Advertising, Too, Was Finding Its Way, and Consumers Were Open to Just About Anything

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The Economics of Online Video 2011

Online video and TV content are set to converge on a range of platforms, from Hulu to Google TV, while players like AOL step up original web video production. What will dominate:angry fruit and cute cats or broadcast and cable shows? Here’s a look at the contenders for consumers’ attention and marketers’ad dollars. 20110207-SUPP-WP--0001,0002,0003,0004,0005,0006,0007,0008,0009,0010,0011,0012,0013,0014,0015,0016,0017,0018,0019,0020,0021,0022

WHITE PAPER THE ECONOMICS OF ONLINE VIDEO 2011 Introduction

online video, depending on who you ask, is content that nearly CHART 1 everyone is watching these days—or only a few “in the margins.” The difference of opinion reflects the range of video content being MOST-WATCHED CONTENT BY CATEGORY created, what qualifies and counts as a view and an ongoing evolu- tion of the metrics to sort it out. With so many companies with a % of online adults who say they watch each type of video, stake in the future of online video, opinions are nearly visceral. by year We’re certainly a long way from the quaint days of Mom, Dad, ■ 2009 ■ 2007 Bobby and Sue sitting around the TV set after supper to watch the three broadcast networks. Today, not only do many homes have Comedy or 50 humorous videos multiple TVs—30.9% of households own four or more sets, 31 Nielsen reported in its September 2010 State of the Media report— 43 but now other screens must be factored in as well. Individual PC News videos ownership is at nearly one per person in the U.S. and Canada, 37 according to the Economist Intelligence Unit, while 22% of house- 38 holds boast a smartphone, according to a study by Nielsen. The Educational videos 22 video content being watched on all these screens ranges from amateur videos about cats and short webisodes created specifically with Movies or 32 internet culture in mind to the rebroadcast (or re-streaming) of pro- TV shows 16 fessionally produced shows found on traditional TV (see chart 1). And yet in many ways, today’s video landscape—“video” used as 32 Music videos a term to encapsulate traditional network and cable TV content as 22 well as new types of content available for streaming or download over the internet, regardless of device—shares much in common 30 Political videos with those midcentury days. In TV’s infancy, programming includ- 15 ed shows adapted directly from its broadcasting precursor, radio— microphones and all. How laughable it now seems that actors stood Animation or 22 around mics reading lines while being filmed. It took a few years and cartoons 19 the emergence of a new type of content for TV programming to settle into its own. Will we find the rebroadcasting of traditional TV 21 Sports videos shows over the web similarly laughable one day? 14 In those early days of TV, advertising, too, was finding its way, and consumers were open to just about anything. Today, advertisers Commercials or 15 are still experimenting with the most effective ways to reach con- advertisements 13 sumers through online video, arguing over “ad loads” as they dip 7 their toes into “engagement” tools. Adult At the top end, this is a universe estimated to be about 178 mil- 6 lion —although those in the “in-the-margins” camp believe the size 8 of the audience is just 10% of that, or about 17 million. Largely, it is Other 6 still the interactive media buyers who are paying attention to online video, and their budgets are still much smaller than their tradition- Note: In 2007, all internet users were asked if they watched each of these 11 types of video. In the current al-TV counterparts. Marketers spent $1.5 billion in 2010 (an increase survey, only those internet users who met the definition of online video watchers/downloaders were asked which type of video they watched, and those figures were then re-percentaged based on all of 48.1% over 2009), as estimated by eMarketer. Nearly one-third internet users. Source: Pew Internet of all online ad dollars is expected to go to video in 2011. Analysts

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THE ECONOMICS OF ONLINE VIDEO 2011 WHITE PAPER

