The battle for online TV

[Cross-posted at A Cup of Tea with PHD]

Image credit: Karl Baron via Flickr courtesy a CC license

Changes are afoot in the world of on-demand TV and video that could not only impact the viewing patterns of early adopters and the masses, but bring about a seismic shift in advertising revenues which are today mostly TV-driven. In fact, I am fairly certain that the masses will get there sooner than expected, if these changes continue apace.

The biggest of these changes is part of Google’s new strategy, who with YouTube have put their stake firmly in the video-on-demand ground by commissioning original content from a range of programmers, all set to debut with independent channels later this year. Some of them are already seeing airtime on the web, such as Vice’s music channel Noisey, which was made available to the public recently. A look at the list of original content creators YouTube have lined up reveals some other interesting names such as the Bowery Presents channel, which aims to livestream concert shows and more intimate artist performances, and content from more well-known media companies and brands such as the Wall Street Journal, the Onion, Red Bull, Jay-Z and Slate. However, the channels that are likely to have more loyal audiences are the niche ones such as one specially targeted at a younger, Hispanic, bi-lingual audience called 123UnoDosTres and one targeted at mothers, called Café Mom. Robert Kyncl, a senior executive in YouTube, said in a recent article in the New Yorker that niche channels are likely to be a success because they give the audience a more immersive experience, a point of view that is tough to argue with. He cites the fact that web channels have very low costs, unlike TV channels that need a 24.7 programming loop and a transponder to get their signals up on satellites.

The New Yorker piece, well worth a read, also quotes Forrester Research which says that by 2016, half of all households will have wi-fi devices, and as people will then start choosing web channels over TV channels, the only way for networks and cable companies to grow will be for them to buy these web channels. Clearly YouTube is taking their strategy very seriously: they already have the YouTube Next Lab, a company created when YouTube bought four-year-old web television company Next New Networks last year, just to coach content creators on best practices.

Web channels like the ones YouTube is planning to host will also pique the interest of advertisers, as longer format TV shows like those currently on Hulu get considerably higher CPMs than most of YouTube’s current videos, which are not more than a few minutes in length on average.

Internet video is also predicted to eat at TV’s traditional hold over advertising revenues. In fact, Accenture’s 2011 Media & Entertainment High Performance Study interviewed a range of broadcasters and revealed that their biggest challenge in the next 12 to 24 months will be identifying new monetization models, as well as the fact that in order to face the future with best foot forward, they will need to focus on the multiplatform consumer – all proof that YouTube is being quite smart with their new strategy.

The US seems to be leading the charge in online TV and video – recently, Netflix debuted its first original online TV series there (in the UK, the BBC has picked up TV rights for it, though it is strictly online-only in the US). The Huffington Post also announced just two weeks ago that this summer will see the Huffington Post Streaming Network come to life, a site that will initially have 12 hours of new programming every day, rising up to 16 hours a day in 2013.

It’s certainly going to be an interesting space to watch. Sit back and reach for the popcorn, all from the comfort of your sofa.

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