Sometimes the big just keep getting bigger. This has traditionally been the case with Univision and their latest online moves are pretty big. The company already ranks as the top U.S. Hispanic property, almost double the users of the closest competitor.

Granted, Univision’s audience was slightly inflated during the month these figures were measured since their site began streaming World Cup videos on June 11. Therefore their current traffic might be closer to 2.5 million, a figure I’ve seen in some industry presentations. Regardless Univision is clearly in the lead and it will likely extend this position given a number of recent announcements:

• September 20: Univision launched 72 new local and mobile sites in top 20 Hispanic markets. Including this one for its owned and operated Miami station.
• September 23: Univision and the NFL announced the launch of a worldwide site (www.NFL.com/espanol) for Hispanic and Mexican NFL fans.
• October 7: Univision launched a new music site, Musica.Unvision.com.
• October 12: Univision and NBA announce a partnership for a new co-branded site with league content on Univision Interactive Media’s online platform.
• October 18: Univision anounces that VEVO’s music video catalog will be added to Musica.Unvision.com.

Most importantly, and probably instrumental in closing these parnterships, a significant deal between Univision and Televisa was realized whereby online content rights from the latter will finally extend to the former. As I explored in early 2009, Univision’s lack of these rights resulted in a large amount of pirated Televisa material on YouTube, something that was eventually policed during the ensuing year, probably as a prelude to this deal.

With the addition of NFL, NBA, Televisa and new music content, it will be interesting to see how much Univision’s traffic grows. Since Univision already reaches over 75% of the online Hispanic audience the effect might be greater in terms of engagement rather than unique users; popular long-form telenovela videos should considerably raise the time on site for their users. Video traffic also sell at higher CPMs and has strong growth potential- online video advertising grew over 31% during the first half of 2010 as compared to 2009.

At the 2009 Horowitz Media Conference a speaker declared that Hispanic online video was a wide open opportunity. It seems to me that with Univision’s announcements this sector will be catching on fire during the next year, and will likely attract a lot of attention and further investment, both in the form of advertising and new ventures, something that should be beneficial not just to Univision but to all participants in the online Hispanic market.

Apple has an impressive position in the music market. Through its iTunes store, the company currently has a 69% share of the U.S. digital music market and a 25% share of the total U.S. music market. Their position isn’t as strong however in the video market. This is especially apparent when you compare iTunes music and video sales on an average unit sold per user basis.

The iTunes store launched in early 2003 and by the end of the year it had almost 700,000 registered users. With the launches of the iPhone and iPod Touch, iTunes greatly expanded its customer base and they now reach over 100 million users.

The larger user base consequently led to accelerated musics sales. In early September total song sales reached 8.5 billion; they will probably surpass 10 billion in early 2010. (Update: Effectively, Apple reached the 10 billion songs sales point on February 25, 2010)

Looking at the average annual songs sold per registered user, iTunes initially had a very high amount- over 60 songs per user during its first year. This makes sense given that most of iTunes’ initial customers were early adopters of iPods and iTunes and probably hard-core music fans. After 2003 average song sales dropped off, but steadily grew back through 2007, until the user base ballooned (with the introduction of the iPhone and iPod Touch), resulting in another drop in 2008. However, the average has recovered between January and September 2009. Perhaps the latest wave of iTunes customers are becoming music customers.

As I mentioned beforem within video the picture hasn’t been as pretty. Total video units sold has been a fraction of average songs sold per customer. I thought that video sales would’ve picked up once more video-capable Apple devices were in the market (iPhone, iTouch, etc.) but that hasn’t been the case. Average sales per user dropped off in 2008, again, due to the increased user base, but video sales have not recovered like music. Rather there have been two sequential declines in average video units sold per user.

So is there a possibility that Apple will rectify its video position? Since April I have been speculating on the highly rumored iTablet. I believe that the device will be a multimedia marvel, revolutionizing gaming, digital magazines and digital video in particular, much as how the iPod affected the digital music industry. What was missing from my initial analysis was how Apple would need to couple its device launch with an evolution of iTunes, in terms of its video business model.

