Following yesterday’s post regarding the rising in the overall online video market I wanted to focus today on individual site performance. However, I ran into a small problem regarding information availability. Usually online video press releases just delve into unique users or total video streams. These dimensions can be attractive for their simplicity but they don’t paint the whole picture.

To truly see how much video activity a site is attracting, three dimensions have to combined:

1. Amount of unique viewers
2. Amount of streams viewed
3. Video time being viewed (per stream or per viewer)

Of course online video measurement firms know this but limit the public dissemination of information, particularly it seems regarding the element of time. However, comScore has provided time information regarding the average time per viewer for Hulu and the average duration for all online videos at any site. Based on this information it is possible to draw a comparison of Hulu’s comparison to the market as a whole.

Based on this information, there was a total of 1.3 billion hours of video consumed online in the U.S. during the month of July. This is 71% more than the 770 million hours viewed in December 2008. Hulu’s traffic has also grown, serving up 46.4 million hours of video in July, up from 40.5 million hours in December 2008.

Although Hulu’s popularity has been rising, its share of the total video market has been falling. This is because it is attracting more unique viewers at a lower rate than other properties. According to comScore, 76% of the total unique viewers use YouTube (up from 66% in December) while Hulu has about a 24% share. Another challenge for Hulu is that their average video consumption is falling. In December 2009 a viewer watched 99 minutes of video but in July the figure had fallen to 73 minutes. Since Hulu has 14 million more unique viewers in July, this may be a result of lighter users entering their user base.

Unfortunately information regarding viewing time was not available for YouTube, MySpace or other video sites. I’ll keep an eye out in the future for such information. A comparison between these sites would be much more interesting.

Perhaps owing to similar reasons that have led to a strong summer for cable network ratings, according to both Nielsen Online and comScore new highs have recently been set in the online video market. According to Nielsen, a record audience of almost 136 million viewers watched video online during the month of July, up 14.2% year-over-year. ComScore measured a larger audience of 158.4 million viewers for the month of July, an increase of 11.8 % over comScore’s measurement in May 2008.

At the beginning of this summer there was a debate concerning online video measurement and Hulu’s traffic; I compared the numbers for Hulu in a July posting. Based on the latest numbers, Nielsen and comScore differ about 16% in regards to the U.S. online video audience (total unique users). This is probably attributable to some difference in their research methodology, which is unclear since they both seem to use panel based projections combined with server data for validation purposes. Nielsen promotes that they were the first to market and that their panel as being “truly random,” being assembled from two separate samples of 200,000 members, 20,000 of which are selected for a “more scientific” panel through their “street addresses and phone numbers.” Nielsen also stresses that their panel “includes both heavy and light users” and that “other measurement companies create their panels from people who answer online solicitation and who tend to be heavy users.” For their part, comScore highlights that their panel is composed of 1 million users for the U.S. market, and that it has been “validated by several leading industry bodies and the use of independent third-party data sources.”

In any case looking at the measurements available for the past two years for the U.S. online video audience it seems that the firms are arriving at more common assessment.

However in terms of total video streams, there seems to be a larger and widening gap.

This larger difference, relating to the amount of video watched rather than audience size, indicates that the panels probably weigh differently in terms of heavy video users. This doesn’t solve the problem however since it is impossible for me to say which panel is too heavy, or too light. Nielsen and comScore are probably comparing these figures to the server data and arriving at different perspectives of what the correct market weight is.

Since comScore breaks out minutes of video consumption per user for Hulu, YouTube and MySpace tomorrow I will be looking at those figures and posting up a comparison.

Yesterday an article in The New York times highlighted the results of a media industry report from the private equity firm Veronis Suhler Stevenson (VSS):

An interesting shift occurred in 2008, the report said. For the first time, consumers spent more time with media they paid for, like books or cable television, than with primarily ad-supported media, like newspapers and magazines.

The VSS report also forecast internet media and subscription television to be sectors of strong growth during the next four years. These trends echoes the results mentioned in another report released a few weeks ago by Strategic Analytics (SA), which forecast that the global paid online video segment will surpass the ad-based online video segment in 2009. The SA report also forecast stronger growth for the paid segment during the next four years.

Both studies partly attribute the shift in balance towards paid content to the recession, which has stifled advertising budgets in both traditional and online media. In any case it is still surprising is to hear that paid video content will be a bigger moneymaker than ad-based content. While some companies like Apple and Netflix have made headway in the paid video segment a lot of studies have indicated that consumers prefer ad-supported models; an IBM study in November 2008 indicated that 70% of consumers prefer ad-supported models over consumer-paid models. Another study by Deloitte yielded similar results, indicating that 67% of US consumers aged between 25 and 34 would “be willing to be exposed to online ads in exchange for free content.

