Friday, September 25, 2009, 9:41 AM ET|Posted by Will Richmond
Following are 4 news items worth noting from the week of Sept. 21st:
1. Bashing Hulu gains steam - what's going on here? - These days everyone seems to want bash Hulu and its pure ad-supported business model for premium content. Last week it was Soleil Securities releasing a report that Hulu costs its owners $920 per viewer in advertising when they shift their viewership. This week, it was a panel of industry executives turn. Then a leaked email from CBS's Quincy Smith showed his dissatisfaction with Hulu, and interest in trying to prove it is the cause of its parent networks' ratings declines.
What's happening here is that the world is waking up to the fact that although Hulu's user experience is world-class, its ad model implementation is simply too light to be sustainable. I wrote about this a year ago in "Broadcast Networks' Use of Broadband Video is Accelerating Demise of their Business Model," following up in May with "OK, Hulu Now Has ABC. But When Will it Prove Its Business Model?" Content executives are finally realizing that it is still too early to put long form premium quality video online for free. Doing so spoils viewers and reinforces their expectation that the Internet is a free-only medium. When TV Everywhere soon reasserts the superiority of hybrid pay/ad models, ad-only long-form sites are going to get squeezed. At VideoSchmooze on Oct 13th, we have Hulu's first CEO George Kliavkoff on our panel; it's going to be a great opportunity to understand Hulu's model and dig further into this whole issue.
2. TiVo data on ad-skipping for Emmy-winning programs should have TV industry alarmed - As if ad-skipping in general wasn't already a "hair-on-fire" problem for TV executives, research TiVo released this week on ad-skipping behavior specifically for Emmy-winning programs should have the industry on DEFCON 1 alert. Using data from its "Stop | Watch" ratings service, TiVo found that audiences for the winning programs in the 5 top Emmy categories - Outstanding Comedy Series, Drama Series, Animated Program, Reality-Competition and Variety/Music/Comedy Series - all show heavier than average (for their genre) time-shifting. The same pattern is true for ad-skipping; the only exception is "30 Rock" (winner of Outstanding Comedy Series) which performs slightly better than its genre average.
The numbers for AMC's "Mad Men" (winner of Outstanding Drama Series), are particularly eye-opening: 85% of the TiVo research panel's viewers time-shifted, and of those, 83% ad-skipped. (Note as an avid Mad Men viewer, I've been doing both since the show's premiere episode. It's unimaginable to me to watch the show at its appointed time, and with the ads.) The data means that even when TV execs produce a critical winner, their ability to effectively monetize it is under siege. How long will BMW sign up to be Mad Men's premier sponsor with research like this? TiVo's time-shifting data shows why network executives have to get the online ad model right. When TV Everywhere launches it will cater to massive latent interest in on-demand access by viewers; it is essential these views be better monetized than Hulu, for example, is doing today.
3. Radio stations push into online video as GAP Broadcasting launches with VMIX - Lacking its own video, the radio industry has been a little bit of the odd man out in the online video revolution. Some of the industry's bigger players like Clear Channel have jumped in, but there hasn't been a lot of momentum, especially with the ad downturn. But this week GAP Broadcasting, owner of 116 stations in mostly smaller markets announced a partnership with video platform and content provider VMIX. I talked to VMIX CEO Mike Glickenhaus who reported that radio stations are starting to get on board. For GAP, VMIX is providing an online video platform, premium content from hundreds of licensed partners, user-generated video tools and sales training, among other things. GAP's goal is to be a "total audience engagement platform" not just a radio station. Sounds right, but there's lots of hard work ahead.
4. So is there a "Long Tail" or isn't there? Ever since Chris Anderson's book "The Long Tail" appeared in 2006 there have been researchers challenging his theory which asserts that infinite shelf space drives customer demand into the niches. The latest attempt is by 2 Wharton professors, who, using Netflix data, observe that the Long Tail effect is not ironclad. Sometimes it's present, sometimes it's not. Anderson disputes their findings. The argument boils down to the definitions of the "head" and "tail" of the markets being studied. Anderson defines them in absolute terms (say the top 100 products), whereas the Wharton team defines them in terms of percentages (the top 1 %).
I've been fascinated with the Long Tail concept since the beginning, as it potentially represents a continued evolution of video choice; over-the-air broadcasting allowed for 3 channels originally, cable then allowed for 30, 50, 500, now broadband creates infinite shelf space. Independent online video producers and their investors have bet on the Long Tail effect working for them to drive viewership beyond broadcast and cable. With Nielsen reporting hours of TV viewership holding steady, we haven't yet seen cannibalization. However, with Nielsen, comScore and others reporting online video consumption surging, audiences may be carving out time from other activities to go online and watch.
Enjoy your weekends! There will be no VideoNuze on Monday as I'll be observing Yom Kippur.
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