Mood:
lyricalNow Playing: Video on the Web ....comes with a price?
Topic: MEDIA
Hello friends n family of the Z3 Report ...its all about video and I have some new dirt that I found on "telephonyonline. com" regarding putting videos online ...and for what price?
Cable wins, broadcasters lose with Web video
http://telephonyonline.com/video/news/bernstein-research-web-video-0618/
Bernstein Research analysts study the Web video ecosystem to discern winners and losers as IP takes over
Video on the Web is clearly proliferating and attracting controversy in the technology, media and telecom space as it does. According to Bernstein Research analysts, all the players in the Internet video ecosystem – pay TV providers, media companies and Internet companies – will influence the future of Web video, but there will be winners and losers in its wake.
In a Webcast held this week, the analysts discussed the intersections between US media, the Global Internet, data networkers and cable and telecom companies. Drawing from Bernstein’s recent in-depth consumer-behavior study, the analysts found that consumers watch a lot more TV – about 309 minutes a day – than they realized and a lot less Web video – only about 2 minutes per day – than they claimed. Yet despite the low numbers, the growth rate of Internet video has been very high, said senior analyst Jeff Lindsay. NBC and Fox’s Hulu is growing at an average of 89% per year, and Google’s YouTube at 38%, and their viewers are far more diverse than the assumed teenage male segment. This rise to fame of online content aggregators has many cable and telcos fearful of video cord-cutting, a potential trend, although one that has yet to materialize.
“The single online property the cable MSOs should fear is not YouTube but Hulu,” Lindsay said on the call. “We view Hulu as the only property with the potential to drive any significant cable-cutting. A new term is already entering the internet lexicon, i.e. ‘Hulu households.’ We have yet to come across the term ‘YouTube households.’”
That being said, these global Internet companies will struggle to find profitable aggregator positions despite their success, Lindsay said, because these are already taken by the broadcasters themselves. Only five companies dominate the video landscape in the United States, according to senior analyst Michael Nathanson. How these companies, which include Viacom (NYSE: VIA-B), Disney (NYSE:DIS), NBC, Time Warner (NYSE:TWX) and News Corp. (NYSE: NWS-A-WI), respond to this online content explosion will shape the debate on Web video, he said. They – along with the Internet companies – have a vested interest in responding quickly, too, as they run the risk of being the most likely losers in the Web video scenario.
“By our math, a show like the Simpsons generates about 64 cents per user for Fox on Sunday night, as it packs in 18 commercials at a rate of about $30 per thousand viewers,” Nathanson said. “However, The Simpsons on Hulu is able to charge about double the CPM due to greater ad effectiveness, but it only has three -- that's right, three -- commercial units. As such, it's only generating about one-third of the value of the broadcast version.”
For these broadcasters to integrate more advertising into Web video runs the risk of cannibalizing their TV ad business, as the budgets are likely the same, Nathanson added. If Web usage of broadcast content does increase, content owners will have to shift to a subscription model or find a way to make ads work, he said.
The analysts concluded that the winners in the IP video movement will be data equipment suppliers like Cisco Systems and Juniper Networks and potentially even the cable and telecom pay TV providers. Even if these TV providers get relegated to a dumb pipe, revenues might decline, but costs and capital expenditures would decline even further, potentially 50%, causing free cash flow and return on investment to rise more than 30% each, according to senior analyst Craig Moffett.
Such an evolution as Moffett describes is possible, although not necessarily likely. The telcos and cablecos are interested in the evolution of Web video and won’t be satisfied being just a dumb pipe, he said. They want to shape the evolution, whereas at least one segment of their competition, satellite, will be rendered obsolete.
“They’ll make changes that protect the content companies, even if the content companies don’t try to protect themselves,” Moffett said. “But if bypass ever did happen ironically and cable was [relegated] to dumb-pipe status, it would actually be a better business than it is today -- obviously not so for the satellite operators, who are in this kind of purely broadcast distribution model. Their model would be obviously fully undermined.”
