Online video content: all future and no present?

It is popular to eulogize the ultimate demise of television as a distribution platform for video content. According to this view, the television screen may survive, but the distribution channel for content will increasingly be online rather than channel-driven. Facts on the ground (or on the couch) point to a different reality, at least for the moment. How many hours do Kat readers reckon the average American watches television each day? Based on current information, the best estimate is 4.50 hours per day. By comparison, eMarketer, a research firm, here, estimates that Americans watch only 1.00 each day viewing online videos. This Kat wonders whether this data point picks up the viewing of video content by subway or bus commuters. Whether it does or does not, however, the current state of affairs is that, at least for the US, the average person watches 5.50 hours of visual content each day, with less than 20% of that content being viewed online.

It is against this backdrop that this Kat read with interest an article that appeared in the May 3, 2014 issue of The Economist, entitled “NewTube: Online Video and Advertising”, here. The article considered the various types of companies that are seeking to enter the competition for viewers of online content. The question that arises is whether, in a world where television still seems to be king, many of these would-be purveyors of online content will be sorely disappointed at the degree of success of their venture, unless the share of online eyeballs dramatically increases in comparison with television viewers. In considering the proliferation of new sources for online video content, one need go no further that what is transpiring at the venerable New York Times. There, under the leadership of Mark Thompson ( former director-general of the BBC), the newspaper is launching 14 online “channels”, which will include short shows based on columns appearing in the newspaper. Going even further, the plans are to have at least one “channel” where comedians will apparently mock court proceedings. Further, the website itself will enable advertisers to show videos on their behalf.

How far, it is hoped at online viewing of content will ape television content can be seen in the presentations made several weeks ago by assorted companies at the so-called “NewFronts” event. Traditionally, television networks take part in what is called the “Upfront”, here, where they seek to market their new programs to potential advertisers. “NewsFront” hopes to become the internet version of “Upfront”. More than twelve companies made presentations of their online content to prospective advertisers, including such diverse companies as AOL, Condé Nast (best known for its upscale collection of magazines, here) and Google. But this proliferation of content purveyors is not limited to those seeking to chase ad revenues. Other companies are seeking to monetize the online viewing of content for different commercial purposes. Microsoft is making videos for distribution on its Xbox console, with the goal of increasing sales of the console, thereby seeking to create a form of ecosystem that is vaguely redolent of the iPhone ecosystem. Netflix is using contents to increase its viewer subscription base, building on the enormous success of its “House of Cards” series, here.

All of this sounds quite exciting, but this Kat is brought back to the data point with which he began—at least in the US, people view 4.50 hours of television content and only around 1.00 hour of online content. For at least some of these new online content ventures to succeed, either television viewing finally begins to decline materially, to the advantage of online platforms, or video content viewers will increase their daily intake to more than the current 5.50 hours, whereby the viewing pie for video contents increases, to the advantage of both television and online purveyors. Alternatively, if neither of these scenarios comes to pass, perhaps some of these platforms will develop a niche following of devoted viewers. The New York Times seems to have succeeded to an extent in leveraging its brand to attract a material number of paywall customers for its newspaper content; perhaps it can further extend its brand into commercially viable online content. Or perhaps none of these will come to pass. Instead, in the concluding words of The Economist—

It is one thing to turn out wacky, original ideas, but another to produce programmes people really want to watch. ‘House of Cards’ is one of the few online series that people around the world have heard of, and its title hints at what can go wrong when firms pile into new internet trends.