While Miley Cyrus was twerking away the last vestiges of her Hannah Montana past at this year’s MTV Video Music Awards (VMA), something equally interesting was happening in the living rooms of America. While an impressive 10 million viewers tuned into the live broadcast, this number was dwarfed by an estimated 30 million VMA mentions across social media during the show. Miley’s tongue-thrusting performance alone launched a staggering 305 000 tweets per minute, illustrating the power of a phenomenon that has come to be called ‘second screening’.
A recent Nielsen study found that the vast majority of Americans regularly use their smartphones or tablets while watching TV, and that 40% do so every day, a statistic that is becoming very significant for media and advertising strategies, and one reason why television companies are likely to fare somewhat better than their print brethren in a digitally connected media world. Television – particularly live television – and online media complement each other in a way that print and online don’t. There’s the appeal of communicating online about a shared simultaneous experience, and also the sheer practicality of it. Just try tweeting and reading a broadsheet news article at the same time and you’ll understand.
This is not to say that television viewership won’t come under pressure from the plethora of new media that the consumer now has at his disposal. Although far more resilient than print readership, television news ratings in the US and other developed markets have begun to show signs of decline as younger viewers in particular shift their attention to more interactive media.
The fact that we in South Africa haven’t experienced this trend should not be taken as a sign of television’s indomitability. Rather than falling into the same complacency trap as newspaper executives in the early 2000s, South African television broadcasters should acknowledge the real reasons for TV’s continuing growth: an emerging middle class that is buying TVs or set-top boxes for the first time, and a short-sighted regulatory environment that has hobbled the development of our country’s broadband internet penetration.
But as we emerge from our collective bandwidth deprivation, we can expect to see an increasing number of people trading their remote controls for touchscreens. And what exactly will they be doing with all that bandwidth? Well, if they’re anything like their global contemporaries, they’ll be watching TV.
Maybe not TV as we know it, but certainly video. And not just home videos of babies biting fingers either. Recent surveys indicate more than 40% of Americans are watching news clips online, and almost 20% are consuming live streaming news content on the internet. It is thus not surprising that online video advertising is currently the fastest-growing of all digital formats, making significant inroads into banner display and search.
According to research firm eMarketer, online video ad spend in the US grew by 42% in 2011 and a further 50% last year. It is expected to double again in the next two years, albeit off a fairly small base. The format is projected to rake in nearly $9 billion in 2016, representing around 35% of total online display spending – hardly a pittance, even if it is dwarfed by the $72 billion that TV will earn in the same year. So while it may be a medium in its infancy, online video advertising already demands to be taken seriously.
Aside from burgeoning user numbers, the format’s popularity in high bandwidth environments may be related to the power of video as a branding medium, coupled with the fact that advertisers have outgrown the notion that online success is measured by click-through rates alone. The eMarketer study also found a 33% lift in engagement and brand recall when online video was used in combination with television advertising than when the extra spend was added to TV alone. Furthermore, for existing television advertisers, online video represents an additional channel across which to amortise the high production costs of television commercials.
Something else that online video has going for it is that it’s hard to do. Or, rather, it’s hard to do well. Sure, there’s a long tail of amateur content on YouTube that costs next to nothing to make. But professionally produced video news and entertainment content requires scarce skills, experience and equipment – a barrier to entry which should help video broadcasters to differentiate their online products and command premium advertising rates. That’s one reason why newspapers like the New York Times, Wall Street Journal and Mail Online are investing heavily in facilities to produce and deliver online video content.
As with so many aspects of media in these times of flux, the business models are still evolving. In the meantime, it will be interesting to see whether print companies will manage to acquire the expertise to catch up with broadcasters, or whether both will be upstaged by web-native businesses.
Take the Huffington Post, for example, whose HuffPost Live offering combines live streaming with community engagement to create what feels like a video version of 24-hour talk radio. By making clever use of new technologies like Google Hangouts and Skype, Huffpost Live manages to sidestep many of the distribution costs of traditional cable and network news broadcasters while delivering a news experience in which the audience can participate directly. And if the 23 million video views per month it generates are anything to go by, the formula seems to be working.
Another interesting model, premised on the ‘second screen’ phenomenon, is epitomised by Zeebox, a mobile application that gives users contextual information about the programmes they are watching in real-time and facilitates social networking around this content. Founded by ex-South African Anthony Rose, who was instrumental in executing the BBC’s online video strategy, Zeebox recently expanded from its native UK into the USA, where it has done deals with the likes of Comcast Cable, NBC Universal, Viacom and HBO. The interface looks like an electronic programme guide on steroids, with nifty features like the ability to set alerts and even programme your digital video recorder via your phone or tablet; functionality coming soon, one hopes, to DStv.
But there is only one undisputed heavyweight champion of the online video space, and it is likely to retain its title for many years to come. With more than a billion users each month watching over six billion hours of video, YouTube has become an ecosystem in its own right, spawning a whole new generation of publishing business models. Entire talent agencies have sprung up with the sole purpose of managing YouTube ‘stars’ like Smosh, Pewdiepie and our very own Caspar Lee (for those over 25, you many need Google to help you here).
Other companies are aggregating YouTube audiences by combining multiple YouTube channels into multi-channel networks, or MCNs, and monetising this traffic under the YouTube partner programme, which gives publishers a share of advertising revenues generated by their channels. Still others are producing original content solely for YouTube distribution. And they’ve been successful enough to warrant serious interest from traditional production companies, as is evident from DreamWorks’ recent acquisition of AwesomenessTV and Fremantle’s investment in Divimove, the second-largest MCN in Germany.
With their experience in generating and commercialising visual media, combined with access to a powerful platform from which to build online cachet, it is safe to say that broadcasters hold the trump cards in the emerging game of online video. But their success in this hotly contested space is by no means guaranteed.
Much hinges on how effectively they can marshal their capital and human assets to meet the capricious and unpredictable tastes of today’s video consumers. Just a few years ago, when analysts were prophesying that all consumer technologies were on the verge of converging into a single device, the notion of second-screening might have seemed as fanciful as, say, a cheesy Korean pop video becoming a global sensation. One thing that’s certain is that there are further surprises in store. Stay tuned.
Tim Spira is the general manager of eNCA online.
This story was first published in the December 2013 issue of The Media magazine.