being the business.  For example, at a keynote Bob Carrigan, CEO of IDG, suggested that their digital media initiatives are targeted to build user bases, information from which is then applied to other business objectives towards their research and consulting work.  In my view, a site like Hulu disparate from NBCs other property sites is indicative of this.  On the magazine side, Conde Nast’s destination sites like Epicurious.com or Style.com different from its magazine sites is another example. 

Pay media is in serious consideration

With advertising CPMs declining and increased online advertising inventories commoditizing advertising, the topic of paid media (subscriptions and paid transactions) was prevalent.  While prime time television shows online are garnering good CPMs relative to broadcast, magazines will find it hard to reach online parity with their rate cards for print advertising.  I am skeptical on how consumers will embrace paid media en-masse, but we are likely to see initiatives towards this.  At the same time, as I projected here, this is a logical new direction that media publishers large and small will pursue.  I am on the fence on the outcome of this, and will be watching to see how it plays out.

Both these conferences were packed with sessions and while this post by no means is an exhaustive coverage, I think these threads merit tracking as various types of media companies continue to refine their digital media strategies.

What do you think?  Start a discussion below.

 

 

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Category: Commentary, Magazines, Projections
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Leaning and Linearity in Video and Other Trends

Posted on | March 4, 2009 | Print This Post

Do you think the Lean-Back / Lean-Forward metaphor for video is still valid given the sea changes we are seeing in the world of video?  I think not and I wrote about this in the recent issue of Streaming Media magazine (Streaming Media 2009 Sourcebook) titled:  ‘The New TV-Web-Mobile Mashup’.  Since I wrote the article, there have been recent updates in the news media that are indicative of the non-linearity trend I discuss.  Before I get to them, let me briefly describe what I think a new paradigm is for video.  

While leaning-back or leaning-forward was an elegant metaphor, visually descriptive of how consumers watch video on TV and PCs respectively, the tremendous changes we are seeing in video related behavior surpass the simple elegance of this metaphor.  Our viewing behavior is better defined by whether we are watching video in linear or non-linear mode.  Hence the title of this post – video viewing is about linearity (or non-linearity) than about leaning forward or back.  

This is more than just semantics or nomenclature - it is defining the evolution of video as a medium and as a business.  It is defining how we relate to video and the choices we will make in where and how we consume video.  In my Projections for 2009, I consider video non-linearity to become a growing trend in 2009, and an exciting one at that.

For example, Discovery Communications recently announced that it will mine its 23 year old vault of Discovery

Discovery Channel logo used from 1995 until ea...
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 Channel videos and publish short clips and mashups on the web including on YouTube.  This not only gives this content a new lease on life, but also opens up tremendous advertising opportunities given the thousands of clips resulting from their archives.

Similarly, in a post on Online Video Insider, Dave Jackson has highlighted ComScore data, summarizing that ‘video snacking’ is on the rise:  

 ”Video snacking” describes how millions of people are creating viewing habits around quick & consistent consumption of video… The average duration of online video was the only metric that remained consistent to last year, up only 18 seconds per video vs. the previous year. This is despite the fact that long-form sites such as Hulu did not exist last year. Americans still have relatively short attention spans when it comes to their online viewing experience…Video snacking is a real trend because online video meets a content need for viewers and is easily accessible to those viewers throughout their day. Marketers and agencies, particularly those that are trying to reach women, would be well served to look for ways to build on this trend to help achieve their goals.

While it may seem obvious to point out that the biggest video site, YouTube, is in fact serving clips, so what’s the big deal with this, what I think we are seeing is a shaping trend in not just video viewing, but also video programming.  The two comprise a virtuous cycle, and clips is just the beginning.  

The future holds mashups, personalized programming, dynamically created streams, and other types of experiences that are distinct from full length program and short clip viewing as we know today.  

