AU industry bullish around online video


Julian Lee has an article in this weeks Media/Marketing section of the SMH that makes a bold declaration.

IF THERE was any doubt that Australians were developing an insatiable appetite for TV-style video online, the sceptics can return to their dens.

This statement is based on some recent research from Nielsen Online that people who stream video content at least once has risen 127% to 4.2m a month.

Personally I’m not a fan of these big numbers unless they’re backed by numbers which show true engagement, which these don’t.

It’s difficult to get many straight answers around the area of online video. If you want to know who exactly is watching these videos – no one can really tell you. If you want to know what content is resonating with what audience, that is also difficult. If you want to know numbers around session duration and average videos watched – that is also tough to get.

But that’s okay – the area is sort of new (well 4 years plus but who’s counting) and it does seem that the takeup is starting to accelerate. Well, the takeup on professional content is starting to accellerate. YouTube has been doing huge numbers for years but the problem is not many advertisers want to appear next to home videos, and rightly so in many instances.

Ninemsn and Yahoo!7 are very excited about online video. There are comments from Joe Pollard (who actually offers some numbers around consumption on their network) and Rohan Lund (who doesn’t really¬†say anything but to say he was “stunned” by the numbers).

One question I have with online video is this. Is it more a marketing tool for TV shows … or is it a revenue stream for publishers? Or is it both?

Whilst early on many felt that putting TV and professional content online would erode broadcast viewers, it seems that this isn’t really the case.

One thing the execs at the NBC/Fox Hulu venture have said is that it plays a very valuable role in providing catch up TV for users who may have missed a broadcast episode due to other committments. Hulu allowed them to catch up on a series online and then rejoin the broadcast version the next week.

One issue with online video locally is that the majority of it – right now – is short form. Short, 1-3 minute snippets. My concern is that 15/30 second pre-rolls do not work in this format and the ratio of ad to content is off. Yahoo!7 has upped the ante of late and has added Home and Away, Packed to the Rafters and All Saints to catch up TV which shows they are moving in the direction of longer form format. Which is smart – longer content, more opportunity for ads. Higher extraction.

As a format pre-roll is a good one. And as time goes on hopefully we will start seeing broadcast/HD quality video online – which doesn’t really happen now. When 7 were putting ep’s of 30 Rock online on Yahoo!7 the quality was borderline terrible … so bad that you questioned whether it was worth watching it.

Of course, users have the option of using torrents to get the latest shows too. And they are doing this in increasing numbers.

Anyway – back to online video. Joe Pollard made the claim that ninemsn is generating around 11m streams across approx. 2.8m users per month on ninemsn video.

Based on those figures and the assumption that a large % of these streams are short form currently, my estimate would be that the revenue potential for online video for a company like ninemsn is around $330-440,000 per month.

This is based on a realistic CPM of $30-$40 (which is where I believe video will end up, if not lower) and a 100% sell through rate on 1 pre-roll per stream.

Over the course of a year this works out anywhere between $4-5m.

If you add longer form content like 20 or 40 min drama’s comedies the amount of ads can be increased from 1 to 3 or potentially 6.

This is where it becomes interesting.

If a ninemsn could keep the same amount of streams, but have a higher % of longer form content the pay off would be significant.

Let’s say out of the 11m streams, 25% were of 20 min programs (3 ads) and 15% were 40 min programs (6 ads) the revenue potential would look a lot different

Short form content = 6.6m streams ($231,000 per month)
Mid form content = 2.75m streams ($288,750 per month)
Longer form content = 1.65m streams ($346,500 per month)

Total potential = $866,250 per month (or $10,395,000 per year)

If ninemsn can pull this off, and add 2-3% points on search share (which works out around 20-30m dollars), it could be a significant contribution to their revenue. A $40m plus contribution.

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One response to “AU industry bullish around online video

  1. Definitely agree with the content to ad ratio being crucial. Nothing pisses me off more than having to sit through a 30s pre roll to get content of 30s or less. I believe some publishers show only one ad per session but others will just ram an ad in front of every single vidoe which just annoys the hell out of the user. Also, it seems freq capping and targeting just don’t seem to apply when it comes to video advertising at the moment.

    Don’t even get me started on the autoplay video ads with sound (un-initiated) that aren’t even in video sections. Kudos to NDM for committing to never using them.

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