➜ DOWNLOAD TABLE OF CONTENTS Key charts from this paper are available for buyers of this white INTRODUCTION 2 paper to download as Power NEW PROGRAMMING, NEW ADVERTISING, Point slides. Use this link to NEW DEVICES: WHERE ARE WE NOW? 4 access the slides: 6 AdAge.com/whitepapers CREATING VIDEO FOR THE WEB TV PROGRAMMING ON THE WEB 7 WHERE TO WATCH: DISTRIBUTION 8 CABLE: TV EVERYWHERE, CORD-CUTTING 11 THE METRICS WARS: RESEARCH 13 CHART 2 ADVERTISING 16 CONCLUSION 18 VIDEO AD-SPENDING ESTIMATES, 2010-2014 DIRECTORY OF ONLINE VIDEO PLAYERS 19 eMarketer is most bullish about the growth of the online video ad market over the next five years. CHARTS $6 BILLIONS ■ PIPER JAFFRAY ■ eMARKETER 1: MOST-WATCHED CONTENT BY CATEGORY ■ BARCLAYS CAPITAL ■ FORRESTER RESEARCH Pew Internet 2 5 2: PROJECTIONS OF ONLINE VIDEO REVENUE from four forecasters 3 3: TOP 10 WEBISODES CHART Visible Measures 4 4 4: ONLINE VIDEO CONSUMPTION BY WEB PROPERTY comScore 6 3 5: ONLINE VIDEO AD CONSUMPTION BY WEB PROPERTY comScore 6 6: AVERAGE MINUTES PER VIEW BY DAY OF WEEK 2 TubeMogul 7 7: NETFLIX ACCOUNTS FOR 21% OF INTERNET TRAFFIC AT PEAK TIMESSandvine 8 1 8: TOTAL MINUTES STREAMED BY MEDIA TYPE Tube Mogul 8 2010 2011 2012 2013 2014 9: ONLINE VIDEO VIEWING comScore 9 10: VIEWING BY DAYPART comScore 10 Source: Barclays Capital, eMarketer, Forrester Research, Piper Jaffray 11: OVERLAP IN TV AND ONLINE VIEWING comScore 11 12: CONCURRENT ACTIVITIES WHILE WATCHING TV expect by 2014 that the online video market will be $5.71 billion at ON THE COVER OR ONLINE VIDEO Frank N. Magid Associates 14 the high end of the estimate spectrum (eMarketer), and at the very The chart on 13: LESS ADVERTISING IS NOT A DRIVER OF least, $3.01 billion (Forrester Research) (see chart 2). the cover ONLINE VIDEO WATCHING comScore 15 Looking ahead, Jeff Levick, AOL’s president-global advertising represents the 14: REPURPOSED TV ADS VS. WEB-ORIGINAL CONTENT and strategy, sees 2011 as the year traditional TV buyers make the spending RANK THE SAMETubeMogul 17 leap to online and add it to their budgets as part of overall reach: estimates of 15: CONSUMER ATTITUDES TOWARD WEB ORIGINAL “2011 is important for bringing in the [agencies’] TV group to the four industry VIDEOS Frank N. Magid Associates 18 understand the web extension of your TV audience.” forecasters Fox Networks for one, has already proposed using its internet above. video views as a way to fulfill TV makegoods, turning to its audi- This document and information contained therein are the copyrighted property of Crain Communications Inc. and Advertising Age (Copyright ence on Hulu to accomplish the reach goals promised to clients. 2011) and are for your personal, noncommercial use only. You may not How the networks view this new video medium is key to the reproduce, display on a website, distribute, sell or republish this document, or the information contained therein, without the prior written consent of development of some major players, including Hulu, which must Advertising Age. Copyright 2011 by Crain Communications Inc. All rights work with its broadcast TV owners, and Google TV. reserved.

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WHITE PAPER THE ECONOMICS OF ONLINE VIDEO 2011 New programming, new advertising, new devices: Where are we now?

