YouTube, Hulu, and a War the TV Networks Could Lose
When it was announced that Disney/ABC would make its original programming available for viewing at Hulu, there was a rush to judgment that the online video war was over and the aliens looking to enslave humanity had won. YouTube, with its 80 million visitors and 20 hours of new content every minute, should just pack up its bandwidth and head home; don’t let the 404 Not Found hit you on the way out. Because, come on, the major TV networks have the best stuff, right? Millions of viewers every night can’t be wrong. With 3 of the big 4 networks committed to Hulu (CBS is still betting on TV.com), that’s where the people will go.
What I’m going to tell you today is that this war for online video has barely even begun, and there are certainly no winners yet. While YouTube’s new Shows channel might seem like a desperate attempt to play catch up in a race that Hulu has a big lead in (the race for proven, quality content), it actually shows a focus on long-term quality growth, a strategic move that could ultimately undo the stranglehold on distribution that the big four TV networks currently enjoy.
Sprint vs. marathon
Despite predictions of YouTube’s demise due to channel content growth and weak revenues, this is a long war that YouTube can win. I think there is an assumption by the big four TV networks that their content is good enough and valued enough to reside in one select channel. But there is a flaw in the networks’ logic. It’s easier for a network program to get eyeballs when it’s available in many more homes than, say, Discovery Channel. The distribution channel of free airwaves versus paid cable gives the networks a fundamental advantage (the biggest audience) and a false security — the mistaken idea that because they have the biggest audience, their content is the most appealing, and that as they move online, they will continue to draw the most viewers.
This thinking is old. The web is much more democratic, and the barriers to great content are almost nonexistent. On the internet, Discovery has as much reach as NBC. And just as cable finally caught up to the networks in quality (The Sopranos, The Shield, The Closer, Six Feet Under, Dexter… I could go on), YouTube seems to be positioning itself to deliver better and better content in the future.
In fact, cable is a great example of the way things are moving. Cable proved that there is an audience for just about anything. Content offerings have become more select, and the advertising has been able to follow. Why wait for golf on a Sunday afternoon when it’s available 24/7 on the Golf Channel? Plus, advertisers know full well what that channel’s viewership is looking for.
By partnering with niche broadcasters and small production companies, YouTube is banking on a diversified portfolio of new, original content, available on demand. And as more and more viewers time-shift their content (TiVo, OnDemand, etc.), the migration of content to web-based channels makes network TV, with its inconvenient linear broadcasting, that much more irrelevant.
Cross-pollination
It’s very interesting to see that as the major players in television are making their moves in the web space, the web video players are moving to get their content on your television (Boxee and Netflix come to mind) and elsewhere — Sling Media comes to the iPhone. It seems that content providers and creators alike are trying to get their content everywhere.
This near-universal reach and the ubiquity of availability make it very hard to determine what is the right medium for creation. Do you present your idea to a production company who then pitches a network who broadcasts to affiliates and then posts to their website? Or take advantage of the incredibly low overhead that web production offers, post to YouTube, which is sent to a user’s Boxee or web-enabled television set? In the near future, will there be a difference between production for web or for TV? Supposing there is no difference, does television become just a medium, not a platform? If so, the playing field is that much more level.
So who wins?
In the current battle between TV networks and web channels, it’s still a draw. Ultimately though, I believe that as media converge and barriers to viewership fall, it will be the independent producers who win as it becomes easier for their content to have the same potential audience as, say, NBC. For the creators there will be new media and new revenue streams available to them, in addition to the greater creative control they will enjoy. Producing a web series may seem like “small time” compared to prime-time network television right now. However, the differences between the web and the home television as a content delivery platform are diminishing.
In this case, producers will need to guard their rights much more closely, which could lead to the big networks scrambling for web content in the future as deals for web distribution are made independently. It is this suggestion that YouTube may be better prepared for than Hulu. As quality content rises in alternative venues – cable TV and the internet – the networks run a greater risk of becoming irrelevant.
My question to you
Is a very simple one. The networks? Cable TV? YouTube? Hulu? Who ya got in the battle for video?
About the author
Andrew Davis -
In 2002, Andrew founded Tippingpoint Labs with journalist James Cosco. Since then, he's spent countless hours exploring the online universe and building a methodological approach to developing digital strategies that drive revenue or reduce costs.
Andrew's always asking big questions and analyzing data to understand markets, online forces and even business models. Andrew's research has resulted in the creation of innovative online metrics including Online Brand Value and Category Brand Value, eye-opening graphical representations of website evolution through the New Media Life Cycle and even using online data to predict offline revenue.
When he's not surfing the web, Andrew's traveling the globe speaking to a wide-variety of audiences about everything from social media to the future of print. Andrew is a frequent contributor to the Tippingpoint Labs website and has been creating valuable content since the early 1990s for The Jim Henson Company, CNN, The Today Show and MTV.
He's contributed to a book of short stories, called The Way Things Were and produced and co-wrote Roadside Ambition a documentary film about one small town with two huge balls.
"In a world where content is consumed as rapidly as it's created, companies need to develop a sound strategy to creating valuable online experiences that can, and should, be leveraged enterprise-wide. There is a content solution to every business challenge."Popular Posts
-
Seth Godin and the Flower Clock
August 24, 2010 -
The Online Brand Value Chain Explained
October 6, 2009 -
Give Most of it Away. The Rest Will Pay.
December 1, 2009
Related Posts
-
Paint a Better Picture by Using Offline Connotations
November 13, 2009
-
Will this Microsite Blend?
October 7, 2009
-
Project Management, Old Ads, and Stories in the Sand
September 21, 2009
Great argument here.
