TechMediaTalk

Projections for 2009 - Online Video

Posted on | January 27, 2009

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.

Category: Predictions, Projections

Comments

2 Responses to “Projections for 2009 - Online Video”

  1. Leaning and Linearity in Video and Other Trends : TechMediaTalk
    March 4th, 2009 @ 6:43 am

    [...] 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 [...]

  2. Mobile Video still a Ways to Go; Whose Watching Online Video Revisited : TechMediaTalk
    March 25th, 2009 @ 8:10 am

    [...] my digital media Projections for 2009 earlier this year, contrary to predictions from some others, I proposed that 2009 is not the year [...]

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