Commentary

Online Video Growing -- But Very Slowly

by Wayne Friedman , Staff Writer, April 28, 2009

The digital threat to traditional television still isn't coming anytime soon -- not in 2009, or 2010, or 2011.

In three years, traditional TV will still be consumed "98 times" more than online video -- this from a new Magna forecast of online video. And, as everyone's knows, it's not just in consumption that traditional TV is leading; big brand advertisers aren't spending much with online video.

Forget, for a moment, all that user-generated content big-time traditional TV advertisers are leery about. According to Magna's Brian Weiser, last year American consumed 244 times more traditional TV than all the professionally produced online video. That includes all repurposed video of network TV episodes, as well as original content from those top-flight TV producers.

Online video advertising this year is projected to be at $699 million, down from recent quicker growth projections. Yet all of these numbers pale in comparison to the $60 billion marketers spent in total U.S. TV advertising last year -- that gives online video a bit better than 1% of the TV total. Magna estimates online video advertising will climb to $1 billion by 2011.

Other estimates point out YouTube may be around $200 million in advertising next year -- with Hulu around $150 million. These two players could be just about half the entire online video market. This means there is opportunity to be had, perhaps for nontraditional marketers, those advertisers Google focuses on for the Internet's future growth.

We all know what is missing for big time marketers -- standardized video commercial formats, better metrics, perhaps a single currency (like traditional TV) and, according to some media agency executives, improved business practices.

In the coming weeks, the traditional TV upfront will be stirring -- albeit slowly -- with some $19 billion on the line collectively for its big three national TV platforms: broadcast, cable, and syndication.

The big question is, when will online be the fourth musketeer -- and to what extent it will have a real impact on the other three national video platforms?

Cable is only now getting to parity in terms of overall volume with broadcast -- about $7 billion to broadcast's $8.2 billion. Is Internet where the cable TV industry was in 1989? 1999? The fast-moving Internet seemingly has a long, somewhat slow way to go.

ad spending, tv, video

5 comments about "Online Video Growing -- But Very Slowly".

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Pinaki Saha from Me!Box Media Inc., April 28, 2009 at 3:26 p.m.
Online video scales in a different way from conventional TV and broadcasts. Big marketers are not jumping in as vehemently as in TV because there is no formalized metric to evaluate ROI. Now, TV is no better either.. and they are stuck in their spray-and-pray philosophy. And may be that is a generation gap. However, one possible way to open the window a little more for marketing dollars could be by providing ability to take the viewer where they want to go in the fastest possible way.
In most cases, Internet has been a more informational conduit as opposed to media conduit. Now the platform is changing. Nevertheless, the marketers and online enablers are still evaluating usage in terms of information aggregation and usage.. not in terms of holistic media consumption like in TV. So, it needs a overhauling of the biz models that Internet enablers have put in place so far. The biggest problem in doing that? - they haven't figured out the right feature set that consumers will use to make this dimension of consumption more valuable... and the best part .. even consumers are trying to figure that out!
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Chase Norlin from AlphaBird, April 28, 2009 at 6:41 p.m.

Good article, but I believe you overlooked that there's a bit of a perfect storm happening right now: 1) more and more websites adding video; 2) users getting used to watching video online; 3) broadband penetration continues; 4) advertisers/agencies realizing the power of online video; 5) shift of media dollars from offline to online; 6) new video distribution outlets - set top box and mobile; and 7) early days in terms of the online video industry. All of this means that making predictions about growth is that much more difficult. Things are just too dynamic and fast moving right now, not to mention the "cloud" of the economic environment. Content is king and video is the king of content, which means we're just getting warmed up in my option.

chase norlin
ceo, pixsy

Michael O'faolain from Redwood Guardian - The Lost Scripts, April 28, 2009 at 8:10 p.m.

Cable companies are negotiating right now with media companies to control access to on line content so that only cable and satellite subscribers will be able to view TV content from web sites like Hulu.

Once the cable companies aren't feeling a loss of tv subscriber revenue because of on line content, in areas where the infrastructure can support it, access to those web sites will be supplemented through set top boxes coming on line later this year.

In 2010-11 standardized video commercial formats and metrics will be developed mostly to work on those boxes. By the 2012 upfronts (if upfronts continue to happen) online will be the "fourth musketeer."

Paula Lynn from Who Else Unlimited, April 28, 2009 at 8:36 p.m.

Let's see. I should trade in my 42" screen for a 15" screen and instead of being comfortable watching a big screen, I should scrunch up watching a small screen for long periods of time. Gotta' think this one out.

Douglas Ferguson from College of Charleston, April 29, 2009 at 9:10 a.m.

Cable channels claimed prime-time dominance back in November 2003, which is a long time ago. So the viewing battle is over. That the broadcast nets are able to generate more dollar volume from desperate ad buyers doesn't dispute the fact that the prime-time audience left broadcast over five years ago.

Revenue is not the same as viewing. And I agree with the perfect storm comment below, that the tipping point is just around the corner.