But lemme tell you who I’m rooting for and why. Actually let me start with why and get to who. I think the argument made above is based on content distribution capabilities and who has the rights and capabilities to distribute the content that is already out there, but I would like to see the argument shift to one of content creation capabilities.
For decades the way major budget content has been produced has been “the Hollywood way”. Even content not produced in Hollywood. And it’s produced some great stuff. But there’s a language that you have to know, a protocol you have to follow, asses you have to kiss, and execs doing constant content testing (a process I call “dumbing down”) before a show gets green lighted, promoted, piloted, and eventually produced. I think the changing of this process to one where better ideas through a simpler protocol and a different set of production requirements will be what seals the deal for me. Anyone who moves more in that direction will get my vote!
I love Hulu and YouTube (sorry tv.com, your affiliation with CBS kinda leaves you behind), but one really is the internet face of the old school tv networks, and the other really is the internet face of anybody with a camera. I don’t need more Jerry Bruckheimer shoved down my throat and I don’t need more people taking “funny” videos of their cats, at least not as the major purveyors of entertainment in a new era.
I want something more revolutionary. Where people who are serious about producing content, but who aren’t hooked in to the media elite, can get a budget, hire quality actors, set up a production schedule, and popularize and monetize their content better. It will lead to more high brow content, which I think will be better for everybody. I want the Channel101s and Studio8s and OnionNNs to have a larger venue (actually ONN just got picked up by Hulu, so there goes that argument) through which they can get a larger audience and major budgets. Can you imagine if Yacht Rock had a slightly larger budget and a targeted channel to make it a bigger deal than it is? Maybe JD Ryznar and his boys could get bigger acting gigs and Bill Paxton or Jason Biggs might get a few less roles. We could have a more diversified and talent-based media and entertainment experience. The internet would serve as its own piloting system and you wouldn’t have the schedule requirements and “seasons” that TV has. You make new episodes of a show because demand dictates it and you keep the quality high to keep up that demand.
Kinda sorta like what iTunes did for music. Took some of the power away from the RIAA and major record labels and put it in the hands of a more distributed network. And what’s happened there? More talented niche discoveries are made every day! It’s amazing.
Now that I’ve written all that, I’m not sure who will step up to take that challenge on. But it could be great.
Ajit,
So great to see you participating in the discussion. Your comments and insight is great!
I think we are seeing a shift in the way content is being produced. The producer has more power than ever to create and distribute their content. It’s great! It’s also the wild wild west out there… which is what’s great about it.
Thanks again for participating!
- drew
Not exactly sure I agree with Ajit that the world will benefit from high brow content but it can’t hurt. Despite being a bit concerned about the mobocracy of content production I do love the concept of the masses producing “tv content” for the masses, wherever they may be viewing it. Hell, produce until the resources dry up and let the next, best Phineas and Ferb win.
I am betting that tv does become a medium and that the various mediums will become more and more inclusive. It certainly will be interesting if the persistent Hulu/YouTube coming to the Roku are true. ;)
My point may need a little refinement.
I think “the masses producing content for the masses” already exists. It’s YouTube. And I even think they should go further down that path for producing tv content. It’s unchecked, (largely) unfiltered, and anyone can do it on any budget.
But as far as solicited, paid, network content goes, that’s where I want to see the change. I want the current testing process to be the release process. I want the concept of “seasons” and “pilots” and “sweeps weeks” to go away. I want the money for content production to be re-distributed. I don’t want it to follow the process it does now. If you’ve ever seen the movie “The TV Set” (http://www.imdb.com/title/tt0473709/, which was brilliant, by the way) it provides a good example for why this process needs to change.
I think the networks are getting us so caught up in how to redistribute the current ad revenue that we might miss the bigger opportunity to redistribute the way content is created, which I believe will have a greater effect on the way advertising revenue is spent, distributed, and valued.
I agree completely about the concern over revenue streams. We work with most of the major scholarly publishers and they have been myopically focused on maintaining existing revenue streams versus creating a better mousetrap.
With that said, I was very pleasantly surprised to see some change at #SSP09 and blogged about it a bit at SSRNblog.
Who am I betting on? The networks. It’s only in fairy tales that the underdog conquers the big bad conglomerate. The networks have a larger reach and any additional venture into other mediums such as Hulu, etc, can easily be advertised to their current (large) fan base. I also think that even though they may not always have the best shows out there, unfortunately, they do have the easiest shows to find. It’s so easy to find your favorite network shows on your television as well as on Hulu. It’s not as easy to find high-quality independent shows on YouTube. You have to search and search and then watch a dozen awful videos before finding a gem. It’s too much work. Plus, even though it is now possible to send online shows to your television set, it is not yet convenient.
I’d be interested to read a similar article AFTER everyone has an easy way to view online content from their television set. That will make a big difference.
Dustin,
Thanks so much for contributing! I still don’t think that the television networks can win this battle unless they change their distribution model. There is GREAT high-quality video content in the form of Shows on YouTube… not many people using it yet – but it’s growing everyday.
Online, niche networks will begin stealing (in effect) the advertising dollars from the bradcast networks because they will garner the RIGHT audience which is far more valuable than the largest audience. These niche networks will win the advertising battle.
But I don’t even think it’s about advertising it’s about product placement and for the shows it’s about licensing the brand or the people. I used to work at the Jim Henson company and I learned very quickly that TV show’s are not very profitable – but Miss Piggy dolls, lunchboxes and books are VERY successful.
Anyway, thanks again for weighing in! It’s much appreciated!
Forgot the link to YouTube shows: http://www.youtube.com/shows?s=sp&b=0