Commentary

Who's The Real Competition For New-Media Content Producers?

If you're reading this, you're probably a big proponent of online video.  I am, too.

But ask yourself one question: if NBC, CBS, ABC, and FOX took every minute of programming in their archives and published it online, what would be the result?

Initially, already-bloated Web inventories would skyrocket, sending rates lower overnight. Over time, though, this move would drive a lot more advertising revenue into the online system, away from television. 

Why isn't this happening already? Because when it's all said and done, the size of the online video advertising pie will still be smaller than the existing television advertising market (let alone the fees from cable, DVD and box office sales).

Therein lies the big opportunity and threat for new-media content producers -- some of whom are trying to create a form of "light television," and others, like our company, that are basically morphing newspaper or magazine articles into video format. 

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The cumulative result for our emerging industry, let's face it, has been hit-and-miss.  Without a doubt, new-media video producers are seeing a lot of viewership: a year ago in February we generated 3 million views, while this February we almost served 10 million streams. Sadly, though, our revenue didn't grow by a commensurate proportion (though it did grow), and we're probably not alone.

What's holding us back?

What's mainly holding back online video advertising from fulfilling its potential is the fact that super-premium content catalogues will remain sidelined for the foreseeable future due to a lack of monetization (think Viacom vs. Hulu).  The money that will be spent online and around video content will initially go to the benefit of the ESPNs and Yahoos -- and finally, goes the theory, to upstarts like new-media companies producing professional, made-for-web original content.

When an ad agency speaks to my company, they ask us who our competitors are.  I try to cast each in a positive light and stress how we're different -- and at most suggest, implicitly, how we might be better suited for their client.  But I wonder how others talk about the competition. I can't help but think they probably torpedo one another to improve their own chances of landing the deal. New-media produce are not likely to bash Yahoo or ESPN -- which would end up hurting the overall group and ultimately, themselves.  Indeed, more often than not, the new-media producers miss out on the deal while the "established players" get the campaign.

A Network?  Association?  Dare I say "Cartel"?

As such, I have long argued that new-media video producers must stop fighting one another -- or at least competing in the marketplace for ad deals and dollars. Instead, they need to come together to position themselves as a strong, cohesive front to bolster audiences, complement content offerings and avoid undercutting one another. 

Ultimately, there are four layers of resistance to be conquered before online video producers generate massive revenues:

a)  Television.

b)  Search (even though search and video serve different marketers and objectives).

c)   Big portals (who have huge audiences, established marketer relationships and decent-sized video streams, thank you very much).

d)  Top-tier publishers (who, like portals, will command a healthy mix of display, sponsorship and video ad sales without needing to produce as much proprietary content as the upstarts).

For these reasons, while big media is sitting on the sidelines and watching, you might see a wave of consolidation among the countless producers who are vying to build a brand, generate an audience, and grow sales -- all before any meaningful acquisitions take shape.

2 comments about "Who's The Real Competition For New-Media Content Producers?".
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  1. The digital Hobo from TheDigitalHobo.com, March 22, 2010 at 5:46 p.m.

    What is holding the industry back is the inability to discuss different types of content in its appropriate context, while other people (like this column) talk about "video" like its all the same damn thing.

    What is holding "super premium" aka TV content back is barely related to the issues that affect branded entertainment.

    I'm guessing you missed the video panel at OMMA that talked about the marketers and publishers being the ones that are holding back the growth of online video.

    Regardless, I don't see how your "Big Four" obstacles are obstacles to growth at all, either for "super premium" "web original" or "branded entertainment."

    Defeat the Television? What about Search as a tool for finding the video you were looking for? Isn't YouTube the largest search engine in the world at the moment?

    Big Portals? Where better to run your branded entertainment and original web content than a targeted, segmented audience pulled from a huge pool of potential viewers? And last I checked, there are more than a handful of "Top Tier Publishers" who are continuing to run branded entertainment as part of their editorial mix.

    If you see consolidation in the "new media video producers" market, its because you produce crap content, not because there isn't a market ripe with opportunity.

  2. Ashkan Karbasfrooshan from watchmojo.com, March 23, 2010 at 10:08 a.m.

    Thanks Digital Hobo, we don't produce crap, if we did, why would 20 of so other media companies PAY us licensing fees to carry our programming?

    I was not talking about our company or any one company in particular.

    My point, which you seem to have missed, is that every ad agency and marketer I talk to wants REACH. Sure, they want targeted communities too... but first and foremost they need REACH.

    The "big four" I list offer more reach, that's it. To offer reach, I see some but not all made for web producers hooking up. Who? No clue. There are people issues and lots of egos involved, so it might not happen... but if it does not happen, advertisers won't really jump on the bandwagon.

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