Even if it’s been years in coming, video on the Web seems to have become an overnight media sensation.
This is the picture sketched out so far: Americans are increasingly glued to their computer screens, watching millions of video clips every day.
They’re clicking on YouTube fare such as soccer bloopers and “Vampire Robot Nazis Strike Back!” as well as hit shows on broadcast-network sites. Interactive programming from Nickelodeon and PBS Kids Sprout connects kids from computers to TVs, and ESPN serves up on-demand highlights from last night’s SportsCenter.
And here’s the snapshot of the future: “In the years ahead, broadband on the computer will be the primary source of entertainment for kids. It’s just as important to them as the TV set now,” The Walt Disney Co. CEO Robert Iger said last week at the 2008 Media Summit at New York’s McGraw-Hill Building.
But while Internet video is genuinely mainstream — 141 million Americans watched more than 10 billion video clips online in December, according to Internet measurement firm ComScore — the vast majority of it is consumed by a small minority of viewers.
In fact, these hyper-users beat the so-called 80-20 rule. When it comes to watching TV on computer screens, the top 20% of viewers account for upward of 85% of all the minutes of video viewed online.
And these are, on average, the youngest viewers of all. That is to say they’re the future of TV.
Research bears out that 18-to-34-year-olds are far more likely to watch video online. A telephone survey of 1,250 households by Leichtman Research Group, conducted in December and January, found 42% of those in this age group said they watched Internet video on a weekly basis, while just 15% of those 35 and older said they did.
Check out Nickelodeon’s explosive video growth: The kids programmer’s broadband video sites, which include TurboNick, served up nearly 1.4 billion streams in 2007 — up 357% from the year before.
To be sure, online video is growing across virtually all demographics. Among the latest developments in the lightning-quick rise of Internet video is last week’s public launch of Hulu, the venture formed by NBC Universal and News Corp. It offers complete episodes and clips from around 400 broadcast and cable TV shows, as well as 100 full-length movies.
Forrester Research analyst James McQuivey even predicted that more people will watch a TV show online in 2008 than on a digital video recorder.
“It is becoming a more common activity than online shopping,” he said.
The aggregate numbers, however, conceal the fact that the vast majority of Internet video viewing comes from a small bunch of consumers.
The top 20% tier of users watch an average of 841 minutes per month — around 14 hours — while the average for half of the people who watch Internet video clocks in at just 6 minutes per month, according to an analysis of ComScore’s October data by Media Metrics, the interactive media division of advertising agency Havas Media. In between them were the 30% of moderate viewers, who watched 77 minutes.
This doesn’t necessarily come as a surprise. “There will there always be a stratosphere of really heavy users,” NBC Digital Entertainment executive vice president Vivi Zigler said. “That’s a reasonable framework for media consumption across any platform.”
Steve Mitgang, CEO of video-aggregation site Veoh, said such viewership dynamics should be expected in a nascent market segment.
“The issue of 20% of the audience being hyper-users and 80% being casual users — any market has that kind of maturation scale,” he said. “We’re early days in this transition of audiences to online TV.”
But given the top-heavy Internet viewing patterns today, how are TV programmers, broadcast networks and other content owners trying to reach this video-crazy group?
The question is important for the TV industry, given that — as Iger alluded to — the heaviest consumers of online video are younger than average.
And what’s of more concern is that those Internet video hogs also watch less offline TV. “There’s an inverse relation between online video usage and traditional TV viewing,” said Jarvis Mak, vice president of research and insight at Media Contacts. “What could happen is people will use online video to replace their TV viewing.”
Media Contacts found that just 30% of heavy online video viewers watch more than 13 hours of TV per week, compared with 46% of the “light” audience.
CALLING THE HOGS
To MTV Networks president of global digital media Mika Salmi, reaching hard-core online viewers boils down to basics: Sling out as much video as possible and make it easy to find.
That includes optimizing the content so search engines can find MTVN’s offerings easily, and creating features like the ability for users to embed the video in their own sites.
“We feel that by serving the hard-core users, we’ll do things to drive others to increase their viewing,” Salmi said. “We want to convert that other 80% of users so they’re closer to the hard-core users.”
MTVN is also trying to increasingly drive viewers — especially younger ones — from television to the Internet and back again. The Nickelodeon series iCarly, for example, solicits user-generated content from its tween audience. According to Salmi, the show’s viewers have uploaded almost 100,000 of their own videos so far.
The strategy is to increase engagement on both platforms simultaneously. MTVN isn’t seeing any audience cannibalization as it stocks hundreds of new video clips online, for example. “It’s like [young viewers] have a voracious appetite for video, wherever they can find it,” Salmi said.
Reaching younger viewers on the Internet starts with compelling content, said Ripe Digital Entertainment CEO Ryan Magnussen. Los Angeles-based Ripe produces video content largely aimed at men aged 18 to 34 — think bikini-clad girls, cars and hip-hop music.
“Our perspective is, if you produce good content, people will find it,” he said. “For us, it’s come down to targeting a certain audience with content that resonates with them … and keeping the content fresh.”
And keeping it short, he added. For all the hoopla about full-length TV episodes online, the bulk of Web-video viewers watch shorter clips. The average online video viewed in December lasted 2.8 minutes, according to ComScore.
“We are looking at bite-size programs that really have some entertainment value in 4 or 5 or 6 minutes,” Magnussen said.
For ESPN, one strategy is to integrate video clips with text articles, said John Zehr, senior vice president of digital production at the sports powerhouse.
“There are always people who are just looking to watch video, but we also want to reach people who may not have come to the site to watch video,” he said.