Although the majority of consumers would opt for ad-based video models, perhaps the smaller pay-to-watch segment is willing to outspend advertisers as a whole, in return for the following benefits:

• Zero or less advertising
• Access to a wider range of content (recent movies, old TV episodes, etc.)
• Ownership of the material or a longer viewing window
• Option to watch across more types of hardware (computers, DVR, mobile, etc.)
• Higher viewing quality

Given these trends in these reports during next two years the online community will see an expansion in paid video content. The ‘TV Everywhere’ partnership was recently launched by Time Warner and Comcast, allowing Comcast subscribers to view video online from TBS, TNT, CBS and HBO. I am also wondering if ad-based sites like Hulu will add paid content options; perhaps a subscription service similar to Netflix for accessing all the episodes for a series. Will hybrid sites emerge, offering both ad-based and pay-to-watch options? It is probably to early to guess which models will win (Hulu was launched only 17 months ago; see graphic above) but it is probable that a greater variety of options will emerge, resulting in a more choices and a very dynamic market.

About two months ago there was a little brouhaha concerning Hulu’s traffic, since the unique visitors reported by comScore were triple Nielsen’s figures. This incident is well analyzed in this posting by Greg Sterling at SearchEngineLand which concludes that “one has to look broadly at all the numbers and use the consensus and directional trends.”

Neither comScore nor Nielsen have issued press releases with new traffic information for Hulu so I’ve compiled charts based on previous releases. Comparing the measurements for visitors over this longer term reveals that the two firms have differed for some time. Nielsen reported 6.32 million unique viewers for Hulu in September 2008, and 10.11 million in May; an increase of 60%. For its part, comScore rerported 25 million viewers in December and 40 million in April; a parallel growth of 60%. Since both firms report very different absolute figures but closely similar growth rates it is more rational to follow Greg Sterling’s afforementioned advice and pay more attention to the similarities and trends between the Nielsen and comScore.

The difference between Nielsen and comScore measurements was much less, looking at the total video streams served per month. Both companies indicate that Hulu has had a steady growth in video streams since its launch in March 2008.

Both Nielsen and comSocre are indicating a strong growth for Hulu in 2009, which can be mostly attributed to the ad campaign launched by the Superbowl spot with Alec Baldwin (inexplicably currently unavailable at Hulu). Given this greater brand awareness it will be very interesting to see how Hulu continues to perform during this summer, especially since it should be a golden opportunity to attract more viewers as the summer TV season has been somewhat slow.

Last week the Council for Research Excellence (CRE) released the results of a new $3.5 million study sponsored by Nielsen titled “Media Behavior in America” focused on media usage and behavior, or more basically the amount of “consumer exposure” to “any of four categories of screens.”

1. Traditional television (including live TV, DVR playback, DVD/VCR).
2. Computer (including Web use, e-mail, video, etc.).
3. Mobile devices (including Web use, text messaging and video).
4. “All other screens” (including display screens, in-cinema movies and GPS navigation units).

Given the multiplatform focus of this blog, I wanted to quickly cover the results of this study.

Jack Wakshlag, chief research officer at Turner Broadcasting and member of the CRE, remarked that the results are “amazingly consistent across all the ages.” Overall over 67% of media time is spent with a television, close to six hours a day on average with just over five hours dedicated to live TV viewing. At 16 minutes of commercial time per hour this means that an average viewers sees over 80 minutes of commercials and promos each day, demonstrating the medium’s importance to advertising.

Computer and mobile usage was much less frequent, occupying less than a third of the total media activity. According to this study on average viewers saw only 1.2 hours of video online per month. Another recent study, by comScore, gauged that viewers saw five hours of video online per month. I am not sure how to explain this difference between the two studies. The CRE study was sponsored by Nielsen and was overseen by an independent board of advertisers, television executives and other industry experts. Regardless, both studies demonstrate that monthly online video viewing is a fraction of daily television viewing, indicating that television will probably remain the dominant advertising medium for quite some time.

Perhaps most importantly, this study demonstrates that the public is consuming media at a greater rate, perhaps since there are so many more options for them to choose from. From an advertising point of view this is both an opportunity and a challenge; an opportunity since their targets are more accessible than ever; a challenge because campagins will require coordination across different screens along with precise segment targeting.