Posts Tagged ‘Internet’

Hollywood and Web Video Follow Up

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Soon after blogging about Hollyood’s potential to have a strong, profitable relationship with web video, I came across Beet TV, a video blog by Andy Plesser. Plesser posts interviews with media executives and clips from various conferences, focusing on the “rapid emergence of online video and its impact on industry and society.” As I browsed through the site, I found many videos which related to my previous arguments.

In the post “Creative Producers will Grab Advertisers with Original Sponsored Videos“, Saul Berman, strategy partner of IBM, discusses a few of the issues surrounding web video monetization. At one point he mentions IBM’s global CEO study, which found that outperforming CEOs have a knack for “disrupting the market before someone else disrupts it for them.” Now, a growing trend in the digital age is that consumers are expecting higher quality content on the web, in terms of production value and level of engagement. That is exactly why I argue Hollywood needs to be more aggressive in the web video marketplace. While the studios have begun experimenting with digital media creatively and economically, in general, they have yet to effectively distinguish their content as superior online entertainment. Here’s the interview:

Berman also talks about a product placement business model, which has become increasingly viable. I’m going to take a look at this in more detail as Gemini Division unfolds, but it seems like a popular approach for producers, advertisers, and consumers, as long as the brand is subtly integrated within the story as a realistic element, not a distraction. Jigar Thakarar of CBS Interactive sees this brand integration as a much more profitable business strategy than offering pre and post roll ads. Here’s his interview from “CBS Sees Sponsored Web Video Programming as Viable Model“:

Because viral videos don’t carry advertisements as they travel through YouTube and other video hosting sites, I can see why product integration would be a practical solution. But it will be interesting to monitor exactly how producers handle a brand’s identity within the context of a story. Will the narrative, mise en scene, and characters always be faithful to the integrity of the show, or will they be heavily adjusted and obscured to land sponsorship? Ultimately, it comes down to finding a balance, but I still wonder if both parties will always be open enough to compromise.

As far as the consumers go, on the one hand nobody wants to feel as though a studio’s production is an excuse to advertise. That perception ruins all credibility. But on the other hand, young adults (ages 18-34) have become trained to avoid and ignore brand messages. So often the best way to reach them is through highly innovative, seamless product placements, allowing a brand to be more easily absorbed. It’s just another example of convergence – branded content and unbranded content merging together. And hopefully, when done correctly, everyone involved will win.

Another interview comes from the Dmitry Shapiro, co-founder of the Internet TV site, veoh.com. Shapiro argues that the future of television is in fact Internet TV. Using veoh as a “virtual digital video recorder,” viewers can consume Internet TV as they do broadcast TV, sitting back on the couch eating potato chips. Take a look:

Shapiro contends that users can get the same experience from Internet TV as they do with broadcast TV. However, unlike TV programs, web shows typically do not enable viewers to sit back, relax, and watch. They are designed to be seen on the fly, as a daily installment. But what if they were both? If there is one complaint I had with Afterworld, it’s that I was not able to plow through the episodes quickly and easily, since every 3 minutes I had to select the next video. Given the show’s twists and turns, I wanted the option of getting comfortable and sinking into the story. It may sound ridiculously lazy, but returning to my computer so often detracted from my suspension of disbelief and the overall immersive experience. (Not to mention the annoyance of hearing, “My name is Russel Shoemaker, I sold technology to the world..” for 130 episodes.)

Web shows do need to be short in length, no doubt about that. For many people, after about four minutes, streaming quality diminishes and their attention dwindles. But I’m a viewer who wants to watch the story as a “couch potato.” That’s why I think it’d be useful to fuse 10 episodes or so together in a half an hour format so that I can have more options: watch it on the go or on the couch. In this way, web shows could function as a medium independent of TV (in terms of style, format, and distribution) but also function, courtesy of Shapiro’s veoh application, as an extension of TV, as Internet TV.

To date, there has not been a breakout mega hit in original web programming. Web content still only appeals to fragmented audiences and studio executives still worry web content will cannibalize their audiences and revenue. Perhaps those problems will be mitigated when more consumers watch Internet video on their 42 inch flat screen TV in addition to their iPods. The bottom line is this though: Hollywood should not be complacent and wait for the future – they must disrupt it before someone else disrupts it for them.

Monetizing Internet Video Content

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This was a paper I wrote July 22nd, 2007 for a class at the University of Southern California. The assignment was to describe a system in the entertainment industry and explain how you think it could be improved. My internship at GoGooRoo.com, an internet video guide, inspired this piece.

