What is wrong with MSFT?
Despite the fact that their sites (MSN.com and I guess MSNBC.com as well) garner the highest time spent on site of any company, they cannot convert those eyeballs and engagement into profits?
Then again, maybe it’s specifically the reason why their operations are burning so much money?
According to April 2009 data from the comScore Video Metrix service, U.S. Internet users viewed 16.8 billion online videos during the month, representing an increase of 16 percent versus March. A significant increase in video viewing at YouTube during April contributed to the month’s sizeable gains.
Nearly 152 million U.S. Internet users watched an average of 111 videos per viewer in April. Google Sites reached an all-time high of 107.9 million video viewers during the month. Fox Interactive Media ranked second with 58.8 million viewers, followed by Yahoo! Sites (45.4 million) and Hulu (40.1 million).
Other notable findings from April 2009 include:
* 78.6 percent of the total U.S. Internet audience viewed online video.
* The average online video viewer watched 385 minutes of video, or 6.4 hours.
* 107.1 million viewers watched 6.8 billion videos on YouTube.com (63.5 videos per viewer).
* 49 million viewers watched 387 million videos on MySpace.com (7.9 videos per viewer).
* Hulu accounted for 2.4 percent of videos viewed, but 4.2 percent of all minutes spent watching online video.
* The duration of the average online video was 3.5 minutes.
This just reiterates that it’s YouTube universe, we just play in it.
Interesting observation from SAI on comScore’s latest data:
comScore says that major video players like Viacom (VIA), Comcast (CMCSA), Veoh, Disney (DIS) and Yahoo (YHOO) generated fewer views in July than they did the year before. It’s possible that the measurement company’s data is off, which is what Veoh say: It insists that it has grown in the past year and that comScore doesn’t accurately measure the site. (They say the same thing about Nielsen Netratings). But if comScore’s data is at least directionally correct, it’s not a pretty picture:
Fox Interactive: 11%
Yahoo: -31%
Viacom: -12%
Disney: -2%
CBS: 95%
ESPN: -12%
ABC: 156%
Comcast: -34%
DailyMotion: 45%
Veoh: -47%
NBCU: 4%
Now, comScore’s data is occasionally accurate, oftentimes a joke (all measurement services are guilty of that, to be fair; comScore is no better or worse in that scale). However, the underlying premise that YouTube is gaining market share full speed ahead at the expense of these laggards is not wrong. Look at this graph, again courtesy of comScore’s data, but created by SAI:
That’s just for the views part, what about the overall business? I think, as I outlined earlier this year, that there will be a MASSIVE shakeout in the aggregator space. There are way too many out there, with too little to differentiate one another, and thanks to services like TubeMogul, there is not even much of differentiation by way of content… this is where a service like Hulu - backed and owned by NBC and News Corp. - might remain in growth mode, but for all intents and purpose, you will see a shakedown.
Biased as I always am, this is a welcome sign for content owners, however… because less noise coming out of the file sharing sites - who house a lot of user-generated crap - means one thing: good content will rise to the surface.
Of course, you might say: “but Ash, doesn’t YouTube - the world’s biggest video site - house more UGCrap than anyone else?” True, young Jedi… but the difference is that YouTube is clearly trying to showcase professional content and become a friend of traditional media (content owners)… this radical shift in business strategy might not be seen overnight, but as a content provider to YouTube, it’s clearly something that one cannot be unaware of.
Wow, from comScore:
Google Sites Maintains Dominant Position
In July, Google Sites once again ranked as the top U.S. video property with more than 5 billion videos viewed (representing a 44 percent share of the online video market), with YouTube.com accounting for more than 98 percent of all videos viewed at the property. Fox Interactive Media ranked second with 446 million videos (3.9 percent), followed by Microsoft Sites with 282 million (2.5 percent) and Yahoo! Sites with 269 million (2.4 percent). Hulu ranked eighth with 119 million videos, representing 1 percent of all videos viewed.
