Seven Realities That Affect Video

Two years ago, I published the 10 lessons I've learned about online video in my five years of heading my company.  Today, in my seventh year, we'll touch on the seven most important realities we face moving forward.

Google acquires YouTube and pulls it off. Google's made a lot of good, bad and ugly acquisitions. While some would consider Android or Doubleclick as its best one, I think the decision to acquire YouTube will over time give Google the one-two punch in search and video that it has long sought to diversify away from the AdSense juggernaut.

As a content partner to YouTube, we’ve seen the site's mishaps and mistakes firsthand, but none have been fatal. Net-net, it has executed quite admirably, navigating the confusing online video landscape better than anyone could have expected. 

Aol resurgence thanks to 5min acquisition. When we signed deals with the three portals -- Yahoo, MSN and Aol -- it became clear that the portals all had a lot of work cut out for them to position themselves for online video. While all three have improved considerably over time, Aol gets the highest marks for the biggest improvement (more like transformation).  The credit goes to Tim Armstrong for moving quickly on 5min as well as 5min founder Ran Harnevo for navigating in the usually political and racing-against-time climate at Aol.  Today Aol is arguably one of the best0positioned media companies in new video, with 5min as the cornerstone.

Big media loses out. Now to be fair, one reason why Aol ranks amongt the best-positioned online video companies is because it hasn't been challenged by old media players, which put their sloppy seconds and leftovers online, using video as a promotional vehicle and auxiliary revenue platform.

Big media manages to build a new media player in Hulu. That being said, big media proved that it can get out of its own way and build a successful platform.  In fact, Hulu isn't just the byproduct of one media company, but three (two initially: FOX and NBC, with a third  -- Disney -- joining later).  While there's a lot of uncertainty around Hulu's future, the company won't disappear into the sunset.

Networks disrupting one another. Some display ad networks have begun to morph into media companies (Specific Media now owns MySpace, for what it's worth).  Others are moving into video (Undertone) via acquisitions or product moves.

The video ad networks have managed to scale, but eroding margins have forced them to become exchanges, ushering in the birth of programmatic buying with the explosion of RTB.

Tech is a commodity. While Google leveraged its superior tech to build the world's greatest ad business, few companies have managed to emulate this move.  To Facebook, for example, tech is a means to an end.  In online video, tech is a commodity -- YouTube is the leader, but its core asset is the audience. It’s the YouTube community that manages spam, makes things go viral, etc.  The tech is an afterthought.

Online video is a global business. And speaking of YouTube's community, the massive global audience it has accumulated over the past eight years has fostered a truly global business.  The barriers to entry for MTV (for example) to become a global business are far more considerable than they are for emerging brands like Machinima.

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