In November 2007, we published a piece called Online Video Distribution: The Race for #3 is On…
Hulu wasn’t even around, so #1 was YouTube and #2 was MySpace TV. Then came the usual suspects: Metacafe, DailyMotion, Break and Veoh.
Since then, Hulu has launched, gone from Clown Co. to media darling, to being called just another big bad media thug… but in the process, it has become a major player thanks to its stash of super premium content.
We define premium content as any made-for-web content that is professionally produced, such as our own content at WatchMojo.com.
We then define super premium content as television and theatrical content that is repurposed or published online. Despite their resistance, super premium content owners such as Disney and Sony are seeing no choice but partnering with YouTube.
Having taken notice, CBS, who initially refused to join Hulu, bought CNET for $1.8B, obtained the TV.com URL and has now set its sights on clashing with Hulu for super premium video supremacy. As a side note: wesupply videos to TV.com, Hulu and YouTube.
Meanwhile, YouTube continues to forge ahead, though rumor has it, its costs are spiraling out of control and turning it into a profitable business is becoming more challenging as every day goes by. YouTube is in a thankless position:
- consumers want free videos
- it has to take on “Big Bad Media” when they file a lawsuit (how dare they, right, it’s their content!)
- oh, we also want someone else to foot the hosting bill for increasingly better quality video.
How do we thank them? By calling them a monopolist. Evil. Or worse, heartless. The last one came from us, but it was actually meant as a compliment. Sort of.
What About the Rest?
Anyway, in the past 18 months since I wrote that first piece, more has changed:
YouTube, Hulu, TV.com have all made life for Break Media, Metacafe, DailyMotion and Veoh tougher and tougher. They made things nearly impossible by launching their own sites, however, and not acquiring them. You see how with content, you can launch a new site (Hulu, Tv.com) and scale quickly if you have the resources. By launching these sites and shooting up in the traffic rankings, they removed a lot of leverage these companies would have had in any M&A talk.
I should mention, we have partnerships with all of these companies as well, and to borrow an analogy from Fred Wilson, like any book/newspaper/magazine publisher wants to see bookstores or newspaper stands do well, we genuinely want these companies to grow in traffic and in revenue, but the truth is, you don’t need a gazillion aggregators, either.
YouTube’s success comes partially from the fact that it stayed one step ahead of the copyright issue and managed to literally aggregate all of the videos in the world (or close to it). Hulu and TV.com will leverage their pedigrees to remain relevant and grow.
But there will be a shakedown amongst Veoh, Break, Metacafe and DailyMotion, unless they shift strategies or get some kind of differentiator.
Some would argue the shakedown has begun:
- Last week, sadly Veoh laid off more people. It will now focus on its toolbar, called Compass. Here is a piece by Tech Crunch talking - and describing - Compass much better than one my one-line “it’s a toolbar” description.
- Break Media, in trying to avoid such a fate, seems to have taken a different strategy: producing, investing and acquiring content libraries… which I personally think makes sense. They just bought HBO’s Runaway Box.
Few of these companies will ever really become profitable businesses, I think, though one or two might cash out and exit, making some money for investors. The challenge they face lies in demand and supply: too many similar offerings.
But by making a play for content, I do think that Break Media differentiates itself from the others enough to have some kind of premium or leverage in potential M&A talks, because a buyer would be getting everything else the others offer (traffic, technology, advertisers and content they not only have rights to, but actually own).
Please note, as a content producer, I am biased. Readers of this blog know this all too well. But the fact is, Break Media does get an edge here, ironic or fitting, since they are partially owned by Lions Gate, who owns a right to buy the whole piece.
Since Lions Gate owns the right to buy the whole company, then logic would suggest that Veoh, Daily Motion and / or Metacafe will also make a bid to own content libraries as a differentiator, as well, since they are actually sellable and “in play”. I am not saying they are thinking of doing so, or will for sure, because the VCs that backed these aggregators were adverse to content to begin with… but the fact remains, in their quest for relevancy, it sure would be a hedge against obsolescence.
You are also going to see this with ad networks, as well. AdConion bought Red Lever, I do expect over time for others to follow suite.
From NYTimes:
After college, Michael Eisner briefly sought the life of a playwright before settling on the corporate media world, working his way up through ABC and Paramount. He became chief executive of Disney in 1984.
Today, without shareholders to worry about, he is driven by his creative impulses and an almost messianic belief that movies and TV shows and videos are more valuable in the long run than the pipes over which they are delivered.
“It’s always the content that defines the platform,” he says. Now the platform owners are “being arrogant and saying, ‘we’re it,’” he adds. “But eventually exclusive content wins out.”
Then he gives an important caveat: The content must be professionally produced as well as exclusive. “How many skateboarding cats can there be?” he says.
After nearly 3 years, 700 hours of filmed material and over 4,000 videos, here are the two things I think are most important about a media company’s video content strategy:
- the cost of creation has to be kept in check;
- the content needs to be evergreen, or at least have a long shelf life.
Everything else is a detail that can be tweaked to make the content a winner… but if either one of those two is off, it won’t succeed. Then again, I don’t have $333M to finance my content company (what Eisner had when he left Disney), but I digress.
Regarding the following:
Like his counterpart, Mr. Diller, Mr. Eisner is at pains to offer a unifying vision for the different companies he has in his portfolio.
“There is a method to my madness, but it’s hard to define,” says Mr. Eisner, who explained that eventually the assets would fit together as one media company.
I don’t think it needs to come together in a grand unifying theory. What matters is some kind of synergy where some of the parts help others. Within our company, the core focus is on WatchMojo.com, for sure. So using Mojo Supreme as an example, we use every other unit to reinforce WatchMojo.com’s leadership position in the marketplace.
- The number of media professionals that got to know about WatchMojo.com via this blog or other blogs in our blog network BloggerMojo.com for example is considerable. It also helps us in other ways, like aggregating or linking to content that we want to cover, promote, mention or reference without actually spending the resources to create a video for. Other blogs, be it SoundMojo.com, ArcadeMojo.com or FlickMojo.com also helps us establish ties with record labels, movie studios and gamemakers respectively that in turn help make WatchMojo.com’s music, film and video game videos of much better quality.
- We can better serve marketers who promote contests via StreetMojo.com, and in turn cross promote pertinent videos alongside those contents…
- Search was a bit of a different story. I’ve covered that quite a bit on this blog back in the day. Click on the MetaMojo.com tag if you care to learn the method to the madness there.
The point being: I don’t mind sharing all of these “trade secrets” because, well, they’re not really secrets, and to quote Vince Lombardi (alright, I am not sure he ever said this, but it sure does sound like something he would say), knowing something isn’t what counts, it’s actually doing it.
Connecting the dots, when it comes to doing it, I don’t necessarily agree with everything that Mr. Eisner is doing - I don’t understand most of it - but I do commend him for being one of the few - along with ourselves - who is producing video content instead of relying on skateboarding cats. As I said all along: we’ve seen an underinvestment in video content and this probably explains why online video advertising estimates were reduced this year (before the subprime/housing/financial meltdown went into turbo).
Back to Mr. Eisner: one thing is for sure, he’s having a helluvatime funner time than his peers who stayed on in traditional media, considering the meltdown there.
PLAY