High-volume Internet video consumers are more likely to go “exploring” for content, according to Media Contacts’ Mak. That underscores the importance of employing search-engine optimization techniques.
But exposing content in other ways is also vital, said Veoh’s Mitgang — namely, being able to deliver personalized recommendations of new content that would be interesting to a specific person. On the Web, you don’t schedule programs. And there is not a mass audience for any given video.
“Not a single show or episode dominates on any given day,” Mitgang said. “People watch equally as much stuff like a professor’s speech from MIT, or an interview with Barry Diller, as they do stuff from premium studios.”
Of course, big viewership numbers are the coin of the realm for ad-supported video entertainment, whether on TV or online. That’s why Web video sites are homing in on the hogs.
By that measure, YouTube should be the undisputed world champion. The Google site represents more than 40% of all online video clips viewed, or 2.6 billion streams in December, according to Nielsen Online.
But some TV executives believe their professionally produced content commands far higher ad rates, and draws a much more loyal audience, than all-purpose destinations such as YouTube.
“If you think of the garage sale of short-form video, video aggregation sites like YouTube and Veoh are probably good places to figure out how to search for the content,” said Disney-ABC Television Group executive vice president of digital media Albert Cheng. “But if someone has a relationship with a long-form show, the way we look at it is, we want to be sure we deliver an experience that is commensurate with that expectation.”
He added, “Our content and our brand are our best navigational beacons.”
Veoh’s Mitgang countered that his site is rapidly building affinity, with average minutes viewed increasing 25% per month. “You grow the audience by giving them a great experience,” he said.
Nevertheless, according to Media Contacts’ Mak, a sizeable audience exists that is primarily interested in watching traditional TV content online.
A group he calls “television devotees,” about 30% of all Internet video viewers, “adore their television sets, but if they miss an episode, they will use online to make up for it.” The “on-demanders,” 16% of all online viewers, expect to be able to find anything they want to watch whenever they want to, he said.
MTVN, for one, is trying to capitalize on those expectations with several “highly vertical” sites, Salmi said.
For example, his group in the next few months plans to provide every single South Park episode from the past 10 seasons at southparkstudios.com. That site is patterned on DailyShow.com, launched last fall, which provides 13,000 clips with bits from every episode of The Daily Show With Jon Stewart ever.
“The hard-core users want to find everything,” said Salmi.
Other cable programmers, though, are treading carefully in offering online content that’s the bread and butter of the linear TV channels carried by their traditional affiliates.
“We’ve tested long-form video programming,” said Paul Jelinek, senior vice president of digital media for A&E Television Networks. Recently, A&E Network’s Web site, AETV.com, offered full episodes of the reality series Intervention.
However, he added, “we have large, strategic partnerships with our cable and satellite partners. And they’re sensitive to that.”
AETN’s main strategy for online video is extending content into genres that dovetail with its networks, which include A&E, The History Channel and Bio, but aren’t necessarily tied to specific shows.
“Much of the traffic on our sites goes to places that have very little to do with the networks’ programming,” he said. “It allows us to extend to a pool of dollars beyond those that marry up with our TV programming.”
OLD TV STILL RULES
But Internet video is not TV. The hard-core Internet video hogs don’t come anywhere close to logging the kind of time Americans spend on their favorite pastime: watching TV on an actual TV set.
In the 2006-07 television season, individual viewers still watched 4 hours and 34 minutes of traditional TV per day, according to Nielsen Media Research. That was 1 minute less than the previous season, but it’s still more than 10 times what the Internet video hogs watch.
Mak’s term for the 37% of Internet video viewers who overwhelmingly prefer watching TV on TV sets is “sight & sounders.”
“They prefer the TV because of screen size and quality,” he said.
Even among video providers hoping to ride the online growth curve, TVs are the preferred viewing platform. “The living room TV is the holy grail,” said Ripe’s Magnussen.
Ripe’s video content is distributed to 30 million cable subscribers, via the video-on-demand services of Comcast and Time Warner Cable. “While broadband video has grown exponentially, I think you’ll see VOD really take off at some point,” he said.
Consumers will almost always prefer to watch a show on a TV set, Disney-ABC Television’s Cheng said, “but if they know it’s available on-demand, on the Internet, they’ll watch it there if it’s not on TV.”
But many viewers just don’t know TV content is freely available online.
Startup TidalTV, planning to launch in April, is aiming to go after the people who don’t watch a lot of online video today.
TidalTV is aiming to replicate cable’s programming model, with an online video guide and thematically grouped channels, said CEO Mollie Spilman, who previously ran sales and marketing at online agency Advertising.com.
The channels will be “faux linear,” Spilman said, with times listed for each of the clips even though all the content is also available on demand. “Aesthetically, you feel comfortable,” she said. “It seems like it’s linear, but it’s not.”
With its launch, TidalTV will have 15 “name-brand” media partners, as yet unnamed. The 23-person company, based in Baltimore, recently closed $15 million in first-round funding led by New Enterprise Associates and Valhalla Partners.
To succeed, Spilman doesn’t want the Internet video hogs, per se. She wants to attract people comfortable with traditional TV who haven’t found an online service that they like yet.
“We’re not launching this site to generate traffic for traffic’s sake,” she said. “We’re saying, there are a lot of people who would enjoy video online, but they don’t know that it’s available.”
In the next 5 to 10 years, Spilman pointed out, the “average” mainstream user should be putting up online-viewing numbers that look a whole lot more like the hyper-users of today.
“We think we can put a dent in the $70 billion TV advertising business,” she said.
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