Tag Archives: YouTube

How does the Future of TV look like?

YouTube localization

YouTube localization (Photo credit: Wikipedia)

Youtube turns 8 in a few days. Just a kid, but mature enough to tell us what the future of TV will look like.

According to eMarketer, in 2012 advertising spending on online video in the US was $2.9bn. A sizable market, but less than 5% of the $65bn spent on TV ads. 

Not too impressive if it were not because online video grew by 47% year on year. At that rate of growth, it would just take 8 years for online video to surpass TV ads spending. Just by the time Youtube would turn 16.

And there are reasons to believe that the 47% growth we saw this year is just accelerating, led by YouTube. Here are 3 reasons why Youtube will drive an even bigger growth:

1. Better ads.

  • Advertisers are increasing their spending.  “YouTube is […] home for major brand advertisers.  On YouTube, our top 100 global advertisers spent over 50% more in 2012 than they did in 2011,” they said in their last earnings call.
  • Ads are getting better both for user experience, and for brands. Advertisers like the new TrueView skippable ad format, through which they only pay if viewers watch the ad. 
  • The potential of Google to better targeting ads to user profiles and context is unmatched.

2. Better Content.

  • Growing number of Professional content available: VEVO and Liga BBVA are just two fine examples I love.
  • Perfect platform for amateurs to turn pros with an ad-based business model
  • Youtube could soon enter the paid-for-content subscription model. This hints they could start making deals for live sport events, one of the strongholds of Pay-TV operators.

3. Better Features.

  • HD at 1080p is a reality.
  • Multiscreen is a reality. Same content on mobile, tablets, PC and TV
  • Social is embedded and there are huge potential for “second screen” options that could potentially integrate better with online TV than with traditional TV

Online TV and traditional TV borders will blur. And when they do, Online has all the advantages to win.

 Milestones in Youtube early life:

  • First video uploaded (“Me at the zoo”) in April 2005
  • Google buys Youtube in October 2006
  • 720p launched in December 2008
  • One billion daily views in October 2009
  • 1080p Full HD launched in November 2009
  • 2 billion daily views in May 2010
  • Trueview ads launched in December 2010
  • 3 billion daily views in May 2011
  • 4 billion daily views in January 2012
  • First video to reach 1 billion views: Gangam Style – PSY, December 2012
  • #2 search engine (bigger than Bing, Yahoo, ASK and AOL combined)
  • 800 Million+ monthly unique visitors in January 2013
a-brief-history-of-youtube-infographic-shortymedia
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Why Google gives Android for free?

mobile-advertising-forecast
You will find more statistics at Statista

The chart already answers why Google gives Android for free.

Google is set to dominate advertisement, in any digital form.

  • Google dominates online, which it is about to surpass print media as an industry.
  • With Android, Google is set to dominate mobile ads, whatever form it may take, beyond search and display. As eyeballs go to mobile, Google will have an advantage position by controlling the OS.
  • And TV is the next one to disrupt. Youtube might be turning to be profitable by now. The experiments in online video ads are beginning to pay off, as it shows the amount of content agreements Youtube is getting into.

Googe wants to control the underlying technology platform, so that whatever evolution digital ads go, they are at the leading edge. Chrome and Android are the most obvious cases. On2, Widevine acquisitions followed the same rationale.

Google strategy to kill competitors is also getting more and more obvious: Give for free the core value of your competitor.

  • Google Apps against Microsoft Office
  • Chrome and Chrome OS, to make the OS irrelevant, as all apps run in the browser.
  • Android against Apple iOS

Digital advertisement, powered by Google, is one of the biggest enablers of the Digital Renaissance. Google enables both publishers and advertisers of any size to benefit from online advertisement. They are one of the biggest ‘patrons of the arts’ for the long tail.

Highlight data points in the chart:
Mobile ads market in US is $4 bn in 2012. Facebook managed to get $339m, even if they just started mobile ads this year.

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Why Is Google Acquiring On2?

on2_video_vp6-trans

Google has announced the acquisition of On2, the company that owns some of the video compression codecs widely used in online video, but that were recently losing ground in favor of h.264.

Why is Google spending $106 million in purchasing the owner of  decaying codecs?

1) Google has high hopes for HTML5, a standard set to handle video natively (i.e. there will a a <video> tag, as there is a <img> tag for pictures now, and no plugin will be required for the browser to play a video, unlike the plugins required now for flash, Windows Media or Real Audio). If Google open-sources the coming VP8 codec from On2, and forces it into  HTML5,  it would seriously hit Adobe Flash and Microsoft Silverlight proprietary strategies in favor of an open HTML5. Google can put a lot of pressure by incorporating VP8 into Chrome and migrating YouTube to support it.

