Despite digital media explosion, turning a buck will get harder

4 Nov 2009

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The fragmentation of media driven by the internet will mean the economies to create and then profit from digital content will be harder in a crowded world where the long tail of traditional broadcast content meets the cut and thrust of inexpensive user creations.

Traditional content creators, such as newspapers and broadcasters, are going to have to work harder to attract readers and viewers in a world where professional, personal and online user-generated content are colliding, the TIF Audiovisual Federation heard yesterday.

Engaging the user

“How do you engage a user when they are accessing multiple media from TVs to consoles and laptops? How do you bundle your content in a meaningful way and what are you going to do to cater for the mobile device, a fast, accessible mechanism for accessing a range of content?” asked Mike Grant, digital media partner at Analysys Mason.

“One of the smartest things Apple did with its iPhone was allow people to access content without the knowledge of knowing what a URL is. They just touched a picture,” Grant explained.

“All of these organisations are looking to create a content experience and are coming up with search-and-discovery options.”

Average viewing time

Grant said the average length of viewing content on PCs today is three to four minutes. “Some would argue that content in short form is the way to go but if you look at long-form content on services like Hulu, for example, the average viewing time is 12 minutes. What you can say about both models is the consumer is still not fully engaged. The total average viewing time for the BBC iPlayer is 22 minutes.”

Grant, who worked with the UK Government on the Digital Britain strategy, said the move to digital media from traditional newspapers, analogue TV and radio is virtually complete.

“The internet advertising market in the UK is worth stg£3 billion – this is the exact same size as the TV advertising market in the UK.”

Mission: relaxation

Grant said that, according to his research, 90pc of people watch TV to relax. Thirty per cent of people user their PC to help them relax and just 3pc use their mobile for relaxation.

“Web technology is set to transform the TV proposition,” he said, pointing to emerging services like Yahoo! Connected TV, the fact that Samsung, Sony and LG are doing services deals with Yahoo! and YouTube, and the fact ITV, Channel 5 and BT are working with the BBC Trust on Project Canvas to define the future of TV programming.

“Project Canvas will bring together the currently separate worlds of linear and catch-up TV and combine them with social media like Flickr and Facebook. The aim is to provide a consistent experience between internet services and TV services and allow users to navigate away from entry point to whatever platform they want, whether it is Sky or Endemol.”

So far, the most likely payment option that all parties involved could agree on is micropayments.

Different market dynamics

“The introduction of web technology coupled with viable broadband delivery will change forever the dynamics of the market – moving from the vertical stove pipes defined by newspapers, TV and radio which triumphed as scarce resources, to more horizontal specialists who ensure a good media consumption experience, whether it’s the iPhone, Canvas or Sky.

“Who will be the winners or losers? From our perspective, those that own the rights to premium content who can pull consumers to a particular experience will retain value in this emerging world. Disney recognises this and is reshaping its business. People will want to choose the way they consume and create content, physical media will struggle.

“Those that adapt will prosper in this new world.”

Growing digital video

Steve McCormack is CEO of Straywave Media, a cross between a traditional TV production company and a digital media firm with offices in Dublin, London and Kuala Lampur. The company has developed content such as Sweded TV and virtual cinema products that have been watched online and on TV by more than 1.5 million Irish viewers.

“Digital video is growing. Some 26 billion videos were delivered to more than 168 million US users in September 2009. This is only the beginning.

“YouTube is still the monster that content creators will have to deal with, with some 10.3 billion users while Hulu is No 2 with 583 million users. Streaming video and audio from both sites accounts for 27pc of global internet traffic.

“Interestingly, perhaps mirroring the TV world, the peak online viewing time is between 7pm and 10pm. The sheer amount of video sites out there such as Vimeo, Metacafe and Funnyordie.com is enormous.

“The good news is YouTube is getting serious about content and partner deals and is no longer hiding behind the Digital Millennium Copyright Act. But now it is serious about monetisation.”

“One of the smartest things Apple did with its iPhone
was allow people to access content without the knowledge
of knowing what a URL is."

– Mike Grant, digital media partner at Analysys Mason

McCormack, whose company is one of YouTube’s first Irish partners, said the key to monetising from YouTube is to understand how it works.

He said emerging platforms for monetisation are happening before our eyes, such as the U2 LA Rose Bowl gig in recent weeks. “It ran in 16 different countries in terms of rights and could be the future of live broadcasting.”

At the other end of the scale, McCormack warned not to underestimate the power of user-generated content, pointing to the ‘Charlie bit my finger video’ on YouTube which attracted 130 million views.

McCormack added that traditional broadcasters are also significantly upping their game with impressive sites, such as RTE’s Player, the BBC iPlayer, NBC and Fox. “When NBC and Fox got together to create Hulu, Google used to laugh at them and called them Clown.com. Now they are the second-biggest video-content site in the world – changing the landscape of who watches TV and how.”

Social-networking sites

A golden opportunity that must be seized by broadcasters and other content creators, McCormack added, is the integration with social media, like Facebook, Bebo, MySpace and Twitter. “Bebo became a commissioner of programming when it brought out Kate Modern and now brokers ad deals that combine internet and TV. MySpace has created Quarterlife and E4 enjoyed a successful presence with Skins.

“Facebook has just moved into TV with its programme ‘Community’, which premiered on Facebook first. Broadcasters and other content creators need to go beyond TV and move out to the other platforms where the audience is. It’s actually entertaining watching Twitter comments during X Factor, The Apprentice and Dragons’ Den. Content makers need to understand this shift.

“The next major trends will be things like Life Casting – where users can generate live broadcasts with one click and the likelihood that mobile TV will get its second life through efforts like SlingMedia Mobile and TV apps on the iPhone, Android and Ovi.

“Independent online video sites like Diggnation achieve more than 250 million downloads a week and have attracted more than €1 million in ad revenue.

“This is only the beginning. TV3 do well online with The Apprentice and the RTE Player is a great, great product. But we need to see things moving further out in terms of social media,” McCormack concluded.

By John Kennedy

Photo: U2’s recent gig at the Rose Bowl, which was streamed live over YouTube, is one example of an emerging platform for monetisation from the site.

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Editor John Kennedy is an award-winning technology journalist.

editorial@siliconrepublic.com