____________________________________________________________ ________ Top U.S. Online Video Properties* by Videos Viewed
July 2008
Total U.S. – Home/Work/University Locations
Source: comScore Video Metrix
Property Videos Share (%)
(000) of Videos
Total Internet 11,425,890 100.0
Google Sites 5,044,053 44.1
Fox Interactive Media 445,682 3.9
Microsoft Sites 282,748 2.5
Yahoo! Sites 269,452 2.4
Viacom Digital 246,413 2.2
Disney Online 186,700 1.6
Turner Network 171,065 1.5
Hulu 119,357 1.0
AOL LLC 95,106 0.8
CBS Corporation 69,316 0.6
____________________________________________________________ ________ *Rankings based on video content sites; excludes video server networks. Online video includes both streaming and progressive download video.
Google can have all of the difficulties monetizing YouTube, they OWN the video space now.
Russia’s answer to Michael Arrington, search engine Quintura’s CEO Yakov Sadchikov comes across some interesting figures on the Russian online advertising market, estimated at $260 million from January to June 2008. This is up 73% year-over-year, according to a report from MindShare Interaction. More interestingly is the fact that contextual advertising accounted for $161 million (or 62% of total online advertising spending), while display advertising accounted for $99 million (38%) of total online spending.
The business daily Kommersant breaks down the top 10 online display advertisers in Russia, including:
- Ford Motor Co. ($4.6m),
- MTS ($2.5m),
- Megafon ($2.3m),
- General Motors ($2m),
- VimpelCom ($1.9m),
- Peugeout Citroen ($1.6m),
- Nissan ($1.5m),
- Samsung ($1.3m),
- Honda ($1.2m), and
- Procter & Gamble ($1.1m).
Partially because I was born in a Russian-built hospital in Tehran, I’ve always been somewhat interested in Russia, its history, and its recent resurgence. The country is a fascinating story in the re-making, what with the rumors surrounding outgoing President Vladimir Putin’s massive fortunes, and the stratospheric rise the country’s fortunes have experienced of late. Consider some stats I came across:
The average monthly Russian salary was:
- $200 in 2003,
- $303 in 2005,
- $545 in 2007.
according to Kommersant and Pravda. Obviously, there’s plenty of upside.
And that’s for the average employee, as in all countries, the highest earners earn far, far more. A CEO earns $150,000 per annum, or just over $10,000 per month, according to this report, and that was 2007, I suspect it’s gone even higher.
In fact, the top CEOs get up to $24,000 per month, according to this.
Connecting the dots: as Russia’s massive population - which a few short years ago was showing troubling demographic signs - increases its purchasing power, expect online advertising rates to follow suit. Here’s comScore’s Top 10 Russian sites:
According to eMarketer, the size of online advertising revenue is $1.35B in 2008.
Since launching WatchMojo.com in 2006, I’ve had some questions about that figure… so here goes:
Definition of Online Advertising Revenue is Unclear
I’d be interested to know what falls into the category: if it’s only video pre-rolls, post-rolls or mid-rolls, then we leave out companion display ads… which on a site like YouTube account for the vast majority of revenue. Moreover, accounting departments need to standardize this definition. Conclusion on this item, we need transparency and clarity in Accounting definitions and guidelines, I’d be curious to see if an eMarketer spokesperson can address this.
Rich Media vs. Video Ads
When I was running sales for a mid-sized publisher, I recall that rich media ads (Unicast, Eyeblaster, Eyewonder, etc.) were bundled in with video ads because many rich media ads contained video… is this still true? I am not sure. Why?
Because…
In-banner vs. In-stream
Video ads can be in-stream or in-banner. In the latter case, it would be a video ad in a 300×250 that is rich media, YHOO has loads of these; then there are in-stream video ads, which go before, during or after video content. MSNBC has oodles of these. This is a very important nuance.
Double counting for partnerships?
Say FOX Sports has a partnership with MSN, who books that revenue? This kind of stuff is fairly standard, think of all ad repping firms who collect and remit ad revenue… but in MSN’s case, for example, it also has a partnership with NBC Universal on MSNBC.com. It’s somewhat useful to know how that is all booked. Is it case by case or is there an accounting rule that is actually respected industry-wide?
Ad Networks
Say an ad network such as Tremor Media, Brightroll, Video Egg, Broadband Enterprises etc. place some of these ads, they need to be accounted somewhere. The questions is: where are they accounted? My take is that like it was with display ads’ networks, video networks will touch 15% of the video pie.