This plays to type: An orange sits on a kitchen countertop, animat- was ranked No. 1 by Visible Measures, which tracks the audience of ed human eyes and mouth tacked on to it. The orange begins to web series (see chart 3). The episodes are silly, run anywhere from speak, calling out to a fellow fruit, vegetable or dairy product (or, in one to four minutes each, and reflect the production quality of one case, a bonsai tree). In similar form, they speak back.The series, something you might find on Nickelodeon. It’s expected that the which comes out at least once a week, mostly spoofs pop culture show creator, Dane Boedinger of GagFilms, makes “thousands of memes, whether it’s pieces of fruit calling out “Wazzup?” to one dollars” per episode from Google Ads—and spends less than that another (as in a popular Budweiser commercial), “Auto-Tuning” to produce each episode. The show has no formal distribution rela- the news, or making fun of Super Mario. The episode almost tionship and consistently ranks highest among “top viral video” always ends with the evisceration of one of the characters by rankings as well, according to TubeMogul. human hands. The show plays to one stereotype about the web, perceived in Welcome to the one of the most popular video series on the web, some camps as just an amateur-hour repository of home videos and “The Annoying Orange.” With 54 million viewers in October, it clips of cats. (See the wild success of the site I Can Has Cheezburger,)

CHART 3

VIRAL VIDEOS VISIBLE MEASURES’ TOP 10 WEBISODES CHART

The most popular webisodes in October 2010, as tracked by Visible Measures

1 2 3 4 5 The Annoying Auto-Tune Key of Fred Happy Tree Orange the News Awesome Friends

Last month’s rank: 1 Last month’s rank: 2 Last month’s rank: 3 Last month’s rank: 4 Last month’s rank: 6

Comedy News Parody, Comedy / Comedy Animation Barely Political Music

Gag Films Next New Networks Next New Networks MondoMedia

True Reach: True Reach: True Reach: True Reach: True Reach: 53,974,273 43,392,347 36,037,364 35,887,980 19,477,635

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THE ECONOMICS OF ONLINE VIDEO 2011 WHITE PAPER

featuring primarily,you guessed it, cats—video and images—to the more consumers watch a single episode of “Family Guy,” “Stew- tune of 100 million page views a month.) But it isn’t just silly videos Roids,” than any other, making it the most streamed video of all that are driving audiences to online video.While about a billion peo- time on the network since its original airing in April 2009. The ple around the world tuned in via broadcast and cable last October episode, by Hulu’s own description, features the character Stewie, to see the rescue of 33 trapped Chilean miners, about 10 million who, after getting “his baby butt kicked by Joe’s infant daughter, watched via streaming video. And even more—26.9 million view- starts hitting the gym with Peter.” ers—streamed President Barack Obama’s inauguration in 2009. So what do consumers want, and what works when it comes to But the biggest online video event this year has to be singer online video? It would seem that mostly they want comedy, with Justin Bieber’s “Baby” video, which logged nearly 250 million a little news and Justin Bieber mixed in. According to a study [by views for the year, making it the most watched YouTube video of Pew Research, the most popular content falls into the “comedy or all time. humorous” category of videos, such as the orange series (see As for TV shows we’ve come to know and love, Hulu has had chart 1, P. 2).

6 7 8 9 10 Smosh Totally Sketch The Station Red vs.Blue Potter Puppet Pals

Last month’s rank: 5 New Last month’s rank: 7 Last month’s rank: 8 Last month’s rank: 10

Comedy / Comedy/ Comedy Animation/ Sketch Sketch Sketch Comedy

Deca TV Totally Sketch The Station Rooster Teeth

True Reach: True Reach: True Reach: True Reach: True Reach: 18,726,276 9,479,012 8,541,008 7,195,807 6,531,149 Source: Visible Measures Visible Source:

