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
Web-TV Convergence Panel Discussion
June 9, 2009
Great panel discussion on Web-TV convergence at the Streaming Media East Conference held a few weeks ago.
- Boxee Founder and CEO Avner Ronen talks about his business and the Hulu situation
- ESPN360.com VP Damon Phillips talks about the sports network’s new media business model
- Doug Ferguson of Sling Media talks about Echostar’s acquisition of Slingbox as well as the new sling.com
- Michael Rosen of Babelgum talks about professionally produced content on their niche platform
- Plus a great Q&A session toward the end!
New Media Journalism In The Industry
May 29, 2009
It is often stated that the Web has democratized journalism. The more I think about it, the more I think: no it hasn’t. Sure, the Web provides a ubiquitous platform to deliver content. In that sense it has democratized journalism. Though to a larger degree, the Web has just created more noise. The argument that journalists are now competing with 28 million bloggers is blind. I am a bit sick of hearing about the woes of the prehistoric newspaper industry. Of the 37 blogs that I follow, 31 are published by professional news organizations. The other six are published by by freelance journalists and marketers. Every one of them is monetizing itself. So, when I hear the argument that the Internet has democratized journalism, I think: wrong, it has just added more noise.
Journalism is an incredibly important profession. The newspaper industry needs to wise up. There is a great article in the June 2009 issue of Wired Magazine on monetization methods for publishers. Below are two videos from a panel discussion held to address how film industry journalism is coping with new media.
“We need to stop thinking about the future of publishing and think instead about the future of reading.” – Clive Thompson, Wired Magazine
[Update: Newspaper Association of America quietly said the total revs were down 28.3 percent in Q1, with Alan D. Mutter noticing that sales dropped by more than $2.6 billion from the year before. Meanwhile, as print ad sales slid by 29.7 percent to $5.9 billion, even online sales had their worst quarter yet, falling 13.4 percent to $696.3 million - detailed figures below. - paidContent.org]
Billy Gurley On Hollywood vs. Web
May 26, 2009
Bill Gurley of Benchmark Capital shares candid thoughts on where Hollywood meets the Web at AlwaysOn’s OnHollywood conference.
Cutting The Cable
May 15, 2009
We are in the early stages of a shift from traditional television delivery to online television delivery. Yet many like me suffer from an acute case of OCD regarding picture quality that prevents us from “cutting the cable”. Trading a beautiful HD television picture with a highly compressed online video “HD” picture is not sufficient… for now.
The cable companies that control internet access (Comcast, Time Warner, etc.) know this. The conflicting interests of web and television have caused U.S. cable providers to restrict bandwidth to prevent the change. As a result, the United States currently ranks a pathetic 12th in broadband speed. The fear is that offering broadband at 100Mbps will cannibalize their TV business and erode profits in their lucrative internet access business. Unfortunately this fear is not only valid, it’s true. But rather than ignoring change as the music industry did, cable companies should focus their efforts on building a more profitable online business model.
Ultimately, I believe the model will resemble that of the wireless providers. Customers will pay for access on a usage basis, with unlimited plans available to satisfy the appetite of bandwidth hogs. This is a fair and proven model. Think of the parallels that television and internet have with landlines and cell phones. Many Americans no longer have landlines because they have increased the minutes on their wireless plan, resulting in a net savings. Though the overall pie will be smaller, this is a win-win scenario. Cable companies will undergo further consolidation, but they will be able to profitably improve their offering to the consumer.
See how your connection compares: test your speed here, then read this article.
Scott Kirsner On New Media
April 27, 2009
CinemaTech’s Scott Kirsner sits down with HDFilmTools to talk about how the entertainment industry is changing for individual content creators.
Revisiting Jeff Zucker’s Famous Comment
March 27, 2009
NBC universal CEO Jeff Zucker famously said in 2008, “We can’t trade analog dollars for digital pennies”. This statement has become increasingly false as advertising dollars continue their shift to The Web. According to eMarketer, online video ad spending will increase tenfold from 2008 to 2013 and more than double over the next two years, from $850 million in 2009 to $1.85 billion in 2011. Developing new distribution models to capitalize from this shift is key. Jeff Zucker would now be the first to tell you that there is money to be made form The Web. NBC Universal and Fox’s joint partnership Hulu now commands the 6th most popular property for online video in the United States, and unlike YouTube, Hulu is able to make money from most of its content. Analysts estimate that Hulu will generate domestic revenues on par with YouTube (approx $250 million for 2009) despite the massive difference in their audience size.
As a filmmaker, it is important to have your finger on the pulse of the industry. The good remain adaptive to changing industry trends and the great anticipate the evolution of them. Filmmakers need to ask themselves, “How can I leverage New Media to benefit my current projects?” and “What industry trends can I anticipate that will impact my future projects?”.