Here’s our breakdown:
Using the figure from eMarketer for total US online video advertising revenues at $1.35B, up from $750M in 2007, as a benchmark.
- Yahoo.com = $200M
Yahoo did over $7B in total sales… with over $5B coming from ad revenues. Yahoo! has a lot of video content along with plenty of rich media on its site. As the world’s largest property, I could easily see Yahoo! doing even $250M in video-derived ad revenue, but when you consider that video accounts for less than 5% of the online video advertising pie, then we will assign a 4% share to online video for Yahoo! total ad revenues.
- Viacom = $125M
I think Viacom generates a larger than normal share of its online advertising revenues from online video ads. Last year I noticed MTV.com running a good dosage of video ads when my wife was watching The Hills on their site (I swear she was watching it). I also think that between Nick.com, MTV.com, NeoPets.com, iFilm/Spike, Atom.com and Comedy Central.com, one reason why Viacom is making a big deal about piracy on YouTube is that it sees just how good the online video advertising business can be.
- AOL Time Warner = $120M
Time Warner’s sources of revenue from online video includes AOL.com, TMZ.com, CNN.com, Time.com and many other prominent places. In fact, while TW does have the cable assets, if AOL TWX had more video assets, I think it could generate $200M per year from video, easily.
- News Corp./Fox Interactive Media = $100M
This is seemingly bullish, but note a few things:
Fox Interactive Media did $900M in total revenues… with MySpace.com doing $750M alone. Of that, it’s worth noting that MySpace is #2 behind YouTube, with MySpace TV making a push to get lots of premium content… leveraging News Corp.’s sales team, to boot.
Moreover, between AmericanIdol.com and IGN Entertainment (which includes IGN.com, GameSpy.com, RottenTomatoes and my old stomping grounds AskMen.com), this is actually quite feasible.
(disclosure: WatchMojo.com is a content partner to MySpace TV)
- NBC Universal = $100M
When it is not hosting the Olympics, literally, I think NBC Universal does about $75M from online video, when you consider that NBC’s online portfolio includes its namesake assets including NBC.com, MSNBC.com and the recently launched NBCSports.com. However, bear in mind, NBC also owns iVillage and Healthology, both sites that use a decent amount of video, and thus, generate online video ads. I think one reason why eMarketer pumped up its estimate to $1.35B is precisely because of the Summer Games in Beijing, which should generate loads of revenues for NBC and parent GE, I would put the 2008 take to $100M.
- MSN.com = $100M
Depending on the accounting, MSN.com can be making anywhere from $100-250M… but seeing how NBC and Microsoft remain 50-50 partners in MSNBC.com, but Microsoft has reduced its stake in the television network to 18%, I suspect most of the accounting revenue falls to NBC, who then remits a cut to Microsoft’s MSN unit (I could be wrong on this). Anyway, between MSN.com and MSN’s video assets, I think MSN does $100M in annual revenues from video advertising.
- Disney = $100M.
Disney consists of ESPN.com, Disney.com and ABC.com. That is a lot of video inventory.
Moreover, Disney is actually quite the king of online media. Well, at least it was, before News Corp. and CBS spent $2B in 2 years to accelerate their efforts. But the bulk of Disney’s $1B+ digital sales come from ticket sales at its themed parks, as well as merchandising… however, you know online advertising figures prominently, and video advertising growing quickly.
I had done an analysis previously, with Disney’s range coming in at a monthly low of $1M to a high of $7M.
Is it right? Who knows… Do I look like Nostradamus? Unless you have a better idea, let’s assume the math makes sense… however, given a few factors, I now put Disney on the higher range, and give them an annual revenue from video advertising of $100M.
- Hulu = $75M
Using AlleyInsider’s range of $45-90M in revenues, we’ll peg Hulu’s revenues at $75M this year in revenues. Hulu is now a top 10 video site, according to both Nielsen and comScore.
Disclosure: Hulu is a distribution partner of WatchMojo.com, as well.
