Commentary

Grappling Hooks And Climbing Gear: Video That Scales The Walled Garden

Despite the incredible growth of the online video market, it's still quite early in the game. Although popular, it's certainly not ubiquitous. And despite developments in video advertising technology--and simultaneous growth in ad inventory--the majority of video that you find online is not being monetized.

BizReport's Helen Leggatt put it succinctly, writing: "The amount of money being spent on video ads, while not minute at $750 million, remains a fraction of the online ad spend in the U.S. in 2007, which stood at around $20 billion." Although analysts predict continued growth of the overall online ad market, most anticipate that online video advertising will substantially outpace the broader market. In fact, eMarketer predicts that by 2011, spending for these ads will exceed $4 billion.

Lessons from the Software World

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Before you lock yourself in your editing studio and master Final Cut on your way to millions, let's examine what needs to happen for this type of growth to occur. Although I'm loath to reveal my closet geekiness, it's instructive for me to revisit my software roots. Even while the software and hardware industries were substantially more mature in the early to mid-'90s than online video is today, they were confronted by a similar issue: proprietary implementations. Code written in a particular language for a particular platform was not portable, expensive to maintain and improve, and a hindrance to innovation. Then came Java.

"Write once, run anywhere." More than 10 years ago, that was the vision that Sun Microsystems had in developing the Java programming language. The concept was compelling: programmers could simply develop an application once and it would work on any hardware device that supported Java. (I won't touch the eventual developers' retort: "Write once, debug everywhere.) It wasn't the first time the idea had been espoused, but there were marketing dollars behind it and serious buzz in the software development community. Java has evolved into the most widely deployed solution in the software world, but its impact is not limited to its own success. From languages (PHP, Ruby, Python, etc.) Web servers (Apache, Lighttpd, Nginx, etc.) and even databases (MySQL, Postgresql), Web applications now run almost anywhere.

Getting Video Rolling

Video isn't quite there... yet. In a marketplace rife with competing standards, incompatible formats, and proprietary implementations, the concept of "video anywhere" is alluring, but not quite tangible. At the heart of the matter are two problems. The first problem is that networks tend to stay closed as long as they can. This was certainly true for services like AOL, and remains true for many of the phone carriers. As consumer demand for content continues to rise, market pressures should reduce or eliminate these barriers. Indeed, online networks like MySpace and Facebook are now actively encouraging outside influences.

The second problem is rooted in the underlying technology. How does one upload a Windows Media file, distribute Flash (for the Web), Quicktime (for the iPod), and 3GP (for 3G mobile phones) versions of the same video? And how does one monetize across those various platforms and networks? Video service providers, advertising technology companies, and major carriers will have to work to bring interoperability to the marketplace. Content creators and syndicators shouldn't have to concern themselves with the technical details, but should instead focus on creating and distributing content. It is incumbent upon the service providers to understand the benefits of a flatter digital universe, and ultimately to work together to make broad distribution and monetization a fairly turnkey operation.

The consumer appetite for content shows no signs of satiety. Indeed, if video continues to grow anywhere near its current rate--something we, our partners, and our competitors are counting on--the walls around these "walled gardens" will have to crumble. And commentaries like this, with the benefit of hindsight, will seem charmingly antiquated.

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