Importantly, non-linearity alludes to user behavior and the business implications thereof.  There has been significant pontification for some time now that Internet video bodes the demise of traditional television as we know it.  I have maintained that traditional broadcast, cable and satellite television viewing is complementary to Internet video in large part, and the two actually can and will augment each other.  Recent Nielsen’s recent A2/M2 Three Screen Report presents data that while Internet TV viewing is on the rise, so is traditional television viewing.

Viewers appear to be choosing the best screen available for their video consumption, weighing a variety of factors, including convenience, quality and access,”  according to Susan Whiting, vice chair of The Nielsen Co., in a statement. 

Traditional television still has a few tricks it can pull up its sleeve, as I report here.  At the same time, Internet video has the potential to transform decades of video viewing behavior – giving us new use cases while not necessarily replacing existing ones. Programmers and advertisers may well find that video non-linearity is where Internet video comes of age for them.  It won’t matter whether we’re leaning back or leaning forward.  

What do you think?  Start a discussion below.

 

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Category: Commentary, Non-linear video, Predictions, Projections

Hulu and Boxee - Brass Tacks of Online Video Business

Posted on | February 23, 2009 | Print This Post

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Hulu pulled access of its content from Boxee last week.  The reaction and general sentiment expressed as a result of this action across the wires is not surprising.  However, admonishing the media companies as being short sighted, even comparing them to RIAA – and the plight that befell the music labels as a result of fighting the Internet – is premature.  

boxeeBoxee delivered 100k streams per week, and while clearly there is a community here that is very disappointed, this is a small community.  The only problem with Boxee is that it is too close for comfort to where many other big players in the media industry want to be.  Whether the pressure to pull the plug came from the programmers or their carriage partners, this action should be taken as a sign that there are high stakes at play in the world of digital media.     

While consumers are thrilled with the apparent open access of primetime programs from the likes of sites like Hulu and ABC.com, these are businesses being incubated by broadcasters.  This is not media companies giving in to the forces of the Internet, but rather them parleying the success of their content to an imminent new medium of distribution.   The video business is based on a complex structure of syndication and windowing, and online distribution is a part of growing this franchise, not giving it away.  

Let’s look at some facts first:  Hulu’s investment of $100M is among the largest of any online video company, if not the largest.  While it can be argued that this is not a huge amount for NBC and Fox, how many digital media companies have been funded by VCs to this level? Comcast’s acquisition of thePlatform was estimated to be at a similar figure (though some reported it as significantly higher).  Think of these as a high level of commitment to maintaining a business in an environment of disruptive technologies.  

Secondly, while all the major broadcasters have online video initiatives, cable networks (which are significantly more numerous than broadcasters) have been conspicuously absent from such Internet initiatives for most part.  This should be no surprise when one considers ‘the hand that feeds them’.  At the same time, cable operators have announced initiatives to bring such cable network programming online – on their own terms.

While the impressive growth numbers of online video over the past few years may suggest that this market is well on its way, we are only seeing the beginnings of a new industry.  The wheels are in motion, and while everyone is invited to the party, not everyone is welcome to stay.  The fact that we can connect our PCs and game consoles to our TVs and watch Internet video, doesn’t change the fact that the number of people likely to do this are very small early adopters, and by all means are of interest but not critical to the end goal of incumbents in the television business.  As soon as something starts looking, feeling and smelling like television, that becomes a different matter.  That’s where Boxee was a victim of its own success. 

As many are predicting, Boxee will ultimately return, and I am confident it will.  At the same time, there will be other such road bumps where the actions of content owners, programmers or distributors will seem discordant with their intentions.  Or are they?

What do you think?  Start a discussion below.

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Category: Aggregators, Broadcasters, Cable, Strategy

Update on ‘Whose Watching Online Video?’

Posted on | February 17, 2009 | Print This Post

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In Part 1 and Part 2 of ‘Whose Watching Online Video’ I emphasized the importance of knowing your audience and why some generally accepted notions of online audiences may not be accurate.  The recent article “With Hulu, Older Audiences Lead the Way” in the Wall Street Journal (may require subscription) sheds some interesting light on what’s going on with Hulu’s demographics.  