The digital age of internet video and web streaming has undoubtedly revolutionized the entertainment industry as a new medium to reach mass audiences. You don’t need a distribution house to show your movie to the world anymore. But with such an easy and free process of uploading video on the web, how can a video site possibly make a profit? Like TV shows and motion pictures, the longevity and revenue of a particular video channel is largely dependent upon viewer popularity. Once a site hosts video content that attracts viewers and keeps them coming back, marketing companies will then compete and pay to advertise, which is the primary source for a video website’s income. (Rigler)

The most difficult aspect of the system involves keeping viewers at a particular video website despite the thousands of competitors available on the web, including the video juggernaut YouTube. To monitor what sites are most popular, the Nielsen/Net Ratings can calculate how many users go to a given webpage and how long they stay there. Recently, the latter has been the more important statistic in terms of drawing advertisers. (Jesdanun) So not only does a video site have to be innovative enough to find viewers, it also needs to be engaging and compelling enough to appeal to viewers for long periods of time. Video websites accomplish this through a variety of ways. Some offer a social network to accompany video content. Others list recommended and most viewed videos or organize content based on a user’s interests.

Whatever keeps consumers entertained though, advertising companies are willing to dish out huge amounts of money to display their ads on such video hotspots. Unlike commercials on TV and film, which are produced for a wide audience, advertising companies on the web find greater profit in presenting their ads towards a specific group. (Rigler) For example, ReelTV, a video site about movies, contains ads for NetFlix and FilmStew.com. In this way, advertisers present their product to people who are more likely to notice them. So for a site like GoGooRoo, which links viewers to a huge variety of video channels, the hope is that a broad range of companies will want to pay for ads on each specific category—movie trailers and advertisements on the film related channels and computer and software ads on the technology channels etc. (Rigler)

Advertisers pay video websites in different ways for hosting their ads. They may pay a certain amount for every user that clicks on their ad or for every user who buys their product of their webpage. (Moncur) But the industry standard has been to pay a video website a fixed amount for every thousand ad impressions (1) they display.

Advertising becomes problematic however, when viewer generated content is involved. Cynthia Littleton of Variety notes, “advertisers demand far more certainty on the type of content before they’ll spend big bucks on it.” Companies don’t want to risk their brand name appearing next to a video that infringes on copyright laws or is offensive in nature. (Teeling) Thus, while viewer generated content may draw the most viewers, it is more difficult to attract big name advertisers.

Nevertheless, I think viewer generated content is an area which can greatly improve the business of monetizing online video. The way the system works now, the majority of video hosting sites do not reward the producers and filmmakers who made them popular in the first place. Sites like Revver and Brightcove do share a certain percentage of their advertisement profit with the people who post viral videos and attract millions of viewers. (Pick) Metacafe awards 5$ to a video producer for every 1,000 views past 20,000. This is a smart and effective system and should be implemented by companies struggling to compete with YouTube and MySpace. First, it would improve a video website’s ‘time spent per person’ rating because users would spend hours researching what is popular and what would make them the most money. The video website would benefit from swelled traffic and advertisers would benefit from the increased chances of reaching their audience. Secondly, the system would  help eliminate copyright and offensive content because advertisers would not invest in legally questionable videos, no matter how many views it received. Finally, splitting revenues with video producers makes people more understanding and tolerant of advertising. Since people know the ads are there to benefit them too, they won’t be as frustrated by pre-roll ads (2)or annoying popups and banners.

Another efficient way to monetize video content involves linking advertisers and users through contests and competitions. In this strategy, an advertising company would make a deal with a video website inviting viewers to create creative commercials or videos for their product. The video that receives the most views would win a hefty reward. This would directly link users and advertisers so that they’re working together; as the user promotes his video to win the competition, they’re also promoting the advertising company.

In sum, because the system of monetizing video is fueled by a buyer’s market, I believe video websites need to give more incentive for viewers to return to their sites. And if that incentive is money, then a cycle is created which benefits everybody–First, viewers are drawn to a video site in hopes of making a profit. Mass amounts of viewers will then attract advertisers. And the money from the advertisers will be split between the website host and the users who produced the content for it. With this win-win cycle, the medium of online video would distinguish itself further from TV and film as the premiere form of entertainment.

(1) An impression is an instance where the ad appears on the page.

(2) An ad that runs before a video begins. This commercial may range from five to thirty seconds.

References

Literature

1.) Littleton, Cynthia. “Sony Flips for Clips.” Daily Variety: July 16th, 2007.

Online Articles:

2.) Jesdanun, Anick. “Nielsen scraps Web page view rankings.” Yahoo! News: July 9th, 2007. http://news.yahoo.com/s/ap/20070709/ap_on_hi_te/online_measurements

3.) Moncur, Michael. “Web Advertising Basics: Overview of Ad Revenue Models.” Website Workshop: November 16th, 2004. http://www.wsworkshop.com/money/ad-revenue-models.html

4.) Pick, Michael. “Internet Video: How to Monetize your Independent Video Content.” Robin Good: November 13th, 2006. http://www.masternewmedia.org/news/2006/11/13/internet_video_how_to.htm

5.) Teeling, Erin. “YouTube: Show me the Money!” The BivingsReport: September 19th, 2006. http://www.bivingsreport.com/2006/youtube-show-me-the-money

Interview:

6.) Conversation with Thomas Rigler, co-founder of the GoGooRoo Internet Television Guide, about the system of monetizing video content. July 13th, 2007.