Video Viewing Rises, But Growth Rates Slow

If you’re watching more premium video online it’s because, well, you are. Total video views for rights-managed programming jumped 23% year over year, according to the recently released report from online TV technology company FreeWheel, which tracked about 52 billion video ads and 43 billion video ad views in 2012.

But premium programmers shouldn’t rest on their laurels. While video viewing is still rising, the growth rate is slowing each quarter. Video viewing volume rose 23% in the fourth quarter compared to a year ago, but only rose 7% in the third quarter compared to the fourth quarter. On the other hand, the growth rate for video ad views is more than double that of video views.

“This trend has been consistent for several quarters, and presents a real revenue risk to content owners,” FreeWheel said in the report. “If new opportunities for distribution and syndication aren’t created and more content isn’t made available online, advertising revenue potential will stall, as there is a limit to the number of video ads that can be placed in a single piece of content.”



Programmers then need not only to focus on selling ads, but also on continuing to drive viewership of online video across the Web.

Despite the cautionary tale, most of the news is good for the online video business. Video ad volume grew year over year, an increase driven by more holiday video ad spending and by increased ad loads. That’s a positive for the industry, since it underscores that consumers are tolerating more ads. Completion rates are strong, too. FreeWheel said completion rates for long-form content average 93%, up from 88% in 2011, and are 81% for content in the five- to 20-minute range, up from 68% in 2011.

“This  rise in acceptance can be attributed to two dynamics: content owners testing and respecting appropriate and acceptable content-to-advertising ratios and adjusting ad length and  position accordingly, and consumers increasingly understanding the trade-off between ‘free’ access to professional rights-managed content and the presence of advertising,” the report said.

Specifically, FreeWheel said that long-form content that runs more than 20 minutes is averaging about 9.4 video ads per video view, up from 6.9 video ads in the same quarter a year ago.

Not surprisingly, phones and tablets are driving video consumption and therefore ads. About 12% of total video viewing occurs on smartphones, tablets or game consoles, up from 2% a year ago.

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