2) Owning a video codec technology, as online video becomes King in the Web. Although h.264 is an open standard licensed by MPEGLA, Microsoft owns their own propriety Windows Media codecs. Imaging Windows introducing ad insertion, or search within videos, or interactive video objects within the video coding technology ahead of others. What would be the effect to Google’s search and advertising “bread and butter” in a video-centric Web? Can you imagine Google paying licenses to archrival Microsoft?

3) Is $106m too much? Google might be making the simple maths? What would be the impact on their market cap, if Microsoft releases a video codec with ad/search features? What would be the impact on Microsoft stock if Google is able to master the video codec technology and do that first? Note that just the announcement of this acquisition make Adobe shares drop 3.5%!!

It is not the saving in licenses or bandwith what drives this acquisition. This is about strategy, defending from Microsoft, and taking control of its own future. Google will not make direct revenue from this $106m acquisition, but if it succeeds in getting VP8 widely adopted into HTML5, they are going to be better positioned that anyone to defend their Advertising and Search business in video too.

Online 3D video, interactive objects within video, search within video contents. All that will come and Google wants to be the one to bring it and not depend on standard bodies, or worse,  its major competitor.

Coverage of this news by other blogs:

TechCrunch, Google Acquires Video Compression Technology Company On2 For $106 Million

GigaOM, Google: You Buy Some, You Sell Some

NewTeevee, Watch Out, Flash; Google Buys On2

StreamingMedia.com, Google’s Acquisition Of On2 Not A Big Deal, Here’s Why

Online Video Gets the Headlines, IPTV the Revenue

An interesting analysis from Telco 2.0 compares the business of YouTube versus Hulu in 2008. The table summarizes the key data used in the analysis:

YouTube Hulu
No of videos/day 1000+ million 3-4 million
Average duration 2.75 min 27.5 min
% clips with ads 3-4% 80%
Average CPM $10 $15-20
2008 Revenues $118 m $52 m
2008 Loss $91 m $9 m

According to Telco 2.0, YouTube would be generating revenues of $118 million, versus $52 million for Hulu, while the low percentage of videos carrying ads in YouTube would make them lose $91m versus only $9m for Hulu.

Hulu business model is closer to that of broadcasters and it shows in a better margin. To make their disruptive model fly in the next years, YouTube will count on:

  • decreasing costs of infrastructure: storage, processing, bandwidth and efficient data centers
  • ability to place ads in clips from amateurs and semiprofessional creators
  • agreements with media companies to become their online video platform in return of a share of ads

Meantime more players are coming to the party, like CBS betting on tv.com to compete with Hulu (NBC Universal and News Corporation’s online video joint venture).  But, in a crowded market, also others are getting weaker, like Joost giving up their P2P model and with few options to survive only as one more flash video site. Despite Joost’s announcement, do not discount P2P TV, that is far from dead in China.

As for IPTV, according to a report from Gartner in September:

“Worldwide subscriptions to internet Protocol television (IPTV) services are on pace to reach 19.6 million subscribers in 2008, a 64.1 per cent increase from 12 million subscribers in 2007, according to Gartner, Inc. Worldwide IPTV revenue is projected to total $4.5 billion in 2008, a 93.5 per cent increase from 2007 revenue of $2.3 billion.”

In 2008, no doubt Online Video got the headlines, but the IPTV Telcos still got the bucks.

Will Internet TV Kill IPTV?

Internet TV has definitively arrived and it is here to stay. YouTube crossed the chasm for video on the Internet, and Internet TV is now steadily going mainstream. Here is some piece of evidence:

  1. Lean-forward TV gets traction. Mainstream users now feel comfortable watching videos on the PC. First it was the few minutes clips, but more and more people have no issue sitting in front of the PC for long videos of one hour or more. With bigger displays, many are getting used to watching video while browsing and chatting in the same screen.
  2. Broadband bandwidth keeps increasing, and video compression techniques keep decreasing bit-rates for the same quality. This trend is not going to stop any time soon.
  3. PC2TV concept has not crossed the chasm, but it is easier than ever to connect small-form, silent, low power PCs to HDTV-ready LCD TV sets with DVI/HDMI connections. The Mac Mini, the Vaio TP-1 or even the EEE Box PC are easy to connect and make Internet TV enjoyable from the sofa. Wii, PS3 and Xbox360 can also make the Internet TV connection, as well as some specific set-top-boxes, such as Apple TV,  new Tivo models, or even LCD manufacturers adding an Internet connexion (see Sony Bravia Internet Video Link).

