Original online video has been the primary focus of this week’s NewFront, the series of events by AOL, Yahoo, Microsoft, Hulu under the umbrella of the annual presentation organized by Publicis Groupe’s Digitas for the past five years with an eye towards capturing marketers attention on behalf of interactive advertising.
But the big question hanging over the proceedings this year has been whether web video can – or even needs to – compete with the TV upfront, which this year is expected to bring in some $10 billion in commitments for the fall season.
There has long been debate about creating a marketplace around online video similar to TV. Some of the obvious arguments have fallen by the wayside, such as the fact that online video, unlike broadcast, has no “season” for airing programming. But the rise of cable – which doesn’t abide by seasonality – and the increased interest in cross-platform advertising have rendered at least those points moot.
As Rob Bennett, GM/Executive Producer at Microsoft portal MSN, said a panel at Digitas’ official NewFront event at a cavernous studio on the west side of Manhattan, at a time when more viewers are watching premium videos on their smartphones and tablets, “the TV is just another screen.” Erin McPherson, head of originals and video programming at Yahoo, pointed to the work the portal is doing with Tom Hanks on the forthcoming animated sci-fi series Electric City. “This is TV on steroids," she said. Yahoo also has an extensive relationship with ABC programming and its own original video production unit.
Perhaps the big moment in the past several months that suggested online video needed to be taken more seriously was when Google said it was commiting hundreds of millions of dollars to redesign YouTube along 100 channels within 20 content verticals.
Jamie Byrne, global head of content strategy for YouTube discussed the evolution of video during the past 40 years and said that this is the right moment for audiences and advertisers to recognize that online video has moved on from the dog on a skateboard that characterized the medium for much of the past six years. “In the 70s, we had four mainstream networks,” Byrne said. “In the 80s, we saw cable, which changed the economics and distribution: niche became possible. Now, with the internet, that will allow us to go from hundreds of channels to thousands. Some will be niche, but others will be more mass.”
The panel’s moderator, Evan Shapiro, president, IFC & Sundance Channel, interjected, noting that all choice sounds like a huge pain for consumers to navigate.
“If you think about YouTube, you do have to choose the video you want to watch,” Bryne acknowledged. “We redesigned the site around channels, or brands, as we call it. We have a customizable program guide, so it will be easier for users to find what they’re looking for and connect with programming.”
In any case, a lot of the fragmented viewing has been happening on TV for some time. MSN’s Bennett expressed the belief that online video can offer some semblance of the communal viewing experience that was once associated with primetime TV. “I have a dream about bringing the family back together to watch a movie. Yes, things have gotten so fragmented. But we do have the power, because we’re so widely distributed, to address that. Our concept involves using Xbox Live and Kinect to start a conversation with other tech providers to plow forward and expand the use of the PC, the smartphone into the living room, in a way that brings viewers together either through an actual shared experience or a social experience.”
Aside from recalling and simultaneously updating the old ways of watching programs, the maturation process of web video also demands that providers offer more original, premium shows. In that sense, it reflects the growth that cable networks went through years ago, when HBO and AMC began focusing more on series that suited the pay TV format, as opposed to the broadcast style of commercial episodes.
Hulu, with its dual revenue stream of monthly subscriptions and advertising represents the clearest connection between TV and the web. And like cable, original programming is the key to growing both, said Andy Forssell, SVP of content for Hulu. However, Hulu doesn’t want to be seen as following the cable model, which still demands some form of mass viewership, for it to succeed.
“Why do we need to have originals? We are interested in unleashing creativity – the kind that doesn’t fit into the usual formats,” Forssell said. “We’re looking to create programming that inspires viewers to talk about it, share it. We’re doing a small number of shows to start, because we want it to stand out.”
So in the end, is online video a competitor to TV, especially the upfront? Not this year, as eMarketer estimates that online video advertising will hit roughly $2 billion – a far cry from the upfront’s take, not to mention the annual $70 billion in U.S. TV advertising.
“We refer to ourselves as the first digital network because of our huge scale,” said Yahoo’s McPherson. “TV viewership is not going down. So I don’t know if online video is replacing it. I think we’re just media addicts. We’re producing over 40 video series, 300 episodes a month. We bought IntoNow, which assists the companion viewing experience. The choice is going to be endless and the challenge is delivering content that stands out and attracts audiences and advertisers. But right now, I see it as a complement to the TV experience.”
Though online video is comparatively small to TV, it’s not that small, said Janet Balis, AOL’s SVP and Head of Sales Strategy, Marketing and Partnerships. “[Online video’s] at critical mass now. It compares to top tier cable networks. We’re all still experimenting with interactivity and program length, but we’ve had an incredible dialogue with top tier brands, as this event shows.”
By David Kaplan