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New Media Bulletin 2
Online Video Streaming
In March 2007, comScore estimated that 70 percent of U.S. web users streamed video. Approximately 126 million Americans streamed more than 7 billion videos online. YouTube drove the lion's share of the video streaming activity at the Google Sites property with 53.5 million unique streamers and 1.1 billion streams initiated. Yahoo! Sites ranked second with 434 million streams, followed by Fox Interactive with 421 million and Viacom Digital with 260 million.
|Top U.S. Online Streaming Video Properties
Source: comScore Video Metrix
|Share (%) of
Video Streams Initiated
|Fox Interactive Media||421||6.0%|
|Time Warner Network||222||3.2%|
|Roo Group, Inc.||96||1.4%|
Behind the News
While the online video market is relatively fragmented, the market is large. Google sites hold the largest share of video streams at 16.7% but the concentration ratio of the top ten firms is less than half of all streams. YouTube is the largest video streaming site but its content is not monetized, except for banner and display ads. Google and YouTube are not taking adequate advantage of the site's dominant position. The media conglomerates are making strides in building an online video presence. News Corp., Viacom, Time Warner and Disney were all among the top 10 video properties in March 2007.
ABC.Com in HD
Disney's ABC Television Group announced that it will soon begin streaming high definition videos of its leading television programs on ABC.com. Beginning with Lost, Desperate Housewives, Grey's Anatomy and Ugly Betty, programs will be available the day after their network showing and will again be ad-supported. The service will be expanded as new programs are aired in the Fall and will include local content with revenue sharing with affiliates.
Behind the News
Bringing high definition video to the PC is designed to boost the Internet audience and justify the ad packages that television networks are putting together for advertisers. These packages combine television network commercials, ads inserted into streaming videos for Web viewing and product integration/placement opportunities. One of the oft-voiced criticisms of streaming videos has been poor picture quality. Streaming in high definition is an answer to this criticism.
Blu-Ray Making Headway in Disc War
Two recent events may contribute to Blu-Ray's success over HD DVDs. On June 4, Sony Corporation announced that its new Blu-ray disc player will sold for $499, not the $599 price announced earlier. The new price will be half of what the first Blu-ray player sold for only a year ago.
In late June, Blockbuster announced that it would exclusively stock Sony Blu-ray titles in most of its 1,700 stores. Blockbuster, the nation's largest video rental service, has stocked both Blu-Ray and HDH formats in 250 stores since November as part of the trial run to gauge customer interest in the formats. The company said its customers rented Blu-ray titles instead of HD-DVD 70 percent of the time, according to the Associated Press.
Behind the News
The price reduction is part of Sony's strategy to make Blu-ray the dominant high definition video disc format. Sony and the other Hollywood studios are counting on high definition discs to jumpstart video disc sales, which have recently settled into a slow growth pattern. Studio hopes have been frustrated by the competition between Blu-ray and HDH formats. Consumers have been slow to convert to high-def video players while competing formats exist. If Sony and other manufacturers such as Samsung can bring out players that are nearer in price to the under $300 HDH players available from Toshiba, the Blu-ray's chances to be the dominant format will increase and studio hopes are more likely to be fulfilled. Only Universal, the sole champion of HDH, would lose from this outcome.
Because Blockbuster is the nation's largest video rental service, its choice to stock Blu-Ray may deal a significant blow to HDH DVDs. As Blu-Ray players become more affordable and the discs become more widely available, consumer use may lead to the increase in high-def DVD sales that the studios are hoping for.
Michael Eisner's Online Ventures
In April, Eisner's online production company Vuguru launched Prom Queen, a series of 80 webisodes that were each 90 seconds in length. The webisodes just finished their run and are already considered a hit with some 200,000 hits per day and a total of 15 million streams. The company has announced plans for a summer spinoff, Prom Queen: Summer Heat. The webisodes will expand from 90 seconds to 120 seconds, running for three weeks from August.
Eisner-backed Veoh TV launched in July. Veoh TV is designed to act as a video browser and digital video recorder for discovering, viewing and managing online video. It claims to combine the breadth of the Web with the simplicity of traditional TV, with a patent-pending recommendation device that allows viewers to discover agreeable content.
Behind the News
The Prom Queen webisodes demonstrates the viability of short-form video content produced for Web distribution. This success will encourage the thousands of producers, both professional and amateur who are making Web-destined videos. However, this activity is going on outside of the framework of the industry structured by the entertainment guilds. The success of short-form videos may further fragment the entertainment market and increase the role of non-guild content production. Moreover, many entertainment guild members may be drawn to distribute their work through this new channel.
Veoh TV is another online development that is attempting to make watching video on the internet as easy as watching television. Media companies are struggling right now to develop killer distribution platforms that incorporate the best elements of TV and the Web.
Eisner's online ventures have an advantage over the media conglomerates because these new businesses are not constrained by traditional media operations. This enables experimentation and innovation without the concerns of television and movie businesses.
Joost CEO Touts New Service
At a party given by Joost for Hollywood content producers and advertisers Mike Volpi, the company's new CEO, touted the advantage of this new Internet to television service. At the party, Volpi boasted that Joost “will transform the way people get entertained.”
Behind the News
Joost is a new Web content aggregator and as such is entering a highly competitive marketplace, where competitive advantage will be based in part on technology. Joost claims that its software produces a superior viewing experience. Volpi's promotion of the service is an attempt to establish Joost as a brand. It is currently unclear whether the brand that people seek will be an aggregator, such as Joost, a network, such as ABC, with which viewers associate a program, or the program itself, such as Grey's Anatomy, wherever it can be found on the Web.
Television networks as content producers will benefit in any case, but prefer that the network itself is the primary brand sought by consumers. If the network can attract Web traffic to its own site, there is no sharing of ad revenue. A second best solution for the networks is to put their content on Joost where it is associated with other content selected by the aggregator. Joost fulfills an editorial function in exchange for a cut of the ad revenue. Joost must brand itself to garner Web traffic and get its share of the ad revenue.