Filmmaker Ted Hope’s Keynote Speech
October 26, 2009
Ted Hope gave the keynote speech at the London Film Festival’s technology conference, Power to the Pixel. I am a fan of Ted’s blog Truly Free Film, which focuses on “cross-media reinvention” – a fancy term referring to the diversification of a film property among various distribution channels and revenue generators.
Online Video Statistics 2009 and Beyond
October 19, 2009
Key Takeaways On The Future Of Online Video:
Online video vs. television viewership
As the stats below demonstrate, television still dominates online video in terms of the number of eyeballs, frequency and time viewed. However, viewer engagement is another story.
- 2009’s online video viewership is estimated to be 144 million ~ 72% of Internet users.
- Television’s audience is almost 300 million.
- Weekly viewership for online video drops about 63% to 53 million viewers.
- Weekly viewership for television is 250 million.
- Average viewer consumption of TV is 4.7 hours per day.
- Average viewer consumption of online video is about 4 hours per month.
- Online video only accounts for 1% of total video viewing time in the US.
- However, research suggests that online video usage fuels TV viewership.
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What online video viewers are watching
One of the largest trends to keep an eye on is professionally created contents’ adoption in the online marketplace. Long form professional content inherently presents more viable business models. As viewer habits change with the increasing volume of professional content delivered over the Web, new opportunities for filmmakers will emerge… and Jeff Zucker will no longer be trading NBC Universal’s analog dollars for digital pennies (if he still has a job).
- 8 of the top 10 most popular online video genres are short form.
- Still, 28% of online video viewers watch full length TV shows and movies, and that figure is expected to grow dramatically over the next few years.
- Hulu’s audience is about 38 million viewers per month.
- Hulu runs 4 ads per hour.
- Television runs 32 ads per hour.
What really matters: MONEY
Actually, what REALLY matters is growth. The Internet is consuming the entire media industry. The newspaper business is walking the plank and an increasing number of magazines are closing their doors (R.I.P. Conde Nast Portfio). Meanwhile Google is still growing at 20% annually. The Company reported earnings last week and beat analysts Q3 expectations by 8.67%. Google also beat analysts expectations on top-line revenue growth by 3.3% for the quarter, with pay-per-click ads growing 14% over last year – all of these print ads need a place go!
- Total media spending (television, radio and print) will decline 14.5% in 2009.
- Yet, online video spending is expected to grow 44% in 2009.
- Online video ad spending amounted to $324 million in 2007.
- Online video ad spending will exceed $1 billion in 2009.
- However, that figure only makes up 4.3% of total Internet ad spending and only 1.6% of TV ad spending in 2009.
- By 2013 online video advertising will represent 5.5% of TV ad spending ~ 244% growth over 5 years (28% CAGR).
- eMarketer estimates that online video ad spending will continue grow at over 40% for the next 3 years.
Viewer engagement and the pulse of the market
Because online video is a lean-forward interactive experience, viewer engagement is far higher than television. This will result in marketers continuing to shift ad dollars from television to online video. In addition, Internet advertising provides more targeting and accountability than TV advertising. In a tough economic climate, measuring return on investment (ROI) becomes even more critical.
- The average consumer recall rate of an online video ad is 50%.
- The average recall rate of a television advertisement is only 18%.
- Viewers are 28% more likely to pay attention to online video ads than TV ads.
- Currently, 50% of US marketers are using online video.
- 43% of US marketers expect to shift 20% or more of their TV ad budgets to online video by 2010.
Arguments against the proliferation of online video
Online video’s business model is in its infancy. Google reported on their third quarter conference call that YouTube is getting “close” to becoming profitable… Close relative to what? While the dominant online video business model is certainly some form of advertising, to date, not one company has provided a solution that renders television obsolete.
- Piper Jaffrey says 79% of consumers are not willing to pay for television online – Advertising.com puts this figure at 94%.
- 72.6% of US ad agencies will NOT run ads on user generated content.
- The average CPM (cost per thousand impressions) for online video is $11 – $35 (depending on weather the add is a pre-roll, mid-roll or post-roll).
- The average CPM for television is $10.25.
- 31% of US ad executives say that the Internet still lacks the targeting capabilities they are looking for, and 27% say that online video advertising is too expensive.
- US online video ad spending per hour viewed averages $.17, whereas television averages $.13.
- About 60% of adults are online and watching TV at the same time.
Conclusion
The Internet is clearly the way that we will consume television in the future – but – we are not there yet. It will take time to refine a successful online video business model. The good news is that more professionally created content is building audiences every day on the Web… And as the saying goes, money always follows eyeballs.
- In 2009 only 15% of digital video traffic will com through TV’s while 85% will come from computers.
- By 2013 61.5% of digital video traffic will come through TV’s while only 38.5% will come from computers.