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WHITE PAPER THE ECONOMICS OF ONLINE VIDEO 2011 Creating video just for the web

investment in original web video content is in high gear. In In January 2010, AOL acquired StudioNow for $36.5 million as September, AOL spent $65 million to acquire 5min Media, which a way to bolster its video offerings from Seed.com, its niche text aggregates how-to and instructional videos and syndicates them content producer. StudioNow is a low-cost production studio that across the web. “There’s been a lot of growth in how-to,” said Dan acts as AOL’s internal video studio, whether it is content for its Piech, senior product management analyst at comScore, referring “Engadget Show” or sponsored programs. to the growth of how-to sites like eHow and 5min. “In November AOL wants to offer a broad range of content. “No one approach 2009, 5min served roughly 10 million videos per month: pretty will win,” said David Eun, president of AOL Media and Studios. darn small. By October 2010, it was serving 145 million videos per “What’s happening is a huge diversity of types of content and what month,” he said. “Part of the reason AOL is acquiring the compa- consumers want. Opportunities range from user-generated content ny is it is going from nothing to huge.” to allowing people to watch TV shows they’ve missed.”AOL claims AOL CEO Tim Armstrong said 5min Media fits with his aim to to distinguish itself from the UGC offerings of the world with a build “a video ecosystem for the next decade.” That view includes “high-quality, premium” bent, according to Eun. In November, the not just distributing video, but also producing and hosting it. AOL home page was relaunched with an emphasis on video.

CHART 4 CHART 5

TOP 10 VIDEO CONTENT PROPERTIES BY UNIQUE VIEWERS TOP 10 VIDEO AD PROPERTIES BY VIDEO ADS VIEWED Google Sites, driven primarily by video views at YouTube, Americans viewed 5.9 billion video ads in December, with Hulu ranked as the top online video content property in December generating the highest number of video ad impressions

TOTAL UNIQUE VIEWING MINUTES FREQUENCY % REACH VIEWERS SESSIONS PER VIDEO ADS (ADS PER TOTAL U.S. PROPERTY (000) (000) VIEWER PROPERTY (000) VIEWER) POPULATION Google Sites 144,757 1,924,214 274.3 Hulu 1,227,929 47.1 8.6% Yahoo Sites 53,050 191,367 30.0 Tremor Media Video Network** 1,021,929 11.8 28.6% VEVO 50,594 266,448 89.9 ADAP.TV** 681,543 11.9 19.0% AOL Inc. 48,550 252,561 31.2 BrightRoll Video Network** 578,946 8.7 22.3% Viacom Digital 45,880 148,321 51.6 Microsoft Sites 423,000 10.2 13.7% Facebook 41,119 124,546 14.6 CBS Interactive 271,461 8.9 10.1% Microsoft Sites 36,589 132,747 50.4 AOL Inc. 231,509 6.7 11.5% Fox Interactive Media 28,902 90,959 19.3 Undertone** 226,822 9.2 8.1% Turner Digital 26,943 89,204 23.4 Google Sites 223,842 4.8 15.3% Hulu 26,493 131,127 217.1 TubeMogul Video Ad Platform** 174,062 4.1 14.2% Total Internet 172,109 5,156,086 873.1 Total Internet 5,910,646 39.8 49.1%

Note: Total U.S. home/work/university locations, December 2010. Source: comScore Video Metrix Note: Total U.S. home/work/university locations, December 2010. *Video ads include streaming-video advertising only and do not include other types of video monetization, such as overlays, branded players, matching banner ads, homepage ads, etc. **Indicates video ad network/server. Source: comScore Video Metrix

