For an informed view on connected entertainment in the UK & Ireland, visit Cue Entertainment
YouTube added a third UK broadcaster to its roster this week, as
STV inked a deal with the online video site that will allow both companies to
sell spot advertising alongside content from the Scottish broadcaster.
The announcement came shortly after a New York judge ruled that
Viacom’s allegation of “massive” copyright infringement was invalidated by
YouTube’s willingness to remove offending material when notified. With
long-form TV programmes increasingly available on what was originally for
“user-generated content” (UGC), can it be long before advertising-supported
first-run feature films find a home online?
Channel 4 and Five signed deals with YouTube towards the end of
2009 and the decision by STV to release 2,500 hours of new and archive content
is a further acknowledgement by a commercial broadcaster that establishing and
running a catch-up service to rival the BBC iPlayer will never produce a return
on the investment required. Handing over responsibility for formatting and
online delivery to YouTube in return for revenue sharing from advertising is
the 21st century equivalent of delivering programmes to Arqiva’s broadcast
transmitters, though this must be a blow to that company’s hopes that SeeSaw
will be the broadcasters’ online platform of choice.
An extensive advertising campaign for SeeSaw has been launched
after the most recent figures revealed that the service secured a mere 0.5% of
the UK online video market in the first three months of operation. With an
audience of fewer than 200,000 viewers, SeeSaw will need to work hard in order
to attract advertisers away from the charms of Google and its UGC subsidiary.
YouTube has captured over 45% of the online Video On Demand (VOD)
market in the UK, at a reported cost of over £1 million a day; a fact not lost
on its parent company. Although the site’s popularity alone does not make it
profitable, there has been a significant shift in the studio’s perception of
the value of YouTube as a delivery platform and “monetisation” has become the
watchword.
US users have had free online access to some catalogue titles for
a while. Now the Sony Pictures Entertainment web site Crackle is to offer UK
and Australian audiences a taste of its film library alongside TV shows and
other SPE-owned content. Available in the US since mid-2007, Crackle has its
own web site but selected content is also packaged and supplied to other
operators, including YouTube. The studio is credited for the traffic but,
crucially, also controls the associated advertising revenue. Sony has watched
this climb over the past year and the growth in income has helped to trigger
international expansion.
At the Futuresource Entertainment Summit (Cue Entertainment July
issue) Head of YouTube UK, Bruce Daisley, said: “There has been a big change in
attitude over the past 12 months; people are now very willing to work with us.”
Having experimented with pop-ups, YouTube has ditched them in favour of
pre-roll and post-roll commercials, which Daisley claims are a more effective
alternative.
Google’s acknowledged ability to monetise online video has been
refined and improved and the results are visible online. Although the company
will always take down infringing material on request, a defence that the
American courts have so far accepted, it is the potential for monetising film
and video content that attracts the content-owning moths to the dangers of the
online flames.
Advertising supported VOD (AVOD) has become attractive to both
advertisers and operators alike, as the TV audience has drifted online, but in
the past there have been doubts about its effectiveness. The digital market
intelligence organisation, comScore, published a report last month titled
“Blurring the landscape: How TV is merging digital and traditional media”. It
includes a comparison between the viewing preferences of TV and online
audiences that reveals markedly similar behaviour patterns; 60-70% say that
they will watch commercials, regardless of the delivery platform.
The conventional wisdom is that online viewers are intolerant of
ad breaks and prefer watching programmes online for that reason, yet this
research by comScore analyst Tania Yuki appears to show that US audiences will
accept 6-7 minutes of commercials in each hour of programming.
While this volume of commercial messages may not be totally
acceptable to the UK audience, ITV and other ad-supported channels established
the principle of ad-breaks in feature films many years ago. If advertising is
the price to pay for otherwise free film content, two-thirds of the potential
audience appear happy to pay it. Unlike subscription services or
“micro-payments”, which were once hailed as the solution to funding online
delivery, ad-supported services are perceived as “free”, a similar principle to
commercial television.
There are almost 6 billion views of online video content in the UK
each month, according to comScore, with less than 5% of that number of views
(300 million) for top-up or catch-up TV. Each month viewers of ITV sites
watch 13.5 videos and Channel 4 viewers watch 18.8 videos, on average. Perhaps
surprisingly, BBC sites fall in the middle of the range, attracting 15.7
monthly video views. Although still relatively small, this audience includes a
significant proportion of higher-spending individuals, which makes it
attractive to advertisers.
BBC Worldwide has a long-standing agreement with YouTube to make
BBC content available to a global audience online. Speaking at the renewal of
the agreement last year BBC Worldwide Digital Media Director Simon Danker,
said: “Building communities for fans and developing new opportunities for
advertisers is at the heart of our new partnership with YouTube.” The
commercial arm of the BBC has certainly picked up the prospect for online
revenues.
AVOD was once derided as a poor alternative to television
advertising but the technology to deliver targeted commercials online has
improved, giving advertisers the opportunity to match the mood of the content.
Product placement, within features and elsewhere, assumes a new importance,
with audiences able to “tag” an item of interest without interrupting the flow
of the film. And local advertisers can enter the game at a fraction of the cost
of advertising on mainstream TV, paying only for the “clicks” that are
engendered by each screening.
Traditional broadcasters have watched, apparently helpless, as TV
audiences slide and the time spent online has grown. The growth of online
opportunities could be part of their salvation, since they already have the
infrastructure required to sell space to their local market.
As far as the studios are concerned, the financial muscle of
global advertisers could change the stance taken by Viacom and others in the
future. With money tight and product and service suppliers keen to attract the
widest possible audience AVOD, and particularly YouTube, are well placed to
deliver costs-per-thousand that are dramatically lower than conventional TV
stations. This will be accompanied by an immediate and demonstrable measure of
effectiveness.
Couple this with the imminent arrival of Google TV and Project
Canvas (reportedly to be called YouView) and the announcement from STV may
presage much more than Hogmanay online.
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