The 6 Letters Holding Back TV Everywhere

TV Everywhere– the ability to watch any televised program at any time on any device- isn’t a matter of ‘if’ anymore but rather a question of ‘when’ once you consider the evolving viewing habits of US consumers and the changing dynamics of the pay television business. The ‘when’ for TV Everywhere becoming a mainstream consumer experience though will largely be determined by the letters F, G, L, N, P and R. Let me explain.

GRP: The metric used to allocate more than $60 billion in television advertising spend each year is known as Gross Ratings Points (GRPs). This figure estimates the size of the audience reached for a particular commercial during each television program over the life of the ad campaign. Unfortunately traditional online metrics like unique visitors, clicks and video starts don’t capture online audiences in a manner that can be translated into a GRP equivalent so broadcasters haven’t been able to take the credit they deserve, in the form of greater ad dollars, for delivering audiences to advertisers through their own websites and mobile apps or those provided by aggregators like Hulu. The thinking goes that if broadcasters could get compensated appropriately for aggregating consumers for advertisers, regardless of the screen through which the content is being watched, more television programming would be made available outside of the traditional TV model in hopes of capturing the broadest audience possible for ratings and advertising purposes.

The first major attempt at addressing the disparity between television and online audience measurement was introduced last week by Nielsen. Dubbed Nielsen Cross-Platform Campaign Ratings, the multi-screen ad measurement service leverages Nielsen’s Online Campaign Ratings (OCR) with their established proprietary National People Meter TV panel to provide unduplicated and incremental GRP measurement. Nielsen’s OCR has gained momentum in recent weeks having been adopted by 15 online ad platforms as well as by the CW Network to guarantee online audiences to advertisers for the recently started television season.

Regardless of whether it’s Nielsen, comScore’s vGRP, or something else, bridging the audience measurement gap across viewing screens is an important step in bringing the discrepancy between digital ‘dimes’ and analog ‘dollars’ in advertising. This effort shouldn’t siphon money away from traditional television but instead reallocate ad spending in media to reflect the actual time being spent with media across different mediums, which will benefit the internet and mobile. The result will be an increase in advertising dollars for video across all platforms and the availability of more content to support this additional spend, which can most easily be made available to consumers via TV Everywhere.

NFL: Major League Baseball (MLB) has it. The NBA has it. Even the NHL, when they decide to get back to playing, will have it. The NFL? Not so much. What I’m talking about it the ability to watch any game live, in HD quality video across any number of connected devices. The NFL only offers its subscribers the ability to buy access to replays of games only after they have been televised.

With only 1/5th the number of regular season games versus both the NBA and NHL and 1/10th that of MLB, it is much easier for the NFL to package the sale of television rights at a national level for all of their games than it is for these other professional leagues (which rely on regional sports networks and local television stations to broadcast the majority of the regular season). Football’s reining popularity combined with the scarcity of game content versus alternative sports options has enabled the NFL to command $7 billion per year in total broadcast licensing fees from CBS, DirecTV, ESPN, Fox, NBC and Verizon Wireless to broadcast each and every NFL game (in comparison MLB generates about $1.5 billion in national broadcast revenues from a combination of ESPN, Fox and Turner). In the following chart you can see exactly why the NFL commands such a premium:

As you can see, the NFL is the only television program that can concurrently deliver an audience of tens of millions to broadcasters who in turn sell this reach to advertisers for more than $4 million for a 30 second sport during the Super Bowl.

Timing

The current agreements the NFL has in place with these 6 broadcast, cable, satellite and mobile providers run through the 2021 season so it could take another decade before the most popular content on television make a full foray across viewing screens (through the licensing of full content rights, including digital). NBC’s simultaneous live broadcast of last year’s Super Bowl on TV and the internet was a starting point, but without an economic model that can simultaneously grow revenues for the League while providing fans with additional access to content, the NFL has no reason to upset the current revenue apple-cart. When the time comes, expect GRP to play an important role in enabling this.

