Bill Gurley shared his insights on new trends in the emerging online video market and how it may impact conventional distribution of content
Gurley then invited his panel out “OnDemand Video has arrived, who profits?”:
- Adam Cahan, CEO, Auditude
- Mike Glickenhaus, CEO, VMIX
- Shishir Mehrotra, Director Product Management, YouTube Monetization (Google)
- Kathy Fields, Partner Goodwin Proctor
Gurley painted an optimistic future for online video, but pointed out the central issue that there are very few “success stories” amongst online video providers. He asked Cahan to address that fundamental question– “where are the success stories in online video?”. Cahan sees the premium properties are the runaway winners; Hulu, MTV Network, the sites that own and operate the content inventory. Cahan pointed out that there is less than a billion dollars of revenue in all online video content, and said “until we see ten times that, something is badly broken”.
Mehrotra subtly defended the business model for Google’s YouTube operations, emphasizing that Google believes there is a lot of profit in the UGC (User Generated Content) video business for Google, “or we wouldn’t be in that business”. He listed four ways Google makes money on UGC, e.g. selling video promotions (advertising) to content uploaders. He also pointed out that Google is very active behind the scenese in identifying content owners and compensating them for views of their content on YouTube. There has been recent controversy amongst analysts over just how much red ink is flowing in Google’s YouTube operations, with some analysts estimating a $500M/year ongoing loss.
Different forms of ad delivery for online video were debated
Glickenhaus pointed out that pre-rolls have dropped from 1 minute to 10-15 seconds; overlay ads are less intrusive but deliver mixed results. Gurley moved the discussion in the direction of piracy and intellectual property rights. The Google-Viacom lawsuit, and online piracy. Glickenhaus observed that almost all television shows and movies are online in China, and there are sites emerging which translate into other languages; Fields feels that eventually intellectual property protection will catch up with that illegal distribution of content (a sentiment probably not shared across the panel). Cahan feels that video content owners will need to develop new ways to monetize video besides simply charging for access to content — rental; enhanced content; new user interfaces, etc… he sees the basic “pay to play” model as unsustainable.
Mehrota pointed out an interesting statistic, that if you take all the video produced by the four big Hollywood Studios over the past 60 years, YouTube has more video uploaded every sixty days. He expressed fundamental disagreement with Gurley about the cost of producing high quality online video. Gurley was more focused on the quality of the content, having in his intro talk expressed the sentiment that “high quality video content is still very expensive to produce”.
The Tru2Way initiative was discussed with a bit of skepticism; it’s a standard which will facilitate opening up the Cable providers set-top boxes for 3rd party applications.