Tuesday, June 17, 2008

Internet TV Opportunities Are Increasing

I originally ran this article with iMedia a few months back and coming across it today I felt it was still relevant, so here you go!

The entertainment and automotive categories are typically where much of digital innovation comes from, primarily because they lend themselves very easily to the application of new ideas and they have the budgets large enough to experiment with, which is why it surprises me that they haven’t yet latched on to Internet TV.

As the dictionary defines it, Television is defined as “the transmission of visual images of moving and stationary objects, generally with accompanying sound, as electromagnetic waves and the re-conversion of received waves into visual images”. As the Wikipedia defines Internet TV, it is “television distributed via the Internet”. Internet TV is also referred to as IPTV, Interactive TV, Online Video, Digital Video and a number of other terms.

Internet TV is inevitable. It encompasses network or cable programming available online (Online VOD), original programming aired for the web (already referred to as Slivercasting), location-shifted programming run through the web to a remote device (e.g. TiVo-to-Go and SlingBox Media), and general online video viewer-ship (whether professional or user generated). All of these are elements of Internet TV in much the same way that traditional TV has reality programming, studio-produced programming, long and short form programming, etc. 2007 is home to the shift from a content-centric model to a consumer-centric model. Programming is delivered in a non-linear delivery schedule (on-demand vs. scheduled) and the consumer has options as to how, where and when they view or interact. Internet TV is the ultimate pay-off for this model; an on-demand, mobile access model where time shifting and location shifting are the norm.

The numbers also support growth potential. Currently there are TV sets in 98% of US households, and currently there is a broadband internet connection in 51% of US households with PC’s in approximately 77% of US households. Broadband penetration increases at a staggering rate (the mainstream adoption of YouTube has helped to significantly raise the awareness and ease of use for the general consumer). According to a study from Burst Media, 69.5% of respondents watch video online, with 63% of those stating they watch video at least once a week. As the general consumer becomes more comfortable watching video online, their length of exposure and comfort with the medium will increase, making watching TV on your computer, or transporting it from the computer back to your TV set a viable option. Especially as we see more announcements from companies such as Sony and Apple, both of who are working on launching consumer-focused devices that stream online video to the TV set.

The models are being developed by any of the various categories that fit under the heading of Internet TV. The two primary elements of growth are in UGC video (user generated content) and Network programming. The UGC sites include YouTube (http://www.youtube.com/), Revver (http://www.revver.com/), College Humor (http://www.collegehumor.com/) and Veoh (http://www.veoh.com/). On the Network side the players are very obvious with companies such as NBC (http://www.nbc.com/), ABC (http://www.abc.com/) and CBS (www.cbs.com/innertube) as well as MTV (http://www.mtv.com/), In2TV from AOL (http://www.in2tv.com/), and some interesting plays like Brilliant But Cancelled (http://www.brilliantbutcancelled.com/). In the middle of these two categories we see a number of players who are blending UGC and Studio production to develop narrow-audience original programming and distributing to many devices. Some of these players include companies like Current TV (http://www.current.tv/), Ripe TV (http://www.ripetv.com/), and smaller players like VegTV (http://www.vegtv.com/) which provide unique, exclusive content to smaller segments of the mainstream audience.

Also contributing to these models are companies focused on distribution or technology to distribute Internet TV content. Companies such as TiVo (http://www.tivo.com/) and SlingMedia (http://www.slingmedia.com/), but we also see companies like Brightcove (http://www.brightcove.com/), MeeVee (http://www.meevee.com/), MobiTV (http://www.mobitv.com/) and Blinkx (http://www.blinkx.com/). On the far end of this spectrum you can count Google Video as well.

Here are four ways to characterize the advertising model in this evolved medium:

In-Stream: “commercial” type placements typically run as: 15’s or: 30’s and mirror the model set aside for traditional TV. They are usually in smaller pods of one, maybe 2 commercials, and allow for 4 pods per ½ hour of programming. Based on a study from HP and MSN dating back to early 2006, these ad formats are as effective as TV in driving general brand metrics and my feeling is that consumers are accepting, even though maybe not favorable, of this model.
In-Page Adjacent: this model is where a rich media unit runs alongside the video placement and may tie into the in-stream advertiser. These stay in the window while the video is playing, unless switched to full-screen mode. This has proven to be very effective for companies at driving ROI as well as traditional brand metrics and can be seen clearly in the AOL video platform, as well as MSN’s video platform.

Product Placement: this is where a brand, product or service are actually worked into the content and either called out by a virtual “host” or factored into the programming itself. This is a natural extension of what we have seen in network programming over the last couple of years and can actually be easier to maintain in a digital environment where products can be swapped out from time to time.

Content Development: this is a more in-depth product placement model and is an extension of the old BMW Films model where a brand actually creates and distributes content. These can be very effective, especially if you have a lifestyle brand that can be reflective of the target audience. The costs are greater and you still need to promote it, but this is a very effective strategy.

Of course these are not the only models that we are seeing online, but they are the current models being applied to Internet TV. Surely there will be some new ones over the coming months and we will watch them with a keen eye, but as the consumer becomes more aware and comfortable with the category the advertising opportunities will continue to increase. I leave this final thought with you based on a recent study from CBS. Their stud stated that only 56% of TV users were aware they could watch their favorite programs online, but 62% stated they would definitely watch at least one in the coming months.

Internet TV is on the horizon, so stay tuned!

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