When you look at the audience of well-known Web 2.0 properties like YouTube, Facebook, MySpace or Twitter, their rapid adoption was fueled by 18- to 24-year-olds. At YouTube’s launch in late 2005, more than 50% of its site visitors were 18- to 24-year-olds.

This was not the case with Hulu.com. When the company launched its public site last March, the largest age group visiting the site were those Internet visitors over 55 years old, accounting for 47% of all site visits, while traditionally younger early adopters accounted for only 17% of traffic.

In my view, Hulu may be the most successful online video site by far.  Not only is it in the top ten video sites (#6 based on ComScore rankings of number of videos viewed in October 2008) within a year of launch, but it is a successful business model for online video advertising.  Its success is a combination of content and painstaking usability design that works.  In many ways it has the simplicity of watching television unlike many other sites where search and navigation is over designed with form leading function.  None of these are original observations on my part, but they are worth mentioning in the context of this post.

What do you think?  Start a discussion below

 

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Category: Consumers

Brand Advertising on the Internet – Is Old New Again?

Posted on | February 9, 2009 | Print This Post

In a previous post here, I wrote about the importance of knowing who your audience is for online video inicon_picture-50424 order to optimize advertising opportunities.  Last week I had the opportunity to attend the AlwaysOn OnMedia NYC conference in New York City.  A couple of recently venture backed companies were interesting in that looking at them one may say that old is new again, or that Internet advertising may look at traditional advertising for inspiration rather than differentiation.  

The distinction here is between brand advertising and direct response, search and other advertising that have been the torch bearers for the transformational effect of the Internet on advertising.  I thought it was interesting to hear this from industry insiders, as my previous post was based on insights as a marketer not as an advertising industry insider.

Short Tail Media and Brand.net

The two companies I refer to are: ShortTail Media and Brand.net.  ShortTail Media’s name should give away the premise of these two companies given the popularity of ‘Long Tail’ as the definitive nomenclature for the power of the Internet.

Both these companies are focused on brand advertising.  According to Blair, metrics attached to Internet advertising are not suitable for brand advertising – implying that click throughs or even impressions by themselves are not a good measure of a brand-ad’s effectiveness on the Internet.  According to her, the value that companies like Brand.net and ShortTail Media bring to brand advertisers is that they eliminate the need for ad networks that commoditize advertising. 

Both companies are funded on this business model, and brand advertisers seem to be responding.  Brand.net claims 50 campaigns since May 2008 with 60% of their revenue coming from the top 15 advertising spenders in the US.  Surely the founders and VC’s behind the ventures know something, so it will be interesting to see how their businesses evolve.

Whether this is a result of technology limitations or the fundamental nature of advertising, it stands to reason that brand advertising is not going to be transformed overnight.  Some of the reasons outside of stated goals of brand advertising (brand development as opposed to direct response creation) seem to be the structure of the industry from an ad sales standpoint and technology limitations.  The bloom has been off banner and display ads for some time.  In fact, the question was even asked – whether display ads would disappear entirely?

Internet advertising is one of the most dynamic areas of the Internet in terms of new innovation, investment and growth opportunities.  With the rapid growth in Internet advertising, and the tremendous opportunities for advertising to be transformed as a result of the Internet, it is not surprising that opportunities in Internet advertising remain bright.  It should also not be surprising that that there are more than 400 ad networks, or that over the last couple of years large acquisitions have been done by the likes of Microsoft and Google.  Venture investment in advertising continues, and with geo location and wireless connectivity becoming prevalent (for example, GPS enabled cell phones and Wi-Fi hot spots), local advertising is ripe for transformation also.