RIP 30-Second Spot, Hello Web TV.
March 4, 2009
I have read and discussed the debate quite a bit over the past year about whether television will merge with the Web. Some argue that the two platforms will never merge, as they provide two completely different experiences – TV is a passive experience and the Web is an active one. I understand their argument, but I believe they are wrong. The death of the 30 second spot metaphorically describes the change that is occurring, and supports my reason for believing that television will merge with the Web.
The 30 second spot is dying. Increasing channels for distribution, an explosion of content, and changing viewer habits are partially to blame. However, the real culprit is accountability. Businesses need to measure their return, and no matter which way you cut it, television in its current form cannot compete with the Web.
The strength of the beloved 30 second spot was that it could be created once and used anywhere, saving businesses money. Yet these cost savings that lead to the dominance of the 30 second spot are increasingly irrelevant as viewer habits change. No longer is the 30 second spot sufficient across all platforms. However, the death of the 30 second spot does not translate to the death of television.
The TV audience is growing steadily… just not on TV. AccuStream iMedia Research found that professionally produced online video grew nearly 25% last year, accounting for 41.6 billion views. What’s interesting is that around 17% of this content was originally produced for Television. TV is not dying, it’s changing.
Ultimately, money follows viewers. Yes, my 30 second spot can reach 100 million viewers during the Superbowl, but does this $3 million expense produce a return? Accountability is forcing advertisers to rethink and reallocate their ad spending. It is for this reason that television and web will merge.
The Television Bureau of Advertising’s 2009 estimates:
- Total spot TV ad revenue to fall 7% to 11%
- Local spot ad revenue to fall between 4% and 8%
- National spot ad revenue to fall between 11.5% and 15.5%
eMarketer expects online video ad spending to rise by 45% to $850 million in 2009.
The Struggling Studio System
February 13, 2009
Scott Kirsner of CinemaTech wrote a great blog a few days ago about the struggling state of the studios. As the migration of viewers and content to the Internet continues, studios are clamoring to figure out how to best monetize new media’s many distribution channels. In his blog, Scott writes:
“I’m very confident about digital media’s ability to support individual creators, doing the kind of work they want to do, often on tightly-constrained budgets. (Constraints = inventiveness, right?) I’m less confident that it will support the same gargantuan, diversified companies that raked in the big bucks in the days when there were only four TV networks, six movies released every weekend, a dozen important records issued on Tuesday.”
I agree with Scott completely. In 2008, box office revenues hit an industry record of $9.6 billion and studios still lost money. In their biggest year ever, studios did not profit. With costs continuing to rise, declining margins will force the slow moving studios out of business… That is unless they get a government bailout.
Comcast – The Evil Empire?
January 27, 2009
The internet is as vital to mainstream America as the phone and television, but increasing bandwidth demanded by online applications and services has prompted a heated debate over the issue of net-neutrality. Are all internet users created equal? Should all internet users be equal? Should companies be able to control the content customers view, when they see it, and how often they’re able to? These are the issues currently being dealt with that will shape the future of The Web.
Media giant Comcast has been at the forefront of the issue, experiencing massive backlash from the tech-community for the Company’s deceptive conduct. It started in late February 2007 when former Intel engineer Robb Topolski created an application to prove Comcast was blocking file-sharing software (read more about it in “The Dark Lord of Broadband” in this month’s Wired Magazine). Comcast, a company largely viewed by its customers as arrogant, unresponsive and overpriced, had made a massive mistake by secretly controlling broadband usage. Because of the Internet’s reach and viral nature the issue spread rapidly, becoming a nightmare for the Company - and rightly so. However, in this specific case the issue may have been blown a bit out of proportion. Though exercising secret policies for capping bandwidth and blocking file-sharing applications is certainly not right, it is rational to establish different levels of service provided customers are given a choice. This has been in effect with transfer speeds across different ISP’s for a number of years – you pay more for faster service. It is only recently due to an increasingly clogged infrastructure that data transfer has become an issue.
Though it is both stupid and immoral for Comcast to deceive consumers, I cannot help but understand the reasoning for implementing bandwidth caps. There are about 100 homes sharing each cable connection. If one of those homes is using far more bandwidth than the rest, they should pay more to do so. Don’t agree? Consider the facts: Comcast is imposing a 250GB/month bandwidth cap – far above global standards (AT&T for instance is experimenting within a range of 5 – 150GB/month). To exceed the 250GB/month limit, you would have to view over 1,750 hours of YouTube videos – that would require three computers hooked up to the same connection to stream non-stop for a month.
While controling the content that people access on the web should not be regulated, I beleive tiered services across different levels of interenet data transfer, similar to cellular service, is fair and will be the model of the future. However, preserving net-neutrality and demanding provider transparency is paramount.
