Much Is at Stake with Online Video

We already know about the billion dollar Viacom litigation vs. YouTube, now the NBCU and News Corp. joint venture for online video distribution has revealed a name for itself: Hulu. Hulu will be ready for private beta in October.

Michael Arrington at TechCrunch has an amusing post that says “Hulu” means “cease” and “desist” in Swahili. The irony here, as he points out, is that litigiousness is partly what spawned the YouTube competitor. But online video is no joke for the networks and traditional content producers.

The Internet now rivals or exceeds time spent with traditional television. One recent online study that documented this trend was conducted by IBM. Results were released last week (there’s a nice summary of findings from Henry Blodget.)

IBM survey

Source: IBM (8/07)

TV is in the same position as other traditional media (radio, newspapers, yellow pages, magazines) that find their audiences to varying degrees migrating to the Internet.

In the US, ad spending on cable, local and broadcast TV approached $50 billion in 2006. Increasingly consumers are using DVRs to skip ads or watching less TV. And when they watch TV they’re often multi-taking, making it harder to gain the attention of viewers. That hefty ad spending becomes increasingly vulnerable as audiences spend less time engaged with TV.

The problem is, while you can port content to the Web, the commercials don’t follow as easily. As Google confirmed in its slides supporting the recent YouTube “overlay” release, users largely don’t like pre-roll video ads. What that means is that conventional TV commercials can’t simply be repurposed and inserted in front of TV shows and other video content being distributed online.

Google Pre Roll Findings

Source: Google (8/07)

It’s a version of the same problem every traditional publisher/content producer has: the Internet is more competitive and complex, with lower margins than the corresponding traditional medium.

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Related: Nielsen Finds Drop in TV Usage Is Real, from MediaPost.

2 Responses to “Much Is at Stake with Online Video”

  1. share.websitemagazine.com Says:

    Much Is at Stake with Online Video

    We already know about the billion dollar Viacom litigation vs. YouTube, now the NBCU and News Corp. joint venture for online video distribution has revealed a name for itself: Hulu.

  2. Video and Localized Video Rising « Screenwerk Says:

    […] that while consumers want online video to be ad-supported (free), they don’t like pre-roll and other interruptions of video content. (See also my AdMission post about making online video […]

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