At the same time, the capabilities of online advertising, with the exception of perhaps search advertising, are dwarfed by the expectations and potential of such advertising.  When people suggest that Internet advertising is changing the face of the advertising industry, they are invariably referring to search and direct response advertising.  According to Blair, while 40% of direct response advertising has migrated to the Internet, less than 5% of brand advertising has done so.  Ask brand advertisers about Internet advertising, and while more money is being poured into it, for most part, it is still considered experimental budgets.

What does this mean for Online Video Advertising?

Surely a similar discussion of another form of brand advertising – namely video advertising – which also happens to be the fastest growing form of Internet advertising is not far behind. Then I come across this article on the web with a little factoid:

For example, Hulu and Break.com have attracted the coveted younger male with spending-power demographic. These very successful digital video publishers sell audience just as the cable networks do.

At least for the moment it seems that a demographic assessment of whose watching online video remains relevant to advertisers as discussed here.

What do you think?  Start a discussion below.

 

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Category: Advertising

Who’s Watching Online Video? Part 2

Posted on | January 31, 2009 | Print This Post

In Part 1 of Who’s Watching Online Video, I discuss some mis-perceptions I have come across of companies and folks in the industry about who they are serving as audeinces.   We all know who your audience is matters, no matter the business you’re in.  Let’s bring the discussion home:  Why does it matter who your audience is for online video?

Advertising:

Clearly, advertising is one reason that comes to mind.  Traditional advertising is still heavily based on demographic targeting.  Giving short shrift to such demographic data is imposing artificial limits your potential for advertising revenue, especially when such information is or can be easily available.  While some may argue that online targeting can be done more contextually based on what someone is watching and their online behavior, such targeting and personalization technologies are at a very nascent stage; the criteria are still broad, particularly with brand advertising (including video advertising).  Regardless, demographic data is complementary and still useful in packaging your service directly or indirectly to advertisers.

According to Erwin Ephron here, godfather of modern media planning:

…And that’s precisely the problem. So far, with the exception of search, online advertising has failed to find its core purpose. And to characterize the rest of online advertising as a single entity wrongly diminishes the challenge, because there are many online ad formats. 

The solution? Erwin underscored that we’re still lacking fundamental ethnographic research about how people interact with and use online advertising. The problem is that basic. We need to better understand it before we can even begin to think about measuring and connecting it to business performance goals.

Product Requirements:

The second perhaps more important reason from my vantage of those for whom I write is that product design and strategy cannot be disconnected from usability and therefore, from users.  The barriers to technology availability and adoption are so low that it is getting progressively easier to roll out new features and layer new functionality with relative ease.  While overall this is a good thing, great products and services strike a very delicate balance between being user driven and engineering driven.  

Great products bear the hallmark of simplicity.  Whether this is the iPod, Google search or something else, what sets such products apart from the crowd is the relative simplicity and well defined usability considerations.  

While online video is a draw for users across diverse demographic segments, simplicity, ease of use, elegance, and other product design criteria are however very subjective across different demographics.  While teens and younger users are heavily vested in their social networks, sharing of new media, and such, older users and seniors are more likely to consume online video with more similarity to television viewing than not.  Their needs are likely based more on search, information and/or entertainment viewing than socializing and sharing.  Simpler search and navigation may be more appealing to them than interactivity.

Parallels from the world of Video Gaming?

Take the case of video gaming.  While the attention is given to massively multiplayer online role-playing games (MMORPG), and game consoles, the fastest growing segment of video gaming is in fact online casual games.  The demographic driving this is women over forty.  It also happens that one of the fastest growing segments of Internet users is seniors and has been for some time.  

While a great deal of innovation is going on in the use cases and experiences around video, and by no means am I suggesting that this is not required, creating new compelling user experiences may have more to do with knowing who the audience is for meeting your growth targets than rolling out the latest gee-whiz technology.  

Perhaps another apt example from the world of gaming is of the latest generation of game consoles:  Nintendo Wii is outselling both Playstation3 and Xbox 360 combined.  While it is built on an earlier generation processor than its competitors and does not have the same quality of graphics or processing speed, it changed the paradigm for what game consoles are.  In the process it has broadened the game console market beyond the traditional 18-34 year gamers - who (by definition) are the ‘YouTube’ generation.

