Everyone wants to be the King of Video, even if no one has agreed on what the monarchy looks like, let alone what it will bring.
CBS, ABC, NBC and FOX are the kings of TV but the undisputed king of online video remains Google’s YouTube, with 1 out of 3 streams each month (disclaimer: WatchMojo.com is a major content provider on YouTube).
Critics of YouTube are quick to point out that its streams are not converting to revenue… in fact, the traditional media companies are quicker to add that their strategies are paying off.
The King of Television: The Tiffany Network
Last I recall, CBS was tops in rating, hence the “king of TV” reference. I have not watched TV in a while, so forgive me if I am wrong.
CBS is extremely progressive with its strategy, streaming March Madness for free and extending the favor to Joost, in which it invested last year (pardon the shameless plug that I won’t even bother camouflaging as a disclosure: but the “great moments” in the lower right area off that Joost link comes from… you guessed it: WatchMojo.com).
Having however totally given up on Innertube (wisely, we might add), it lacks proprietary distribution and as such is nowhere to be found on the Top 10 amongst Properties where video streams originated.
Bear in mind, CBS adheres to a distribution over destination mantra, generating over 150M streams each month on thousands of websites (a strategy, I might add, which we basically copied big time as of last summer and thanks to which we have seen streams grow 900% quarter over quarter, twice).
But, insofar as those streams are being served on places like YouTube and Veoh, I wonder, how much revenue does CBS generate off those streams (disclaimer 2: WatchMojo.com is a major content provider to Veoh, too).
Interestingly, CBS was spun-off from Viacom. While CBS has done many great things and generally the Web armchair QB types (yeah, sure, include me in that lot) have pointed out that Viacom has not always come out victorious, it is impressive to see Viacom kicking butt online (according to comScore) even though on TV it does not have a leading network to leverage online. But then, maybe there is a conclusion right there: that online and offline really are different in many more ways that they are similar…
Don’t Count Murdoch Out
FOX - by way of their sister company MySpace’s massive reach and parent News Corp.’s investment in Hulu - remains a monster, trailing Google’s leadership amongst video properties with the largest audiences (disclaimer 3: WatchMojo.com is a major content provider on both MySpace TV and Hulu).
The boldfaced is a consideration: if we are to monetize these mofos, we need to own the streams, right?
Wrong. I think - and this is one big IF (not sure I even said if there, but I digress) - that video is the killer app because unlike text (but even better than search), you can not only seamlessly distribute your content, but you can also bundle in monetization tools and syndicate it just as seamlessly. This is critical, because in a hyper-syndicated world where distribution has become commoditzed and good content is lacking… then that is key.
This is why I think long-term CBS’ strategy of taking your content to the audience will pay off… provided… well, provided one thing. More on that later.
But what about NBC and ABC?
NBC is News Corp.’s partner in Hulu and with the Olympics set to take the world stage in China this year, we expect NBC to do very well. NBC has forever been a leader in video: MSNBC.com - of which it owns 50% with Microsoft - remains a leader in the space. In case you are wondering, Microsoft owns only 18% of MSNBC the TV channel, but as far as the website is concerned, I believe it remains 50-50.
Moreover, MSN.com is on the verge of propelling its video mojo to greater heights by way of acquiring Yahoo!, a perennial leader in online video.
Content is King
Interestingly, while Yahoo! and MSN do not produce content, NBC, ABC, CBS and FOX do, so while Google’s YouTube, Yahoo! and Microsoft’s MSN.com remain aggregators, the media companies’ websites are in an altogether different boat.
This raises a separate issue, which I will write about in a separate post, you know, in order not to violate Nick Denton’s rules of blogging (something to do with blog posts not being longer than 6,000 words).
This begs the question, how much revenue do these media companies make?
It has been stated that Disney is the king of digital media. It’s early in the game, and the battle lines are being drawn, but indeed it’s hard to argue that Disney isn’t tops right now. Mind you, there is a ferocious onslaught coming from Rupert Murdoch’s News Corp.’s Fox Interactive Media (disclaimer 4: I worked briefly for Mr. Murdoch’s FIM when it bought the company that bought my company… but then they keelhauled me and so I had to go off and start WatchMojo.com).
So we will look at Disney’s figures to guesstimate online video revenues for a typical traditional media company:
- Disney’s rates are “north of $20 CPM” according to digital chief Albert Cheng,
- aggregate streams on Disney-owned sites are 237M, according to comScore (ABC + ESPN + Disney),
Then you can forecast a range:
How to read this table? Simple:
- At $20 CPM, assuming there is a 50% frequency cap… (there is a frequency cap, right), Disney generates $2.37M per month, or $28M in annual revenues from online video.
Using the CPM and frequency cap matrix, or 1 ad out of 3 streams and sold at $25 CPM, I would be inclined to forecast $1,955,250 per month but you can see that their revenues can scale quickly to $7M per month, but that would come at the risk of alienating users… and advertisers, for three reasons.
1 - ABC.com - News is Hard to Monetize
After all, while news remains a very popular category, it is extremely tricky to sell. Short of running a Halliburton ad next to a video on the Iraqi occupation, you cannot always monetize news. So where I write frequency capped it could simply be “not advertisable” - hence the need for ad-friendly content.
2 - ESPN.com - Sports is Usually Short Form, Too Short to Monetize
But more importantly, even in some short sports videos, ESPN.com might wisely exclude ads… because running a 30-second ad before a 15-second ad piece of content is cuh-ray-zee, and judging on some of my surfing experiences on ESPN.com, the folks at Disney and ESPN seem to get that.
3 - Disney.com - Can’t Hawk to Kids as Easily
The title says it all: you just don’t have the same kind of flexibility to pitch to kids.
Once again, this reiterates the need for ad-friendly content. Being able to come up with ad-friendly content is as challenging as coming up with good content. Few people can do one, even less can do both at once.
All in all, this would make Disney’s online video advertising revenues a $24M annual revenue stream, which seems low.
Bear in mind, all of Disney’s online revenues are slated to be in the $750M to $1B range… so could online video really only account for 3% of that?
Yeah, it’s possible, though I presume Disney does about $25M-$50M in video ads… after all, all of video advertising in 2007 in the US market was $750M… so whether it’s $24M or $50M, Disney effectively got 3-5% of the online video pie.
The bottom line, clearly the upside is there - or of course, I am plain wrong in all of these numbers.
Disclaimer: WatchMojo.com is a content provider to News Corp.’s MySpace, YouTube, Hulu, Veoh? I used to work at News Corp. from September to December 2005, you know, until the keelhauling incident.
Subscribe:
July 14th, 2008 at 2:36 pm
[…] had done an analysis previously, with Disney’s range coming in at a monthly low of $1M to a high of […]