- Google/YouTube = $65M
The bulk of that $200M comes from display banners. The only part I would attribute to “video advertising” is the sum of revenues from promotional/commercial videos that YouTube runs off its main page. At an run rate of $65M per annum, that is $175,000 per day, times 365 days. It comes from Forbes’ analysis. I should state, all the way back in 2006, one month before Google bought YouTube, I said “YouTube should be making $15M per month, or $180M per annum”. No comment. Disclosure: WatchMojo.com is a content partner to YouTube.
- CBS = $60M
CBS made $24M from March Madness… mainly from banners etc., but some videos, too. And CBS has been growing very rapidly, of late, launching its syndication network. I am not sure if CBS was doing much more than $5M per month on video ads because its reach was largely on third party sites that consisted of the Syndication Network, and let’s face it, once you embed ads, no one embeds your content on third party sites…
So if CBS was doing more than $60M in online video advertising in 2008, then more props to Quincy Smith and his team.
CBS only recently cracked the Top 10 list of largest web properties, thanks to its acquisition of CNET, which takes us to:
- CNET = $40M
CNET probably does $40M in video advertising, which out of a revenue of $400M is 10% of its total. Considering that on your average site online video accounts for less than 5% but CNET was an early mover here, I think that sounds about right… and yes, I am guessing here.
- The clones (Metacafe, DailyMotion, Veoh, Break.com, Joost, etc.): $50M
I use the term clone affectionately, but I suspect that combining all of the players looking at becoming #3 in the online video distribution space would give you a figure north of $25M but less than $50M. Why? Too much UGC content holds them back…
To really avoid double counting, I am omitting all video networks, such as Brightroll, Yume, Tremor, Broadband, etc.
- Rest of Web: $220M
Doing the math means that the rest of the Web is fighting for just under a quarter of a billion dollars.
What do you think? Does this breakdown make sense? Who are we missing?
Video is now firmly kicking search’s ass… well, not yet in revenues (where it actually matters), but in terms of engagement:
According to comScore, in May, in the US, people streamed 12B videos, but conducted just over 10B search queries.
eMarketer says online video advertising revenue will come in at $1.35B in 2008… but the odd thing is that YouTube - despite having a commanding market share lead in streams generated - does less than $50M in actual video ads, with the bulk of that $200M yearly revenue coming from display banner ads.
So who generates video advertising revenues? By our estimates, it’s mainly traditional media and the portals. For more on that, click here.
The latest comScore stats are out: video streams in the US remain above 10B (and above search queries), but they fell in April from March.
Hmm… maybe this is the sign of the video bubble bursting? I doubt it.
Related:
Are we still talking about this? I guess so. They even published a Part Deux.
We get the message, but the tone… man, the tone:
comScore, Inc. President & CEO, Dr. Magid Abraham, published the following letter today in regards to comScore’s domestic paid click data on Google, which has received significant media attention during the past week. Dr. Abraham confirms the accuracy of comScore paid click data, illustrating where comScore got it right and so many of the analysts, unfortunately, missed the mark.
Well, well… I will add this: comScore just proved how irrelevant it is by excluding global traffic, but I digress…
According to comScore’s November 2007 Home and Work panel,
What is the largest print magazine company on the Web?
Answer: The New York Times, surprisingly strong at 47M uniques at #10.
I wonder how that will change with News Corp. buying - and potentially opening up - WSJ.com. The Dow Jones network has 17M users, and that is going to shoot up if it goes free.
What is the largest magazine company on the Web?
Answer: Hearst, with a respectable 17M users at#49. I wonder where Conde Nast is. Also, shocking that Dennis Publishing - with Maxim, Blender and Stuff - is nowhere on this list. I think given the target market of Maxim and Blender and the amazing content they have, they should be on such a list. But I digress. Maxim was my former competitor…
Interesting, no? See the entire breakdown of the top 50 properties in the US, according to comScore.
What’s crazy is the online presence of retail brands such as Sears, Walmart and JC Penney. How do they manage their online audiences when online-only etailers such as Amazon and Overstock earn their bread and butter solely from their web operations. There’s some food for thought…
Also, shocking to see Lycos down at 47, that was once the largest property in the world, if my memory serves me right.
PLAY