What do you think?  Start a discussion below.

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Category: Consumers, Market Data

Who’s watching Online Video? Part 1

Posted on | January 28, 2009 | Print This Post

In a prior career in consumer marketing, my team and I spent considerable time and effort analyzing demographics and consumer market segments.  Gen Y was the new market segment that was getting calibrated (I just dated myself revealing that, didn’t I?)  They now go by the term Millennial Generation and are receiving increased attention by marketers and sociologists, as they are starting to enter the work force.  There is another generation that has received much attention, namely the YouTube generation.  Though they are not a bonafide demographic from a text book marketing perspective, they are generally described to be 18-34 years old, mostly male.

Most online video technology companies that I have spoken to describe this as the target audience for most part.  A few months ago, I asked Forrester Research to send me some sample data from their Technographics Research to see if there was some merit to this assumption that many online video companies make.  While the data was sparse and inconclusive (given it was gratis and complementary data – which also prevents me from presenting it here), there was sufficient evidence to validate my doubts.

While the 18-34 ‘mostly male’ demographic is an attractive one as they spend a disproportionate amount of their time on the Internet relative to others, they are by no means the majority of Internet video users.  

Taking a look at the Neilsen Q3 2008 Three Screen Report data a few things can easily be eyeballed: 

 One, there are more women watching online video than men.  This should not be entirely surprising, especially when one considers that there are reportedly more women bloggers and casual online gamers than men.  In fact, there are more women online than men.

Second, in aggregate, whereas the 18-34 age group watches over 3 hours of Internet video a day compared to less than 3 hours for other age groups, the 18-34 constitute 23% of the Internet video population.  The over 34 age group constitutes 62% of the Internet video population.  In aggregate the over 34 group consumes 55% more Internet video than the 18-34 group.

I’ll discuss the implications of this for us in the industry in a subsequent post.

What do you think?  Start a discussion below.

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Category: Consumers, Market Data

Projections for 2009 - Online Video

Posted on | January 27, 2009 | Print This Post

While 2009 is already underway, it is still early in the year.  Already much has happened within a few short weeks in 2009 for our industry.  CES concluded with a glimpse of things to come.  Important new products were demonstrated that are the first mass sighting portending Internet video coming to the TV.  We had a record breaking live streaming event with the Presidential Inauguration.  

It is nevertheless early enough in the year to add to the myriad of predictions that others have made for 2009.   I would like to consider these projections into 2009 as opposed to predictions.  Predictions, at least to me, connotes some kind of crystal ball, while projections is extrapolating the existing dynamics in the industry with some thought, experience and collective wisdom of my colleagues and peers.  

I will be elaborating on these projections and developments related to them in future updates.

Overall State of the Online Video Industry in 2009

Much has happened in our industry in the last couple of years.  It is sometimes hard to imaging that all this really kicked off only a few years ago.  Things are nevertheless moving fast.  With the proliferation of companies in the online video space, 2009 will be the year when the men distance themselves from the boys.  

In a market getting exceedingly crowded with online video services, the opportunity to remain a siloed or a general purpose player gets progressively narrow particularly in a tight economy, which 2009 is predicted to be. We will see some degree of consolidation, strategic partnerships and even some attrition.  

The good news is that most of the smaller companies are actually nimble and thrifty, unlike the excesses perpetuated in the dot com days.  While we will see some maturation of the market with consolidation and specialization of companies, I expect to see new business models, and even new companies to emerge as a result (despite the economic climate).  There is limited advertising to go around, so entrepreneurs will find a way to make their services viable with business models other than advertising, such as specific vertical focus supported by sponsorships, and even subscriptions and paid services.

