Paul M. Banas on Consumer Insights, Marketing Research, and the Digital Media Landscape
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Is Online Video Ready For Primetime?

Are people ready to give up their traditional television viewing habits and spend significant amounts of time with the emerging technology behind online video?

These numbers from eMarketer certainly indicate rapid household penetration growth of online video, with at least 50% of US households expected to watch online video in 2008, up from less than 20% four years ago.

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However experimenting and watching a YouTube clip here and there is one thing, but truly replacing significant amounts of television usage is something else entirely.

Michael Estrin at iMedia Connection has done some informal qualitative research to see if online video is ready for primetime, by gathering together a small group of twentysomethings who weren’t heavy online video users, then showing them some examples of different online video services, and then discussing their merits and shortcomings.

Here are some key insights from the discussions:

Expectations for online video are low (the YouTube effect)

With its buffering and the amateurish quality of most of the content, YouTube doesn’t fit with what people are looking for from long time frame entertainment:

“If I want to be entertained, I sit down on the couch,” says one participant, “this other stuff [short clips on YouTube] is just for killing time at work.”

Response is better with more professional sites that feature professional quality content (such as Joost)

While sites such as Joost have better quality content and a more technologically sophisticated interface, the lack of more popular TV shows and videos is disappointing:

“We open the Comedy Central channel and disappointment sets in. ‘It’s got everything you don’t want to watch,’ Todd says.”

The television advertising that was hidden by Tivo is now back

Other sites such as Veoh have some of the more popular shows available, however to people accustomed to using DVRs to skip ads, viewing pre-rolls was a disappointment:

“I could just as easily watch this on TV without the ads because I have TiVo”

In the end, while participation and interest in online video is certainly increasing, its ability to garner significant amounts of viewer’s time is still being constrained by expectations and technology. Michael Estrin summarizes it this way:

“There’s something terribly basic about TV from a user perspective. You watch the show, the ads come on, you go get a snack, and you watch the rest of your show. But while internet video may look a lot like TV (assuming the content and the quality make their way to the computer screen), the advertiser/user relationship is something quite different.”

While this could all change with media providers moving beyond dabbling and getting serious with online video, people probably won’t be getting rid of their television sets any time soon.

7 comments

1 Frank C { 02.21.08 at 9:01 am }

I’ve been on the Hulu beta since November and I’ve really enjoyed it. I do wish the show selection was more extensive at times but the quality of the viewing has been quite good, even at full screen. I also like that they allow you to embed clips on your blog, the only problem being that they aren’t viewable outside the US.

2 robojiannis { 02.21.08 at 12:21 pm }

I don’t think sites like youtube will manage to compete with television. As you wrote the quality of the tv productions is too good to leave it.
But I’ve heard that some channels Fox, NBC are putting their shows (Heroes, Prison Break, House) online for free. Maybe for us europeans these are not accessible, but still it’s a step towards online video.

3 Paul M. Banas { 02.21.08 at 9:01 pm }

@Frank C and Robojiannis
One thing I need to keep in mind is how certain media sites I talk about are unable to be accessed by readers in Europe and the rest of the world. I apologize.

Is it just me, or is the concept of a World Wide Web an implicit promise towards accessibility that US media companies simply aren’t honoring?

4 Nick { 03.19.08 at 1:52 am }

As with most big corporate machines, the concept of the web is alien to them. In my experience, it is always down to quantifying gain and it is difficult to put a measurement on giving things away for free. Nice post. Also, I didnt realise TV Guide had a section for online video!
http://www.onlinevideowatch.com/tv-guides-online-video-guide-lacks-original-online-content/

5 Paul M. Banas { 03.19.08 at 8:39 pm }

@Nick
I like your point about measuring free. I’m sure the television and motion picture industries have seen what has happened to music on the net and are trying to figure out how to respond differently, but still make money. It seems that the BitTorrent protocol doesn’t seem to care how much it costs to produce a TV show these days.

6 Nick { 03.22.08 at 4:20 am }

I guess there are workable models with some of the recent “pay what you want” music ideas. Takes radiohead and NIN. Maybe the motion picture industry should attempt such a strategy? Series can be “pay what you like”, but charge for exras, behind the scenes, scripts, cuts, extended versions, high definition.. etc?

7 Paul M. Banas { 03.23.08 at 9:18 am }

@Nick
The Radiohead example is a good one from an artist standpoint, since they have made more money through “pay what you like”, than they would have normally, since they aren’t having to cover a lot of record company overhead costs.

The problem both the motion picture and music industry companies face is that they are the overhead costs. Anything less then what they make now shows a downward pointing arrow on their revenue charts.

I do think that the charging for extras will come about. Like banks, they will figure out that a lot of little charges and fees can add up to big money, and help cover part of their lost revenue streams.

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