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Online video viewing is set to reach a milestone next year according to eMarketer. Numbers released this week show that half of Americans will watch online video next year.
But there needs to be a categorical shift of viewers online if the web video hopes to make the kinds of revenue that are seen offline.
Netflix has been hard at work getting its content on as many platforms as possible. This week, they're starting to stream early seasons of ABC shows like "Lost" and "Desperate Housewives." There are also rumors of a Netflix app that will soon stream video content to the iPhone.
This is all great news for Netflix. But is it a winning situation for the networks? Yes.
Television networks are desperately trying to bring their ad dollars from television onto the web. And Comcast's new strategy to earn ad dollars online is to simply shift put all of its content there.
A new partnership with Time Warner, called TV Everywhere, is bringing Comcast content online for their television subscribers. But while TV viewers might be glad to see that content on the web, they will be less enthusiastic about the fact that it comes with all of the network's television commercials.
The free online ad supported video segment may be growing, but new research shows that people are willing to pay for their online video.
According to a report by Boston-based Strategy Analytics, paid-for video is expected to grow faster than free ad-supported video over the next several years, at a rate of 39% annually, compared to 37% for free video.
That's good money if you can get it. But it will be a hard sell to get people to pay for things they get now for free.
Video portal Hulu has come a long way since it was colloquially known as "Clown Co.” The website has since gotten a real name, design raves and 10% of the online video ad market.
And as video sites like YouTube struggle to bring in ad revenue and portals like Joost shutter, Hulu's network supported business model seems even stronger.
Today The New York Times discusses the reasons why Hulu works. Mostly, it's because they just throw network content up on the Internet unscathed.
News of Michael Jackson's death last month nearly shut down the Internets with interest and confusion as people went online to check and discuss the news. Today is the pop singer's memorial service in Los Angeles and online news channels and video hubs are preparing for similar levels of traffic.
Everyone - from the BBC to USA Today and MySpace - is planning to live stream the service, which is today at 10:00 PST at the Staples Center in Los Angeles. If viewer interest comes anywhere near the level expected by these sites, the whole Internet might shut down. Alternately, it could illustrate the potential of online video left untouched by profit motives.
Online video began as a short form medium, but as creators and audiences become more comfortable with longer videos online, advertising dollars will surely follow suit.
Sites like Hulu and YouTube have been focused on branding partnerships for professional video content online. And consumers are proving that they have the attention span for longer content.
It's no secret that despite the recession and shrinking overall budgets, major advertisers continue to shift ad dollars to online.
Earlier this month, Nielsen reported that in Q1, spending on local Sunday supplements fell 37.7% in the United States. A perfect example of how some of that spend is making its way online can be found with Office Depot.
Is online video advertising undervalued? The online video ad market is estimated to grow to between $2 and $7 billion by 2012. But that's still a drop in the bucket compared to the $70 billion television ad market.
Online publishers and advertisers are frantically creating new formats and content to entice viewers online, but the hurdle in online video ad profitability may have less to do with the quality of the advertising than the quality of the audience.
Thanks to shows like "The Simpsons" and "CSI," Hulu is finally charging more for ads online than during primetime.
According to June Sanford C. Bernstein & Co. report, Hulu is charging almost double the rates FOX gets for the Simpsons online. Fewer ads served during the program means that these shows are still making less money online, but the higher rates are indicative that when audiences move online, advertising will move with them.
Comcast and Time Warner are pairing up to offer more of their content for free online — to people who already subscribe to their cable channels on television. Starting in July, the cable companies will let a group of about 5,000 subscribers access that content online.
The new model will make it harder for people to access television content online for free. And while cable companies will not yet be able to monetize online viewing as profitably as they do offline, the migration of their content online should help them get a foot in the door for charging for that content down the road.
Offline advertising may be suffering right now, but that doesn’t mean that online brands can’t still profit from it. According to AdWeek, online entities like Zappos, Amazon and Kayak are working with traditional agencies — and advertising — to fatten up their profits. But the thing they still needs to get worked out is how to measure the effectiveness of cross-channel campaigns.
Trying to foster more brand awareness and utilize growing budgets, online companies are looking past search and display toward more traditional methods. Barry Lowenthal, president of The Media Kitchen here, a unit of MDC Partners' Kirshenbaum Bond + Partners, tells AdWeek that television ads bring "people into the fold that aren't already participating in the category or, if they are already participating in the category, might not be considering your brand. It's much higher up the purchase funnel.”