The popularity of user-generated video remains one of the most profound phenomena of the digital age -- but not necessarily of the digital economy. Consumers are demanding, and media companies are providing, access to more premium video content online than ever before. After several years of experimentation, it's clear that the real money in online video remains where it always has been historically -- with professionally produced content created by leading media and entertainment companies.
While it's very easy to become enamored with the latest or coolest technological innovation, from the iPad to Internet-connected TV, when it comes to video, they are all just a means to an end. People are interested in watching quality, premium shows online -- plain and simple.
One of the most telling signs of this dynamic is the sustained growth in the number of people watching full-length television shows. According to a recent report issued by eMarketer, 33% of online adults in the United States, or 58.9 million people, will watch full-length television shows online this year on a monthly basis. Among adults who already watch video regularly online, the rate is 50%. In 2011, eMarketer forecasts the rate among these groups will rise to 39% percent and 56%, respectively.
Online video isn't just about clips anymore, and the business of online video certainly isn't. As a CEO whose company is fortunate to help manage online video for numerous programming companies and television service providers, I see this firsthand as well. Of the billions of premium video views we manage annually, we're seeing average viewing time increase across the board. And, I am more excited than ever about where things are headed.
Like most Web enthusiasts, I want as much video online and accessible as possible. As an industry veteran I also recognize that it takes money to produce all the shows that we love, and that there are fundamental differences in terms of costs and revenue opportunities for how and where these shows are distributed. TV is still the dominant target for ad and subscription dollars and so far broadband video is not generating the same financial results due to lower ad loads, fractured audiences etc. I look forward to the day when technology and financial models evolve so that the kind of screen on which the video plays doesn't matter as much.
But, as a technologist, I also know the journey behind the scenes will be a bumpy one. In fact, I can hardly remember a time when the technology camps were more fragmented. The way video is presented to consumers is fragmented, with technologies like Flash, HTML5, or the upcoming WebM all diverging. The devices and operating systems on which video is presented to consumers are fragmenting as well, with mobile devices, game consoles and connected TVs powered by competitive offerings from the likes of Apple, Google and Microsoft all enriching the market but by the same token complicating the media distribution and consumption life cycle. And, these are just two areas of fragmentation from a laundry list of issues confronting the industry.
While this fragmentation provides consumers and media companies with many choices, it can easily dampen the rate at which premium video is enjoyed more ubiquitously by consumers. Fortunately, there are some underlying technological systems that can help mask some of this complexity and let consumers enjoy long form video in a user-friendly way. And, most technologists that I know haven't forgotten that our products are just the means to the end for consumers -- who simply want to enjoy great content. We all have our work cut out for us, but the payoff for consumers and media companies will be worth it.
In the end, recent reports from both eMarketer and Nielsen show that people are clamoring to watch more premium shows on television and online. With one third of online adults watching full length TV shows, it's clear that premium, long-form video has earned its vaulted, new status in the online video landscape.
Nice to hear converging opinions. We started filming and creating quality long form programming for the web nearly four years ago. When we started there was not any conversation other than the short form YouTube dialog. Today's buzzwords and trends of premium programming in curated environments is music to my ears.
Ian, I believe that the fragmentation that you describe isn't a problem, it's a welcomed change.
Now, instead of being limited to the predicable content from big-media companies, people can choose from a multitude of creative Indie content via the Internet on platforms like Netflix.
Technology diversity can also be a wonderful thing -- especially open standards that don't require a license. It enables the best video delivery solutions to rise to the surface, and expose content that would otherwise be hidden from the public.
It's pleasing to see that Internet video doesn't have the same constraints as broadcast TV or Cable. It brings us closer to a pure meritocracy -- where all creative talent is recognized and good quality video (regardless of budget) can be distributed at will to those who want it.
Great piece, Ian.
Often left out of the conversation - mostly because it isn't ad supported - are the people who want to "watch TV on their computer" for the convenience of it. We never discuss Slingbox as a competitor to Hulu, but if convenience is what you are after, its a great choice for a user.
You want HBO on your PC? Slingbox. Watch 30 Rock whenever you want? Slingbox. Skip commercials? Slingbox. What many, many people are really after is 24/7 access to their DVRs at any time. Like they say, "there's an app for that."
They are an entirely different subset than people who are "cord cutters" who are angry at their ISP/MSO/Cable provider b/c of pricing. They are maximizing the value of what they have.
While they may not be part of the ad model, it certainly is worth recognizing those folks when considering what options a user has to consume content whenever, wherever.
At the end of the day it's all about where the source of the $$ is. Premium is 'premium' if it has all the brand blessings or else it's just another high quality UGC. The problem with too much divergence of distribution technologies is that it solely depends on eyeballs first (view counts) as opposed to post or in-play conversions of call-to-action.
Flash was (is) doing very well so far. Then Google wants to bite into the big pie and pushed for HTML5. Somewhere in the ecosystem is lurking SilverLight (MS). Then soon, another framework will pop up... and then another one. At least, the good thing is, these fragmentations are device specific now and hence is still limited to countable numbers.
From audience interface development side, the application developers have to bear the labor pain of building their apps ready for device and frameworks. The goal is to make access a no-brainer for the audience. However, I would say that this just opens up an opportunity for display and digital placements in more device and usage specific dashboards. So, we will keep on building till all finally converges to one video player and one video format... !!!
The more things change... Viewers are looking for similar experiences online as off. It's not just about full length content, either. The group experience of watching TV in your den together or going to the movies is also migrating online. Long-form content lends itself to socializing, not just solitary, on-demand experiences.