YouTube and Hulu are gaining a leading position in advertising-supported Internet TV. YouTube has reached an agreement with CBS to offer complete TV shows with inserted video ads, which is a different game from current UGC and short clips from TV shows.  On top of that, many TV channels are developing their own Internet sites to deliver Catch-Up TV, i.e. broadcast TV-shows offered on-demand. Spanish TVE site is one fine example.

If all this is already posing a serious threat to IPTV and Cable, other over-the-top players are also strongly positioning in Video-On-Demand. Apple TV, Amazon Unbox or even Netflix offers of movie downloads, compete seriously with the VoD that IPTV telcos and cable operators offer.

How can IPTV telcos fight back and win?

  • Embrace Internet as another channel for their offering. Provide users with access to their subscription channels on the PC (and mobile) , with a one-stop-shop offering for catch-up TV for all channels they offer. Enrich the lean-forward TV experience on the PC screen, and add interaction to main social networks.
  • HDTV. Bet on better video quality and immediacy. iTunes can offer HD movies, but it will take a while to download. IPTV streams the content and the user watches immediately. With increasing bandwidth the advantage will erode with time, but the telco can always be ahead with newer ultra HD formats.
  • Content is King. Exclusive content deals make the difference. IPTV telcos should focus on Live premium content (sports events, concerts). No Internet TV player can support millions users concurrently streaming a live HD broadcast of the Super Bowl. Only multicast IPTV can cope with it.
  • Manage the complexity of the Home network on behalf of the user. Bet on set-top-boxes with PVR features and open to support Internet TV, including competitors offering for video downloads. Make YouTube and iTunes just another TV channel in your catalog. Position your set-top-box in the living room before someone else does and makes yours replaceable.

IPTV is a platform for a next-generation Pay-TV service. Exclusive content and a wide offering of channels is a key success factors for IPTV, as it was for Cable/Satellite pay-TV operators. Embracing Internet TV as part of IPTV offering is another one.

Behind the scenes of Obama Girl

The videos of BarelyPolitical.com are becoming more and more funny, and more and more seen.
One dutch TV channel interviewed these guys

As Ben Relles describes, this would not have been possible in 2004, even if Internet was already extremely popular by then. This phenomenon today is empowered by Web 2.0, and the YouTubes, Facebooks and hundred of thousands of bloggers.

Amber Lee, Obama Girl, admits the Crunch on Obama clip was shot in just 6 hours! The means to produce quality content are so inexpensice these days, that it is unleashing a tsunami of creativity from a new generation. MySpace, YouTube and viral blogging are providing a mass distribution power rivalling that of TV stations.

How did BarelyPolitical and its Obama Girl became such a hit in such a short time? The mavens-connectors-salesmen, Stickiness factor and Context of the Tipping Point should explain the theory… but the practical implementation is a secret for me yet, except for the Stickiness factor that I can see it is very well provided by Amber. The Obama Girl does stick.

Adobe positions on Internet TV

Adobe just just released Adobe Media Player 1.0 and Adobe TV.  Built on AIR, the Media Player supports Flash video and h264 video encoding, with 1080p, 720p and 480i resolutions. Users can subscribe to channels, with content available from CBS, Universal and MTV among others, including the Long Tail of niche content creators.

You can get the player here. You can also tune to Adobe TV  with hundreds of videos on Adobe products, including, Photoshop CS3, Dreamweaver and others. More details in TechCrunch, ReadWriteWeb and NewTeeVee.

Adobe Flash technology already supports YouTube and it is a de facto standard for Internet TV and video clips. With the new launch Adobe aims not only at providing technology but also the Service behind. Adobe is playing in the same league as YouTube (without the social network component), iTunes (without the rental yet), Joost (without the P2P technology), Vuze (bittorrent based) or Miro (Internet video aggregator), only with different technology choices and content strategy.

Adobe has successfully reached some content agreements, and it is already inserting video ads. With the support of standard and hi-definition, Adobe Media Player can be a solid platform for Media companies to put their content in Internet. At least the ad-based business model is well known. And Adobe support mobile handsets will give even a more compelling proposition to content owners.