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THE ECONOMICS OF ONLINE VIDEO 2011 WHITE PAPER TV Programming on the Web

as for traditional TV producers—mainly broadcast and cable CHART 6 networks—they’re still pumping out shows the old-fashioned way, with no fewer than 50 new series debuting across the TV landscape AVERAGE MINUTES PER VIEW BY DAY OF WEEK last fall alone. As Nancy Franklin pointed out in a column for The New Yorker,this old strategy might not work in an increasingly clut- The average amount of time spent with online video tered TV landscape with more options for when and how to view: increases on weekends across all media categories At the same time that one says “Holy cow!,” one is thinking, How incredibly stupid. Competition is a good thing, sure, but even 1:40 LENGTH IN MINUTES most of us with DVRs can record only two shows at once. So even a big TV fan couldn’t help missing a good number of shows last week, especially if she wanted to watch any of the live sporting events. So where can you watch online? Hulu has received much attention largely based on its backing from broadcasters ABC, NBC and Fox. But it doesn’t crack the top five in destination sites for viewing—though 40 million viewers is nothing to sneeze at (see chart 4). Hulu is akin to Netflix, with its relationships with traditional film and video sources (TV networks and movie studios) and only a few made-for-web originals among thousands of videos. Where it wins is on revenue—$240 million in 2010, up from $108 million in 2009, all from the 15- and 30-second ads Hulu runs at the beginning of and throughout each show (see chart 5). More importantly, Hulu has succeeded in making sure an audience pays attention to those ads. The online video service, however, is not betting the ranch on an 1:30 ad-supported model alone. In November, the site launched Hulu M T W T F S S

Plus, which charges a $7.99 monthly subscription for access to par- Sources: Brightcove, TubeMogul ticular shows, adding another revenue line for the well-backed upstart, and earlier this year began floating the idea of sending live TV channels and video on demand content to subscribers. It’s not yet clear that online video can completely take the place would allow “TV Everywhere” to be implemented. of cable TV for many consumers, though Hulu’s move would cer- If Hulu aims to be the YouTube of professionally developed con- tainly be the best test case yet. A study by Needham & Co. found tent and YouTube remains the No. 1 site for user-generated content, that for cable viewers, at least, the internet would need to carry the then Blip.tv bills itself as “the next-generation television network” four major broadcast networks to convince them to “cut the cord.” showcasing independently produced shows. This is a major concern among cable providers currently addressed The average length of an episode on the Blip.tv site has risen by the “TV Everywhere” initiative, which requires consumers to from six minutes a year ago to 14 minutes today,meaning that peo- prove that they are paying cable subscribers if they want to stream ple are watching longer online video segments being made by inde- any cable shows online. The online audience is already spending pendents. Even more impressive is that peak viewership of Blip.tv more time watching online video on weekends, which indicates a has moved from the daytime hours of 12-3 p.m. to the prime-time switch from the long time pattern of most video being consumed at hours of 8-11 p.m. work during office hours to more viewing at home (see chart 6).At The move to prime-time viewing of online video is visible across the 2011 Consumer Electronics Show, Time Warner CEO Jeff the web. Nielsen reported a prime-time annual increase of 14% (for Bewkes made a plea to the industry to help develop the tools that a total audience of 62.4 million in March 2010) for all of online

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WHITE PAPER THE ECONOMICS OF ONLINE VIDEO 2011

A very small portion of video consumption CHART 7 online is long-form TV repurposed for the internet. YouTube consists of about half of NETFLIX ACCOUNTS FOR 21% OF INTERNET TRAFFIC all video watched online, and majority of it AT PEAK TIMES is short-form. YouTube has the largest North American downstream fixed-access peak hour audience size, and this is wher e we see share by application, September 2010 massive consumption of content and massive social/sharing. Other Traffic 26%