We are likely to also see new forms of online advertising suitable for video programming than the pre-post-mid roll models emerge, partly out of necessity (i.e., driven by higher inventory requirements and limited creative of video ads) and partly by consumer behavior and preferences (e.g., dislike of pre-rolls).

Net-net I expect the online video industry to come out stronger at the end of 2009, having weathered tough times at a formative stage of the industry.  By stronger I mean in terms of business fundamentals and value propositions.  Given the relative youth of the industry, it has not collected baggage unlike other industries that are contributing to the economic woes.  The current economic climate will reward companies that hunker down and hone their craft.  We are already seeing signs of that, albeit in the unfortunate forms of layoffs, despite significant funding rounds by some companies such as Veoh and Brightcove for example.

Devices Will be the New Frontier for Online Video in 2009

While deep pocket service providers like Apple and Netflix can afford to introduce dedicated living room devices tied to their service, for most other over the top service providers, third-party device support is required.  I expect we’ll see a concerted effort in 2009 to reach the television with enabling devices by service providers.  Whether this is through set tops, DVD players, DVRs (ala Tivo), game consoles (that are reportedly  in 75% homes), or high end televisions themselves, we are likely to see major moves being made in 2009 as the new frontier for online video gold.  Yahoo’s widget channel is a good start, and others are likely to jump on this trend.

Video Non-Linearity to Gain Ground

One of the projections that I am particularly excited about is the evolution of ‘video non linearity’.  I use this term to define video usage ideally suited to Internet behavior.  While the discussion so far has been on long form video (ala primetime television show) versus short clips (ala YouTube), the happy medium is somewhere in between, which is non-linear viewing of video.  

Non-linear viewing is germane to the success of web; I am confident will become germane to web video.  I write about this in more detail in an upcoming article in an industry publication (I’ll keep you posted).  Video non linearity will be the result of giving users choices to watch what they want within longer video segments.  There are IMHO a number of factors that naturally drive publishers and consumers towards non-linear viewing, increased advertising opportunities being not an insignificant one.  However, what enables non linear viewing will be a number of enabling technologies, which while have been around for some time, will find their footing in 2009.

Going-Out-on-a-Limb Projections

I may be going out on a limb here, but I expect at least one of the bigger players (i.e., in terms of venture investment) will get taken out by one of the big Internet companies.  I am holding back attributing specific names of candidates on either side, though I have my hunches. That said, on a slightly different note, I’ll go ahead with naming one company that has been conspicuous by it’s absence from this space, namely Cisco.  Knowing Cisco’s appetite for the Internet and more recently video, and their appetite for big acquisitions when they want to dominate a market, I have a hard time imagining they will not make a bold move following their integration of Scientific Atlanta and the roll out of Docsis 3.0 by the cable industry (which was heavily backed by Cisco).

A Must-Have Projection – Mobile Video

There was an industry joke back in the days before 3G – “3G is the future and it always will be”.  Something about this is reminiscent of mobile video, at least in the US.  Sure we have mobile video services from major carriers, good adoption of 3G data services, and video enabled handsets.  However, I have yet to meet someone truly enthusiastic about mobile video, and so far I have not seen a mobile video killer application.  

No, I don’t think 2009 will be the year for mobile video. But what does that mean?  What I mean is that mobile video is not going to take us by storm the way online video did, not in 2009.  I hope I am wrong, but as far as projections go, I can’t see that happening.  More likely mobile video usage will creep up on us like Bluetooth headsets did.  You did not see anyone rushing out to get one, but a very large number of people have them today.  Meanwhile, most companies that bet their future on the adoption of Bluetooth withered along the way, leaving the spoils to a handful.  

Mobile video will continue to advance as carriers have deep pockets and it serves their long term interests to build mobile video as a viable business.  As little as a year ago, at the MMA conference in LA, where new mobile applications and monetization opportunities are discussed, mobile video was not even on the agenda.  When asked, I was told it is too small (an opportunity) today and still a ways away.

What do you think?  Start a discussion below.

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