Although I really love my new job in online advertising sales, as I previously worked for 12 years in TV, I am still irked when I hear media pundits declare the inevitability of television’s demise. It was thus with some sense of reassurance and satisfaction that I recently read the positive report by The Economist of the TV industry “Changing The Channel,” but perhaps it would be more aptly titled “TV Ain’t Dead Yet.” Among the report’s key points:

• Increased and better programming options: Clearly television is no longer the domain of the “big three” networks. A myriad of networks now proliferate resulting in greater programming options which satisfies more diverse interests, but also creates increased competition which improves overall quality.
• Increased viewing options: Besides having more things to watch consumers now have more options on how or when to view it. First of all there are more sets now in households. Secondly there are other platforms for viewing (iPods, Hulu, etc.). And finally there are also adjunct devices which allow consumers to record programming or view it on demand.
• Increased consumption: Programming and viewing improvemetns have yielded greater total consumption. On average a U.S. viewer watches over five hours of television per day, about a third more than what a person normally estimates.

The report also busts five myths surrounding the television industry:

• Myth #1, Death by DVR: Although DVRs have penetrated 34% of the market, time-shifted viewing is not threatening television’s advertising business model. Viewers will almost always watch live programming before considering recorded programs. This is backed up in a recent study by Duke University’s Fuqua School of Business which finds that 95% of people watch television live.
• Myth #2, Commercial Aversion: Even without DVRs it is believed that people ignore or evade commercial breaks, but a recent study by the Council on Research Excellence indicates that “TV advertising and programming promotions reach 85% of adults daily.”
• Myth #3, Online Viewing Cannibalization: It is also believed that online viewing is hurting television ratings but the average YouTube viewer watches only 15 minutes of video per day on the site, compared with five hours in front of an actual television set. Online video certainly is an interesting, high-growth market, but it’s not substituting television.
• Myth #4, Shift to Mobile TV: A great deal of hype has also been given to to mobile TV, although it has yet to take hold in any country other than Japan or South Korea. And even in those markets it has yet to find a viable business model since mobile TV is free and advertising CPMs run only 10% of the TV market rate.

As much as I enjoyed the report I was disappointed that it barely touched on the potential of targeted television advertising, perhaps since it’s a technology which has taken so long to be applied in the industry. Combing the mass audience of television with the audience targeting capabilities of the internet would immortalize television, not that it’s going away anytime soon.

Yesterday a deal was announced between Univision and YouTube whereby the U.S. Hispanic network would bring a “hefty stable of short- and long-form programming to YouTube.” While this is “the first time any Univision programming is available on the Web outside of its own properties” a great deal of the network’s programming, particularly material from Televisa, has been illegally posted on YouTube. Back in February TubeMogul estimated that this content drawing was over double any other U.S. network.

Number of views of clips from the 10 most-pirated shows on each major network
Univision: 583,750,247*
Fox: 289,074,325
ABC: 260,299,418
CBS: 127,334,729
NBC: 120,890,835
Source: TubeMogul
*Includes Televisa content pirated from El Canal de las Estrellas

As I mentioned in a posting in February, Univision’s view count is mostly attributable to Televisa content, specifically material copied from El Canal de las Estrellas where their telenovelas air months ahead of Univision. Similar to how different regional premieres have encouraged piracy in the movie industry, pirated telenovela clips have flooded YouTube to the delight of thousands of fans.

The piracy seems to have gone on unabated in part because Televisa and Univsion are still wrangling over the digital broadcast rights of these telenovelas. This protracted battle is the focus of an excellent article today in Ad Age.

…perhaps because of the animus involved, Televisa simply ignored the fact that fans were uploading its telenovelas to YouTube… Televisa has become more aggressive about policing YouTube over the past year… The number of pirated clips of Televisa-produced Univision shows are down 53% since February, according to TubeMogul.

