Advertising and Marketing

The Media Industry's Big Video Gamble

Zooming iPad sales create new shift for content players 5/10/2010 12:00:00 AM Eastern

While
the fog continues to lift on the ad recession, that sound Wall Street keeps hearing
is big media companies switching gears. Along with talk about what these
companies will do with their cash piles comes hints about how content will shape
new businesses, from the iPad to online video.

The
gamble for big media is in choosing between providing free ad-supported content
to online platforms or exploring a subscription play, possibly in concert with Apple
and its new iPad. On an earnings call last week, News Corp. chief executive Rupert
Murdoch posited that the iPad would lead "a revolution in media consumption."

Windowing
options might allow big media fi rms to exploit both. But as one ad executive
told B&C last week, the question is the extent to which advertisers
will be welcome on subscription services, which could gain real mass if the
iPad continues its breakneck sales pace. As of last week, the iPad had passed the
1 million unit mark only 28 days after its release.

The
video marketplace is also heating up as it continues rapid growth. Which
companies will benefi t most remains the question. According to ComScore,
YouTube served up 13.1 billion views in March; big media-backed Hulu notched 1
billion.

Meanwhile,
the Bloomberg newswire reported that the number of display advertisers at YouTube
has increased tenfold in the past year. Barry Salzman, managing director of
Google media and platforms, told a Bloomberg reporter, "What YouTube gives
advertisers is massive reach and massive audience."

According
to the "Online Video and the Media Industry" study produced recently by online video
distributor Brightcove, there is a great disparity in Web video growth. In the
fi rst quarter of 2010, the networks streamed 380 million videos compared to
326 million for Web media brands, which include the likes of YouTube, Yahoo,
Facebook and Bing. That's a closely run race until one considers growth rates.
During this period, network TV saw a 44% growth in video views while native Web
brands saw a 300% uptick.

Chats
with media buyers suggest there's high interest this upfront in surrounding TV
content in all the places it's delivered, and there are strong indications that
dollars are coming back while paid search may be leveling off. Google CEO Eric
Schmidt has said: "The next big business for us is display."

Whatever
the broad-stroke numbers, everyone has been mum on how many digital dimes are
in the register. Hulu, owned by News Corp., NBC Universal and Disney, will only
say that it recently became profi table.

CBS
CEO Leslie Moonves, speaking on the fi rm's earnings call last week, again
defended the company's decision not to join Hulu, preferring to keep content at
CBSowned TV.com, where CBS gets to keep 100% of the ad revenue rather than 70%.
He also suggested there's some dissatisfaction with the current Hulu business
model among its owners. The vaunted new Hulu subscription model remains under
wraps.

Eric
Koepele, director of digital sales at privately held Hearst TV, told B&C
that pricing in online video has grown stronger this past quarter. "It's in
the low double digits percentage-wise," he says. "The biggest categories are
similar across TV and the Web-automotive, fast food and health."

But
online won't be the only game-changer for competitors looking to build a
recession-proof warship. "We will develop an innovative subscription model that
will deliver digital content to consumers wherever and whenever they want it,"
Murdoch noted on the call. Big changes are clearly on the way.

March