While iTunes does offer unparalleled access to content from many producers, it is easy to understand how many consumers might be stifled by its pay-to-own business model. An 45 minute standard-definition television episode on iTunes takes up about 450 MB of storage space. That is about 50 times more than a song. A song costs only half as much as the TV episode ($0.99 to $1.99). Therefore the real prohibitive cost to consumers from buying video content is disk space and not the purchasing price.

The logical solution for iTunes would be to implement a video subscription model. This week such a service was reported on at AllThingsDigital and Disney is rumored as being one the service’s early partners. Such an option combined with the “iTablet” would give Apple a much stronger customer offering for video, and would probably propel the company’s position within the market during the next few years.

The digital video market, being nascent, promising and hot, is the equivalent of a precocious young celebrity. They both attract a lot of attention, press coverage, and debate concerning which projects and relationships are worth pursuing. Of course, I have my own opinion, but just about digital video and not celebrities.

If you divide the digital video market by delivery methods (streaming or downloaded) and business models (consumer paid or ad supported), four sectors emerge.

Companies within the ad-supported streamed quadrant (upper left-hand corner) have received a lot of criticism lately for basically giving away for their content. Although YouTube attracts between 40 to 60% of total internet video streams the company places ads in only about 9% of these streams. Hulu has been somewhat more successful since it’s selling about 60% of its ad inventory, but the site has much less traffic, and runs only two minutes of spots per 22 minute program (a quarter of the standard amount on television). Hulu’s annual sales are running at about $120 million, a third less than estimates at the beginning of the year.

Unsurprisingly, there is much speculation about Hulu beginning a subscription service option, which would extend its presence towards the lower left-hand quadrant, along with the likes of Netflix and the “TV Everywhere” project currently being developed by Time Warner and Comcast. Such a business model might offer Hulu a greater revenue per viewer than what advertising currently yields, even at a high $50 CPM. Interestingly Amazon’s versatile Unbox service offers both paid streaming and downloaded options, placing it across both the lower left-hand and right-hand quadrants. Just within the paid downloaded quadrant iTunes is probably the biggest player.

Most of these companies do not yet have mobile video platforms. The only options seem to be YouTube, iTunes and Podcasts. Hulu may have an iPhone App in the works, but it seems to be on hold until their subscription service launches. This would leave Podcasts as the only mobile ad-supported downloaded service. It seems to me that this is an opportunity worth exploring.

Mobile video content has a strong value proposition. It offers portable viewing of video, anywhere and at anytime, and doesn’t require a network connection which can very unreliable or inaccessible in many situations. Mobile video also offers a higher level of viewer engagement than with television or computers where consumers can change channels or application windows. The only catch is that in order to make the most of this, you would have to “pause” or disable the fast-forward button during commercial breaks. Of course, the downloaded content would also have to an “expiration date,” as is the case with any video content, but this could be easily implemented with mobile devices just as Apple has restricted the length of time for viewing rented movies from its iTunes store.

I posted my idea for an ad-supported downloaded video on a recent article by Dan Rayburn concerning Hulu’s possible iPhone app, and how Hulu could opt for this route . His response:

Sure, it’s possible, but I don’t think likely as the consumer experience would suffer and the content would not be available instantly.

I respectfully disagree since consumers do want to be able to watch video content without relying on AT&T’s 3G network. Perhaps in the long term when mobile networks switch to 4G downloadable content would not offer the same value, but it remains to be seen how quickly mobile networks upgrade, and how data pricing plans also evolve. I also believe that consumers would be willing to temporarily cede their FF button in return for the right to see the latest episode of their favorite TV show anytime and anywhere. Viewers don’t mind sitting through the unskippable commercial breaks in Hulu and this proposition would be fairly similar.

