According to a Pew survey, 62% of Americans who use the Internet, watch online video, while only a little over 45% surveyed said they were active in social networking. Compare this to a survey taken in December of 2006, where the percentage of respondents who routinely watched online video was only 33%. That’s tremendous growth in less than 2 years.
The Pew report indicated that among Internet users between 18 and 29, 89% viewed video on line, and 36 percent responded they do so daily. Up from 16 percent in 2007, currently over 35% of all U.S. homes report watching an online video. 23 percent of those who watch video online have connected their computers to their TVs, with a breakdown in the category of 29 percent of males and 16 percent of women
The weakened economy has also played a strong part in the growth of online video, with many now choosing to give up costly cable or satellite premium subscriptions.
And while viewing online video isn’t a major aspect of online social media sites, when you consider that online social sites like Facebook feature large quantities of videos, the numbers of individuals who watch online video are perhaps even greater than the studies may indicate
eMarketer predicts that online video consumption will increase by a minimum of 33% over the next 5 years, reaching a saturation of 88% of all U.S. Internet users and an overall saturation of 59% of all U.S. homes. That’s an increase from 2009 from 144 million to 188 million in 2013. Personally, I think that some unforeseen changes in technology and large corporate business models may leave these numbers in the dust, putting the number of regular online video viewers well over 210 million by 2013. We’ll just have to wait to see whose prediction is closer.
But even as online video grows more and more popular, many reports, including a recent one from eMarketer indicate that few are willing to pay for online video content.
“It is difficult to imagine the public tolerating a return to paid content for video genres that are currently ad-funded,” said Paul Verna, eMarketer senior analyst and author of the report.
It is possible that some niche video, including specialized training and preparatory workshops, adult content and a category described as “ultra premium” content will be able to work on a fee-for-service basis, but it is wholly unbelievable that anyone would be willing to pay for the bulk of content one know finds so prevalent on Hulu, YouTube and many other sites. Even as we speak, some pay-per-view sites that offer contemporary television programs and movies online for minimal fees are seeing that for the most part, the business model simply isn’t viable. Someone may pay a dollar or 2 out of desperation to see the season ending episode of Prison Break, but it’s not a sustainable, growth invoking model for profitability.
So is advertising sponsored video the answer? With the vast number of online channels that are and will be competing for dollars, relatively few will be able to see any level of success. My guess is that an occasional upstart may pop up here and there, but with the studios and television networks mega dollars and enormous tentacles, they should be able to stay a step or two ahead of most of the pack. As we start seeing increased bandwidth, better video and more complex and quality online programming, we will see advertising as a vehicle for paying for such programming become the viable choice. However expect online advertising to continue to change and develop as does online video. Interactive video, that allows one to click on screen to find out details about the car the hero is driving or the shoes the sexy siren is wearing will become more and more commonplace. One will be able to watch a video and while watching click a few times to get to a website that will enable them to buy one of the kitchen devices featured in a “Top Chef” style show.
And speaking of Top Chef, programs like Top Chef and Project Runway seem to be able to take in-program advertising to the next level, with seemingly every moment and every shot of each show featuring some branding opportunity for a product or service. As Madison Avenue melds with Hollywood to become what is known as “Madison and Vine”, we have seen increasing use of in-movie and in-TV show advertising, even when the product placement isn’t as obvious as an interactive opportunity to buy Oxyclean. (God rest Billy Mays soul).
For years, advertisers have negotiated to have “so and so” wear “such and such’s” shoes or for a box of Cheerios to be a prominent part of a couple of scenes. Just think James Bond’s Aston Martin. In the novels it was a 1933 Bentley and on screen, it’s been an AMC Hornet, Jeep, Bentley, Audi and lots of other makes and models. Go online and you’ll find just as many people calling the Omega Seamaster watch the “James Bond watch”.
As we migrate our habits towards watching more video online, I think that a combination of traditional 30 second and perhaps 15 second spots, coupled with presenter ads, along with in-program advertising and interactive advertising, will form the core income streams to support our viewing addictions. The future looks bright just so long as you don’t ask the viewer to pay for their video outright.
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