Commentary

Digital Video WILL Reign Supreme

by Matt Wasserlauf , February 10, 2010

My 3-year-old has been nagging me a lot lately about "watching video on the computer." He's relentless. And ever since my wife customized some JibJab content online, Theo hasn't stopped: "Can we watch video on the computer?" "Can we watch video on the computer?!!"

My son doesn't care where he watches his video -- and neither does most of his generation. In fact, 178 million viewers are now watching 33 billion videos online, according to comScore Video Metrix, December 2009. I have to wonder if Dave Morgan (author of last week's "The PC Will Not Beat the TV For Video Ad Dollars") has seen those numbers lately.

The fact that this viewership online is only capturing $1 billion in video advertising is a short-term issue. Some factors do need to be worked out. These include serving and tracking standardization, measurement -- and most of all, economics -- in order for our industry to close the revenue gap with TV. In order for more content to get on-board online, the means of tracking and measurement have to be worked out. I agree with many of the voices out there, from writer Daisy Whitney to Mindshare's Cary Tilds, that standardization is the last hurdle.

Once our industry organizes around common standards, the potential becomes unlimited. Hulu just announced that its audience has exceeded 100 million viewers. I'm proud to say that so did BBE's (yes, that's my company.) But viewership is not the barrier. The masses are tuning in, despite the lack of compelling, high-quality content. Cable TV suffered from this same fate early on.

The real barrier is content and the model necessary to make more of it. In order for the creative community to produce future hit shows for the online medium, they must understand the metrics around success. With common currency, the industry can scale in a way that TV has enjoyed since its ascent to the top of the media funnel. Ratings and share, brought to you by Nielsen, have allowed the TV industry to reign supreme for 50+ years -- and they're all that that stands in the way for Online Video.

The next generation of viewers, from my son Theo to the new Facebook generation, are ready to watch "TV Everywhere." Jeff Bewkes, CEO of Time Warner, may have coined the phrase, but the next generation of viewers live by it. IPhones, iPads, laptops and Xboxes -- they will all do. With a common standard of tracking and measurement, these devices will deliver the next wave of content, never seen before on a TV or on Home Box Office. The future of TV is digital, and the future of digital is online video.

tv, video

6 comments about "Digital Video WILL Reign Supreme".

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The digital Hobo from TheDigitalHobo.com, February 10, 2010 at 4:56 p.m.
I'm baffled why people insist that all video is created equal. I'm also baffled why anyone would presume that Dave Morgan, of all people, isn't familiar with how many people are watching online video. Eagerly looking forward to his comments.
But it is patently unfair to say that the value of Hulu's 100 million viewers are worth the same as BBE's. Thats not a knock on BBE in any way. You do great work for some of the best clients anyone could ask for. My hat is off to you for the work you've done, and the network that you've built. Its just not the fair to say that eyeballs watching "Cube Fabulous" are worth the same as the eyeballs watching "30 Rock" right now.
Content isn't a barrier. The business model (or hobby model as it mostly stands today) doesn't work in a manner that enables anyone to make money in online video. And thats how it should be. Good content will be created, and people will watch it, and marketers will pay to be associated with it. But its just not being created right now.
The reason the money isn't flowing into online video right now is fairly easy to understand when we take our egos out of the equation. The vast majority of the video content being produced today isn't worth two cents. Even if 178 million viewers are watching it.
The industry needs to stop patting ourselves on the back about how good online video is and have a real gut check. When we deserve the money, we'll earn the money. Standards or not.
Reply

Jeff Bach from Quietwater Media, February 10, 2010 at 5:20 p.m.

Always the tantalizing future. Always just out of reach....

I think 33 billion videos watched online is a very raw number. That number I think only tells part of the story. The rest of the story is that 98% of that total is one-off UGC on Youtube which will NEVER be usable commercially.

You are very correct in stating that the problem is content. One-off UGC does not need an ecosystem. One-off UGC can be created by the hobbyist and mostly is. UGC will hardly ever be commercially viable in a business model.

Good content needs a sustainable business model that pays for a few of the things that make the content "good enough" top be commercially used. Online video does not currently have that business model in widespread use. TV DOES have that to the tune of about 70 billion dollars in 2009. Where is online video with that number?

Steven Ziemba, February 10, 2010 at 5:23 p.m.

I've got a 6 year old at home who knows when he wants to watch something specific we log onto the Internet. Specifically, we watch Monster Trucks and NASCAR. We watch Speed Racer on HULU. We watch music videos of his favorite songs on YouTube. We watch soccer on ESPN360 and FoxSports. We download movies and TV shows to his Sansa for long road trips. I agree with your assessment. We too are breeding the next generation of viewers in our household.

Dave Woodall from fiorano associates, February 10, 2010 at 7:16 p.m.

Have to agree with the Hobo. The fact that you're watching video on your PC Matt is only indicative of an environment where the Living Room ("everywhere" really) and the Web haven't been fully integrated yet. When they are, your son will no longer say "Let's watch the computer", he'll simply say "Check this out" and call-up the content from whatever device is handiest: Networked 60" LED screen, Laptop, Netbook, or Cell phone. With respect to Mr. Ziemba, the problem with his example is that nearly all of content mentioned was first made available elsewhere and then repurposed on the web. Hulu (like most sites hosting on-line content) is nothing more than a giant, networked Tivo, chained for the most part to a miniscule screen.

No one argues that someday all of our content will be delivered digitally (Hell, the technolgy exists to do it right now); it's the traditional content distribution system (movie studios, broadcast and cable TV Networks and their affiliates, and ratings services) that's not ready for it.

Besides, why is everyone getting so defensive? It's only a distribution system; it's not like we haven't seen this before. Just as information and entertainment moved from Print, to Radio, to TV; it's now moving to the Net. Content producers will continue to produce content, distributors will continue to distribute, advertisers will continue to advertise, and consumers will continue to consume. The names may (or may not) change but the song remains the same.

Steve Noble from VideoAdMan.com, February 12, 2010 at 4:28 p.m.

Great article. I offer video services for the Web and Mobile and recently decided to step back and work directly with SMB's. It's been slow. They are on the cusp but not there yet BUT when the SMB's do reach that point and are ready to embrace video and marketing via social networks, tv, mobile and the web video and true convergence will really kick in. Thats my bet anyway... time will tell.

Walter Sabo from SABO media, February 23, 2010 at 4:19 p.m.

The major fight I have with my 4 year old is when I tell her we can't watch something right now, it isn't available. In her world, everything is and has always been on-demand.

Of course there is a business model for online video---we developed it two years ago at HITVIEWS and it is a success for numerous major brands. This is new, of course 70 Billion isn't going to migrate from TV to online overnight. But the model is here and working.