Thursday, September 04, 2008

Online Video: Battle of the Internetwork stars

Having been distracted by the new Google browser for a couple of days, here's some news on the video front of interest:

Hulu (NBC's online video site...see prior posting here) will be showing some of its new Fall Season premieres online...first...before you can see them on TV. And not just the loser shows, but established properties like The Office, Prison Break and, well, yeah I guess that is kind of a loser show (jk PB fans).  Read all about it here

Why would NBC do that? Because it's working for them.

Hulu is making much as YouTube if you beleive some

The gist is that hulu is making as much money on ads as YouTube is delivering ads on a much larger volume of video. What's missing in the equation is the cost of produced content on Hulu. 

YouTube is winning the value battle when it's measured in terms of where people spend their time...rather than where advertisers spend their money. 

"For all its business challenges, YouTube remains the most popular video service on the Web. The site commands 34 percent of all Web videos streamed in the U.S. market, while the second-place service, MySpaceTV, only controls 6.4 percent, and Hulu brings up the rear with 0.7 percent (according to May, 2008 numbers from comScore Video Metrix)"

The challenge of course is aligning the two. Many models remain to be tried...Amazon, for instance, has a video-on-demand service that effectively bridges what Netflix (rentals) and iTunes (purchases) do  (see more).  

But all roads would seem to include an inverse relationship between audience size and the per unit advertising price paid...Hulu, which serves about 88 million video stream a month, is effectively generating only about 10% of the ad inventory for each online stream that it does with the traditional TV screen version (two 15-second ad breaks in a 30-minute episode online vs. 3 minutes offline). YouTube, it appears, is only generating ad revenue on about 3% of its 4.2 Billion videos each month. 

People have choices and every choice has its price. Ad pricing deflation would seem likely as the supply of choices people have for content AND distribution far exceed the growth in demand (what with 24 hours in a day being a fixed limit).

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