Related Posts
Film Industry Articles You Should Read vol.2
October 15, 2009
Hollywood warming to Internet as DVDs begin to fade
Higher margins, the ability to collect and use information about customers, more revenue and greater willingness to share content with Internet operators is prompting Hollywood to join forces with the likes of YouTube or set up its own Internet portals.
Bill Mechanic On Moguls’ Bad Decisions
Bill Mechanic, former chairman/CEO of Fox Filmed Entertainment, shares his thoughts on the present as well as the future of independent film production. Mechanic spent 7 years at Fox, from 1994 – 2000, bringing it from a “doormat” to the #1 studio.
Film Fund-amentals: Across the Digital Divide
Despite the extra money that Paramount had to invest in preparing Paranormal Activity for commercial release, the film is such a low-rent item that it will make a profit after the first six customers finish paying for their tickets. What is especially interesting about the release of Paranormal Activity is the film’s online strategy…
Comcast & NBC-U: ‘They’ve All Agreed to Agree’
What I am hearing from inside and around the deal is that indeed the Comcast deal to buy 51 percent of NBC-Universal is done in principle, but it will be several more weeks before anything official is announced.
Blockbuster Kiosks: Interview With NCR Corp.
October 12, 2009
Blockbuster announced Tuesday, September 15th in an SEC filing that it would be closing around 960 ( 22%) of its stores by the end of 2010. That is double Blockbuster’s previous projection of 425 store closings. Many of these locations will be replaced by Blockbuster Express movie rental kiosks manufactured and operated by NCR Corp. As I stated in an earlier post, Blockbuster’s entrance in to the kiosk market seems to completely contradict their business model. With Redbox projecting 22,000 units by year-end, it appears Blockbuster is operating under the business strategy of “if you can’t beat ‘em, join ‘em”. Blockbuster, clearly a late entrant to the market, plans to open 10,000 kiosks by the middle of next year. I recently spoke to NCR Corp.’s Manager of PR Jeff Dudash to hear their side of the story.
Sceneclips Interviews NCR on Blockbuster Kiosks
About 15 minutes
Although I still have a hard time understanding how kiosks compliment Blockbuster’s retail stores, current opportunities in the market should not be blinded by the anticipation of future opportunities. While streaming video on demand is certainly the distribution means of the future, the kiosk market is by far the fastest growing movie rental distribution channel. Last year, kiosks grew from 2% of the movie rental market to 19% this year, and according to NPD Group the kiosk market will grow to 30% in 2010. That being said, Blockbuster’s entrance is no doubt an act of desperation to maintain its dwindling market share. The problem with the initiative and with Blockbuster as a whole is that they are:
- Late to the market – Redbox has already established itself as the dominant player and has nearly 10 times the number of kiosks that Blockbuster has.
- In a poor financial situation – They nearly went bankrupt before issuing $675 million in senior bonds.
- Still lacking a streaming media strategy – Netflix takes the crown here, just like they did in the DVD by mail market.
Please note: I am not a Netflix, Blockbuster nor NCR shareholder. My thoughts and analysis bear no interest of personal gain. I express them simply because I care about film distribution.
Paramount’s Breakthrough Distribution Bet
October 8, 2009
CNBC’s Julia Boorstin talks about Paramount’s “breakthrough” distribution approach with Paranormal Activity. Through Paranormal Activity’s website, Paramount is putting the audience in control by letting them decide where the film is shown. The film has already grossed over one million dollars on a $15,000 budget.
The Studio Strategy: Follow The Music Industry
October 2, 2009
According to Digital Entertainment Group, DVD sales fell 13.5% to $5.4 billion while DVD rentals rose by 8.3% to $3.4 billion in the first half of 2009. The movie rental kiosk is largely responsible for the growth of movie rentals and is also a primary factor in the decline of DVD sales. Over the past year, the kiosk market has grown from 2% of total movie rentals to 19% of the movie rental market. While 850% annual growth is clearly not sustainable, the movie kiosks’ affects on the studios are.
New channels of distribution continue to cannibalize DVD sales and squeeze margins. In addition to the kiosk market, online stores are booming. Both Amazon and iTunes have seen 21% year over year growth in digital sales and rentals, while retailers like Borders are experienced DVD sales declines of 48%. With the demand for DVDs falling, retailers like Borders and Best Buy will reallocate floor space away from physical media in order to maximize revenue per square foot. This poses a serious threat to the studios, who typically generate 30% profit margins from DVD sales.
It’s rather ironic that while the major studios don’t want to go the way of the music industry, they are making the same mistakes. Fox, Time Warner and NBC Universal have all become embattled in the lawsuit game. As analyst Michael Morris of UBS notes, “Investors are growing more concerned with how media companies can monetize their film libraries as DVDs are replaced by other delivery methods.” My piece of advice: it’s not through lawsuits.
Side Note: My thanks to the people at Shutterstock who threw some free images our way. They have quite a large selection of film related images… but for this post I figured a monkey was more appropriate. 