Even if the number of clips has been cut in half, plenty of Televisa’s content can still be seen on YouTube, something that would never be permitted by a Hollywood studio for an equivalent U.S. television series. A quick search of just recent Televisa telenovelas will yield dozens of clips that have each garnered over 100,000 views. Just the telenovela Sortilegio, which premiered in October on Univision, has garnered over 70 million views on YouTube. What’s worse, I also found a shady website called SortilegioTV.com where full episodes can be streamed for free, although a disclaimer below stipulates:

The streaming videos that has been found here are hosted by third party. Any copyrighted videos is a property of the original copyright holder. Therefore any violations, the owner of the blog is not liable.

While this is chaotic, at least it indicates that there is a tremendous amount of demand for Hispanic content online. Obviously, Univision’s decision to launch this new YouTube channel is an effort to consolidate its presence in this space, with or without Televisa telenovelas. In the meantime, perhaps Televisa can afford to let its content be pirated in YouTube since it probably won’t affect its business interests in Mexico where the company recently launched its own video portal, Tvolucion, similar in style and content to Hulu. Tvolucion seems to fullfill the wish of every telenovela fan, but only if they’re in Mexico. ‘Foreign’ viewers are notified that the material is not available in their market, although Tvolucion is “working on offering their catalog to a greater number of regions.” They are then invited to let Televisa know where they’re based.

It’s possible that Televisa is angling to have some sort of presence online in the U.S. market, thus bypassing their broadcast partner Univision and becoming a direct competitor within the online space. However it’s more probable that the two companies will compromise on an arrangement whereby Univision will gain the online rights for the telenovelas, with certain restrictions or windows in place, just as Hulu and Netflix have arranged with other content producers.

In any case this does makes me realize that eventually the U.S. Hispanic online market will be much more complex than what is currently seen in traditional media.

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.

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.

I recently read an Ad Age article regarding the popularity of Univision’s content on YouTube. It focuses on how popular certain network content is on YouTube. A major point is how Univision’s telenovelas (Latin soap operas) are the most popular fare by far.

Number of views of clips from the 10 most-pirated shows on each major network

1. Univision: 583,750,247 views
2. Fox: 289,074,325 views
3. ABC: 260,299,418 views
4. CBS: 127,334,729 views
5. NBC: 120,890,835 views

However, as one of the commentators noted, many of the Univision videos didn’t seem to come from that network since they had an embedded logo bug for El Canal de las Estrellas, Televisa-owned Channel 2 from Mexico. It is easy to confuse the two network since they broadcast many of the same telenovelas, produced in Mexico and very popular with Univision’s Hispanic audience as well as in many other foreign markets.

As I searched YouTube’s site for telenovelas I also noticed that many of these telenovela videos were hosted by a few specialty YouTube ‘channels,’ who seemed to specialize in the telenovela genre.

YouTube Channels with Telenovela content

1. Laurisgar: 1,415 videos
2. Tvnovelasmx: 1,414 videos
3. Mundomexicotv: 1,077 videos
4. Felsesnovela: 418 videos
5. rBd24RbD: 434 videos

The hosts of these channels seemed to be based in Mexico, and some of them even explained how they posted the videos ‘as soon as the programs were transmitted’ by Canal 2 in Mexico. What’s noteworthy was although these channels originate in Mexico their content seems to draw more traffic from outside that country. For example the Laurisgar channel is currently ranked as the #5 YouTube channel worlwide, but it doesn’t even place in the Mexican rankings (YouTube channel rankings after changing the ‘country of content preference’). I believe this discrepancy is due to Televisa’s new online video site, TVolucion. This site, launched in October 2008 is sort of a Mexican version of Hulu, so it’s been a major draw for Mexican telenovela watchers. Also similar to Hulu, this site cannot be utilized by outside of its home country so ‘foreign’ telenovela fans need to get their fix elsewhere, hence YouTube’s attraction.

However, as the Ad Age article also mentions, this situation will probably not last much longer. Univision doesn’t currently offer any telenovela video online since the rights have not been cleared with Televisa but talks have been ongoing for some time. Also, just last month, Univision named Kevin Conroy as the President of Univision Interactive Media; previously Mr. Conroy was AOL’s Executive VP of Global Proudcts and Marketing. Expect further online developments from Univision soon, as well as clean-up of YouTube’s telenovela material.

CrunchBase Information on Televisa

CrunchBase Information on YouTube