The issues surrounding TV Everywhere aren’t limited to just these two issues of audience measurement and content accessibility, but most other items, like user and device authentication, can be solved with improvements in technology. It’s the negotiations that will take place between content owners, distributors and advertisers that will eventually determine what user experience audiences are left with, which might not necessarily in the best interest of the consumer. If these three parties can find common ground with evolving consumer consumption needs though, not only will TV Everywhere become a reality, but the groundwork will be in place for the next evolution in television: unbundled, on-demand and IP-based program delivery.

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April Showers for YouTube- What Will May Bring?

YouTube_ShowerMay did not come soon enough for YouTube. Starting the first week of April when Credit Suisse issued a research report estimating that the site would lose $470 million in 2009 and ending on the last day of the month with Hulu, its main competitor, announcing a much anticipated deal with Disney, YouTube spent April taking a beating in the media over its business model and outlook.

Looking past the media feeding frenzy though, there were several data points from March released by comScore during the month that keeps me believing in YouTube’s opportunity and enviable position.

  • Video. YouTube created the online video market and now delivers over 40% of the online video streams every month in the U.S., making it more than 10 times the size of the 2nd largest online video property Fox Interactive Media (which includes MySpace).

Now you can’t tell me that Twitter, MySpace or even Facebook wouldn’t love to have YouTube’s audience and market position. For Google though, the challenge remains- how to turn this opportunity into more meaningful revenues and a profit.

The company has started addressing the challenge through a series of recent initiatives. The most noteworthy (running Google TV Ads online and Video Ad Sense on unauthorized versions of copyrighted content) attempt to address the gap between the estimated 9% of videos that are currently being monetized by YouTube and the 80% of content that is professionally produced on the site (thanks to Dean Donaldson of Eyeblaster for this data point on slide 36). The other announcements (paid video downloads and ecommerce opportunities related to music, DVDs and games) are geared towards increasing the average revenue generated per user session.

From a deal perspective Google is attempting to improve the overall quality of YouTube’s content catalog, and associated CPM rates, by striking deals for TV shows and movies from Sony, MGM and Lionsgate, and getting clips from Disney’s ABC and ESPN properties. Combined, all of these initiatives can turn YouTube into a break even operation, but they do not unlock the real business potential which is promotion.

YouTube should embrace the promotional nature of its platform (just look at the list of most popular online videos of all time– mostly music videos and movie trailers) and consumption habits of its users (they watch over sixty 3 1/2 minute videos per month) to help content producers and advertisers reach this video “snacking” audience more effectively. Some companies already see the potential and are running their own campaigns for free across YouTube or leveraging companies like 750 Industries and Feed Company to help generate virality for their promotional videos.

Google has tried to address this opportunity by applying the automated AdWords auction model to videos through YouTube Sponsored Videos, which in theory makes sense but has its challenges from a delivery and brand experience perspective. Search works really well for text where there is context for the information you are looking for in determining the best results. This doesn’t hold true for video search which relies on inconsistent metadata tags to determine what the content is and doesn’t take into account whether the content is original, copyrighted or mashed-up. This can lead to inconsistent search results and magnify less relevant content which just won’t work for most advertisers. YouTube’s solution needs to be more dynamic to address advertisers’ concerns around presentation and adjacency.

With the soft-launch of YouTube RealTime, Google has another shot at getting the solution right. Adding social features to the YouTube experience will inevitably drive better user engagement and additional content consumption across users. Combined with Google’s recently announced behavioral targeting capabilities, YouTube could actually push targeted, relevant videos from advertisers as part of its video recommendation features and in the process enable video consumption to grow more virally across its users than is currently available.

For YouTube the key is being able, and open, to using the pieces it has at its disposal in unique combinations to turn this opportunity into revenue reality. This will require Google to think outside of its search black box, which can be difficult as seen with YouTube’s inability to capitalize on the Susan Boyle viral video phenomenon, and provide a more hands-on approach to delivering its solutions. If they can’t bring a media-type solution to media’s video promotion needs, then plan on continued rain in YouTube’s extended forecast.

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