The Seesaw Effect: Trends Shaping Video's Past And Future
To an outsider, the video landscape has been dominated by the rise of new video distribution platforms such as YouTube and iTunes, as well as enabling platforms such as Twitter and Facebook. Of late, we’ve seen content’s resurgence, staging a comeback.
But, on the front lines, it’s been a bit more nuanced than that.
Culminating with Google’s $1.65 billion acquisition of YouTube and capped off with Time magazine naming “you” as its Person of the Year, user-generated content blew wide open in 2006, as the Web’s new tools and platforms (Blogs, MySpace and increasingly YouTube) allowed the average, ordinary citizen to say and do extraordinary -- as well as admittedly trivial -- things.
A scramble ensued after YouTube’s acquisition. There was a fight for second place and relevance among YouTube’s competitors. Meanwhile, Rupert Murdoch’s marching orders for MySpace were simple (“kill YouTube,” basically). When NBC and FOX announced plans for Hulu to create an online home for super-premium programming, it washed away everyone else, as YouTube’s grip on mid- (or “torso” in their own parlance) and long-tail content strengthened.
2008 Professional content
By now marketers had widely rejected UGC as a viable canvas to run ads against, and YouTube had conceded that advertisers would never pay $20 cpms for skateboarding dogs. With Hulu’s launch in March 2008 came a massive shift: Content needed to be professionally produced. The initial duopoly pitting YouTube versus Hulu morphed into an oligopoly that eventually included Netflix, Amazon and Apple, giving content owners some much-needed traction. If not king, at least content suddenly gained relevance, if not prominence.
Ironically, much of the technology that enables the video ecosystem has become commoditized: content management systems (CMS) and content delivery networks (CDN) have seen pricing freefall, and their offerings commoditized. The bells-and-whistle add-on components haven’t been able to gain much traction either, what with YouTube’s increasing market and mindshare making it the de facto gatekeeper between audiences and the new video technologies. But for a brief period, marketers and publishers looked at technology to bridge the gap between audience size and monetization.
By 2010, there was enough advertising money funneling into the video industry that incremental distribution could be monetized. A series of acquisitions, including AOL/5Min, cast the spotlight on aggregators and redistributors that had aggregated content catalogs and built mid- and long-tail distribution. Still, a specter loomed over the landscape, as total video views -- and inventory of “good enough” content -- kept mushrooming at a faster rate than money was incoming, leading ad rates to keep falling.
2011 Content Differentiation
As things seesawed once again -- and word of YouTube’s massive content investment got out, and Netflix and Hulu toyed with original content production -- the focus not only shifted from distribution to content, but to differentiation, be it on talent, exclusivity or goodwill (brand equity), something that would make the content stand out among the clutter and entice advertisers to fork over enough money to offset the rising costs of content licensing, and the fact that relying on the CPM model was unsustainable for most creators.
2012 Madison Avenue Becomes Wall Street
This year has been marked by exchanges, trading desks and real-time bidding (RTB), which have captivated Madison Avenue the way black box quantitative “wizardry” enthralled Wall Street. With an increasing number of content creators, publishers and ad networks vying for supremacy, we’ve seen the rise of ad exchanges and real-time bidding that allow marketers to effectively bypass or merge many of the steps involved with media planning and buying. But the jury’s still out; audience quality, editorial placement and content relevance have varied.
So, what does next year have in store?
As bullish as we all are about digital video (online, mobile, tablets), the reality is that online video remains much smaller than anticipated, weighing in in 2011 at $2 billion in the U.S. (forecasts back in 2007 pegged 2012 online video ad figures at $7.1 billion).
Have companies adapted to this reality? What does this mean for video’s future?
Find out next week.