Analyst: Too Early for Web Video to Affect TV

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Following the Digital Content NewFronts that wrapped up a few weeks ago, ad industry executives, pundits and other industry watchers have been outspoken in their belief that the concerted effort made by the Web’s biggest content sellers to urge advertisers to divert their millions to Web video and other platforms was unlikely to move the spending needle by very much.  

And even though some big brands like General Motors and Samsung Mobile have said they plan to move significant money into digital since then, Barclays Equity Research analyst Anthony DiClemente doesn’t think their efforts will move the needle by very much, either -- and he has the numbers to back it up.

Citing Nielsen data, DiClemente points out that most viewers still spend a lot more time watching TV than they do Web video. Each month, the average person spent 153:19 hours watching live TV in 2011, compared to just 4:34 hours watching Web video, and 4:20 hours watching video on their mobile devices.

The monthly total for TV watching was actually down 46 minutes from the average in 2010, but this was made up for by the fact that consumers watched an additional 1:17 hours of TV through their DVRs, which means that TV viewing effectively gained 31 minutes per average consumer. Web video viewing, meanwhile, increased by only 11 minutes from 2010, and was flat for mobile devices.

With that in mind, if digital video advertising is expected to grow by 36 percent this year, where will the additional revenue come from? According to DiClemente, video’s gain will come “more at the expense of print ad budgets.”

Overall, DiClemente says, “we think it is still too early for online video to be meaningfully disruptive to TV.” He adds that Web video’s ad-supported business model is also far from convincing: since TV-quality premium content is expensive to produce, “we wonder about what the eventual return on that investment could be.”    

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2 comments on "Analyst: Too Early for Web Video to Affect TV".

1. Richard Lyons from PVP
   

   commented on: May 17, 2012 at 12:21 p.m.
   Apple wants to rent you the time limited rights to experience licensed content, but not to possess video in perpetuity. I am expecting a Pandora/Netflix style video genome algorithm to learn, predict and suggest user viewing choices (. . You might also like . . .) with a strong walled garden bias toward iTunes content from which Apple generates additional revenue. ... The Apple TV will really harm broadcasters, unless we can better control the IP path into the home. Their search engines will not point to OTA or your website .... Breaking news now propagates regularly via Twitter, but without second sourcing or fact checking it can be as worthless, wrong, and dangerous as mass hysteria. The revolution will not be televised, it will be tweeted, just ask the organizers of “Occupy Wall Street” or the “Arab Spring
2. Douglas Ferguson from College of Charleston
   

   commented on: May 17, 2012 at 2:32 p.m.
   In other words, the tipping point has not yet been reached, so continue to whistle in the dark.

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