Separating Hype From Reality In Online Video

Some of you may be surprised to hear this, but I actually do have a day job.  When I’m not writing these “life-altering thought pieces” (yes, I’m kidding), I am running an online video content company.  Each year, I set some objectives, and by Memorial Day and Labor Day I look back and see how we’re doing after one-third and two-thirds of the year have passed.

This Labor Day weekend, I went back and also looked at some of the predictions my peers and I had made for 2012, as well as 12 things that I suggested wouldn’t be happening this year.

Not surprisingly, the predictions my peers and I made could be summarized as “hopefully this year the reason why I started/run my company will become true.” I guess that’s normal -- we’re either biased or naively optimistic, otherwise we would be literally insane, doing the same thing but expecting different results.

However, when I looked at the 12 things that won’t happen, I couldn’t help but laugh that by and large, at least 10 of those 12 things might never happen (let alone this year).  The list touched on:

1)    Standards and Definitions
2)    Year of Mobile-talk
3)    Death of Television-talk
4)    The Cord Cutting Hype vs. Reality
5)   Waiting for Apple’s Jesus Television, and OTT in general
6)   Use of ROI
7)   Push towards quantitative advertising
8)   Publishers Will Lose Power
9)   Tablet Hope
10) Branded Content
11) Consolidation in the Industry
12) VCs and content

I was right on the first 10: Indeed, we still don’t have real definitions in the online video industry.  Mobile did grow-- but to suggest that it’s a platform that will drive meaningful revenue is laughable, while television remains as strong as ever (the vocal minority’s #NBCFail meme was the joke, if you ask me), with cord-cutting being a rounding error across the population.  Meanwhile, Apple TV remains a great guessing game as OTT drives miniscule volume (yes, that will change -- hopefully my 4-year old daughter can run that unit when she grows up).  We continue to fumble the ROI debate, and the “securitization” of advertising ensures that advertising is as transparent as a muddy swamp.  Tablets may be the future, but today, good luck running a campaign to reach audiences on tablets.  Branded content grew, from marginal to “maybe one day.”

Ironically, with some consolidation happening and more VCs finally betting on content (but still small overall), I was sort of wrong on the last two (this, after years of saying that “it’s gonna happen this year”).  Even a broken clock is right twice a day, I guess. 

But ultimately, with way too many players (with too much funding) chasing a relatively small pie, a few caved in and opted to roll up into a bigger play.  Meanwhile, seeing YouTube’s $100 million investment in content (a figure possibly bigger than the sum of all exits outside of YouTube), VCs realized that, at least in online video, their bets on winner-takes-all distribution, technology and advertising portfolio companies were too risky, while bets on content could provide a better risk-adjusted return to their investors. 

Of course, the reality is that VCs’ strategy of pouring money into YouTube content plays is a risk; there’s no guarantee that YouTube will continue the practice of funding content in such an upfront, guaranteed manner.  Furthermore, YouTube remains a very challenging platform despite providing an immediate audience to target. 

Indeed, YouTube has been inspired by television’s funding approach -- but while linear television provides an immediate audience (which the programming must try to retain and grow), online advertising has always followed audiences, not preceded it, as is the case with YouTube’s approach. 

Ironically, even though VCs are now eyeing my industry, the lesson I’ve learned has been what most non-content industry CEOs (those in distribution, technology, advertising) should be asking themselves: If VCs suddenly lost their appetite and either fled to another sector or pulled your resources by cutting you off at the board level, do you have a business that can fund its current operations and growth as a going concern?  If the answer is no, you have some tough choices to make, because waiting for that overnight, hail-Mary-like, silver bullet to shift television ad dollars to digital isn’t a strategy. At best, it’s a prayer.

 

Tags: video
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3 comments about "Separating Hype From Reality In Online Video".
  1. Drake LaDue from fused180 , September 5, 2012 at 12:27 a.m.
    Right on! Thats really it. I'm in mobile and I can tell you the wave is here i't just not a tidal wave. But as in any technology and new media outlets, no matter how much they make sense, consumption and the consumer is driven by many more moving parts than "look it's super cool". Apple being the best example, always recognized as the better platform but it took 36 years to get here. I was in content delivery for years and the competition were cable cos. Been here a long time and still has build out left in this country. Definitely not going anywhere but will and has begun to morph into a different type of service provider from a product POV. Drake VP of Sales fused180 Go to http://fused18 .com Mobile Marketing and Strategies
  2. Drake LaDue from fused180 , September 5, 2012 at 1:33 a.m.
    Sorry for the terribly written comment before, that's what I get for multitasking. I think I was writing, reading, scanning with my phone and listening to a webinar. :). What I wanted to say was, When I distributed content for DirecTV and Dish Network I sold Bulk Commercial Television, Voice and Data Services, the cable companies were my competition. Time Warner, Comcast, Charter and several dozen others. They have been around a long time and have the strongest footing as media outlets. They may merge and get smaller but will most likely never go away in our lifetime. Plus they still have a few midwest states they can build out their plants.
  3. Diana D'Itri from IDR Broadcasting , September 5, 2012 at 3:38 a.m.
    After ten years in the space, I've seen web video for business in the past two years grow incredibly in competition and hype yet monetization still remains elusive. There are a lot of reasons why video is a hard sell but I think it's most likely due to the fact that web video is a support player, not the star that many would like to believe. Applications, strategies, integration may not seem investment worthy but web video is revolutionizing business marketing, especially for the small to mid sized business. As technologies continue to swirl and converge, the article is quite clear in showing that no body knows for sure where it will land. What is certain to me, however, is that video, in some shape or form, will most certainly be there in the midst.