The most important thing to remember is the immense market potential of mobile video. According to Nielsen, consumers currently spend about 3.5 hours per month watching video on a mobile device; that’s only 1.8% of the total time they spend watching video. Everybody is expecting this market to explode and the sooner or later a diversity of video options will be offered to satisfy a range of demands. Perhaps the downloaded ad-supported models won’t be the majority, but they will certainly be available. The only question is which companies will offer the service.

This week’s new iPhone launch piqued my interest again in Apple’s 10-inch touchscreen device, which is rumored to be released before the end of this year.

This device, let’s call it the iTablet iPad (Microsoft has a hold on the “tablet” category name), will be like a larger version of the iTouch. See below for what I estimated the size and shape to be, and how it would relate to Apple’s existing lineup of small electronic devices; from left to right: Shuffle, Nano, iPod, iTouch and iPhone.

The device can be seen as an extension of the iPod family, but what will it do? The iPad will probably have the following features:

• Multi-touch user interface, similar to the iTouch and iPhone.
• Accelerometer, although the functionality of this will be somewhat different given the larger size of the device.
• Rear or side external audio speakers, similar to iTouch.
• Video and audio output, a first for an Apple small device, but necessary in order to support many of the functions I believe this device will fulfill.
• Wifi for web browsing and connecting to iTunes and the App Store.
• Bluetooth for external devices (headset, keyboard, mouse, game controllers) and for peer-to-peer applications.
• Run on the new iPhone OS 3.0, which offers a variety of new functions including direct App Store movie and TV show downloading, In-App purchasing, Peer-to-Peer connectivity, Voice over Internet functions and Push Notification.

Given these features the iPad will transcend all current product categories since it will fill a variety of functions:

• Game Platform: The iPhone and iTouch have clearly demonstrated their ability to compete in the portable gaming market. I believe that Sony’s latest PlayStation Portable (PSP), the 3.8 inch screen PSP Go, revealed last May and releasing in October, is a direct response to Apple’s smaller gaming products. A 10-inch screen will extend Apple’s presence in the gaming market, towards the higher end. Also, since the iPhone OS 3.0 communicates with many accessories, the iPad may probably support Bluetooth gaming controls, which will make the iPad Apple’s first entry into the console game market. There are also rumors of Apple launching a premium game section in the App Store, which might be the direct software component of this strategy.
• E-reader: Clearly the Kindle is a device that has received great reviews and acceptance in the marketplace, but while its black and white digital ink technology facilitates text reading, it is not ideal for color periodicals. Apple is already beginning to cater to this market with iTouch and Iphones Apps like Iceberg Reader which offer both subscription or single pay systems through in-App purchasing. While the Kindle will probably remain the staunch choice for book readers the iPad could take the majority of the color periodical subscription market.
• Multimedia Display: I expect the iPad will become the choice device for multimedia-to-go. It would be much more practical and comfortable for watching movies on trips, instead of carrying around a portable DVD player or a laptop. It could also be shared for viewing between two people unlike an iTouch or iPhone. The new iPhone OS supports direct movie and TV show downloading, signaling where Apple might be going with the iPad.
• Presentation Device: The portable size and touch screen capabilities of this device will make it an innovative device for animated presentations. Just see how much touch screen technology is in vogue now, popping up every day on CNN’s Situation Room and in movies like Quantum of Solace. Salespeople who want show clients some extra pizazz will use the iPad.
• Sporty computer: I also believe that the iPad will be used by many as their ‘second computer.’ I am thinking about businesspeople who already have a company laptop. The iPad will fit that need as their fun computer, for using Facebook, reading Golf Digest online, and watching videos. For all the reasons I listed above, iPad will be the device that they take on vacations. Similar to how some people have two cars; iTablet will be the sporty roadster they use on the weekends.

There are probably a number of other functions I haven’t thought of; I never expected the iPhone to be used a medical device for example. All in all, the new versatile device is sure to overturn many established parameters about electronic device categories, which will appeal to many different consumer segments. If it launches before the Holiday season Apple has another breakout hit on their hands.