HTTP 23%

video compared to daytime viewership growth of only 1%, reaching 45.4 million over the same time period. And that growth is coming Netflix 21% from devices connected to the TV set, Revision3 CEO Jim Louderback said, with 40% of Revision3’s video plays coming through TV sets. In 10% October 2010, Blip.tv had over 100 million video views. YouTube For now, most original web programming is coming from non-TV sources like Blip (mostly by way of short-form con- 8% tent), while the legacy producers have turned to the web prima- BitTorrent rily as a distribution source for long-form content, hoping for some additional revenue and, perhaps, to hedge against a threat Flash Video 6% to their traditional business. “A very small portion of video consumption is long-form TV repurposed for the internet,” says Jon Gibs, VP-media analytics at ■ STREAMING VIDEO RTMP 6% Nielsen. To his point, YouTube consists of about half of all video ■ OTHER WEB TRAFFIC watched online, and the majority of it is short-form. That’s sometimes hard to remember when revelations like the one last October Source: Sandvine; Mary Meeker, Morgan Stanley that Netflix, made up entirely of such “long-form” content, accounted for 20% of bandwidth usage during peak internet hours in the evening, according to a study by Sandvine, a company that helps companies manage their bandwidth usage (see chart 7). Matt Cutler, chief marketing officer at online video metrics firm CHART 8 Visible Measures, agrees that short-form is where more of the action lies. “Long-form behavior is settling in as a ‘TV on the web, on my terms,’” he said. TOTAL MINUTES STREAMED BY MEDIA TYPE Cutler sees it as an important step in easing new audiences into In the third quarter of 2010, newspaper sites for the first online video, but he doesn’t see this audience group as being very time passed broadcast sites in total minutes streamed social. Rather, the highest interaction possibilities come in the tran- sition to much more diverse video, where “things are really explod- ing,” Cutler said. “YouTube has the largest audience size. This is Broadcast 290,958,556 where you see massive consumption of content and massive social/sharing.” 218,644,719 Online video is even getting more popular on sites not known for Magazine video content. In the third quarter of 2010, Brightcove and Tube Mogul tracked total minutes of online video from newspaper sites Newspaper 313,082,730 for the first time surpassing the number of minutes watched on broadcast sites (see chart 8). “We track participation—how and where people are pulling Online Media 106,594,313 down and sharing content, this whole participatory nature of video,” said Cutler.YouTube has steadily grown in popularity and frequency. Indeed, participation is widely seen among online video profes- Source: Brightcove, Tube Mogul sionals as the next frontier, with great benefit to marketers.

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THE ECONOMICS OF ONLINE VIDEO 2011 WHITE PAPER Where to watch: Distribution

where are consumers getting their video? The usual suspects CHART 9 are getting new company in unlikely places. Facebook, for one, popped onto the charts as one of the top 10 video sites in the last ONLINE VIDEO VIEWING year as viewers shared clips and shows through the social network. The long-dominant No. 1 ranking still goes to Google Video sites, The number of online videos watched steadily which include YouTube, which received 144 million unique viewers increased in the second half of last year, peaking at in December 2010. But Facebook surpassed major media sites like more than 35 billion. NBC, CBS, Fox and Turner with 41.1 million viewers, who watched 40 VIDEOS IN BILLIONS 124.5 million video sessions. Those figures only include video actually hosted by Facebook. Since many videos appearing on Facebook are YouTube-hosted, Facebook may play an even more powerful role than the numbers suggest in distributing video to online audiences. Other sites in the mix include Yahoo.com, with 53 million viewers, and third was Vevo, with 50.5 million viewers (see chart 4, P. 6). 35 The number of online videos watched by internet users grew steadily in the second half of 2010, with 35.3 billion video watched in November (see chart 9). And online video watching saw an 35,340,250,000 increase in all dayparts, compared to last year, with a 16% increase on weekends (see chart 10). Short-form continues to see momentum and push into many 30 distribution channels, driven by demand on both sides of the table. As AOL’s David Eun puts it,“If you’re a publisher and you have content, you need it in as many places as possible. If you’re a destination, you can’t get enough high-quality video.” Not everyone shares exactly that same philosophy, but a version NND JJJASOF MMA of it can be heard from other web video publishers. Next New Networks CEO Lance Podell remarked that the strategy at Next Source: comScore New, which is a major producer of online video content, “started out by doing distribution deals with everyone, then realized the 80%/20% rule was kicking in—we were doing the same paperwork on all, but only 20% were delivering. So we narrowed distribution Then, in early 2011, Hulu and Viacom reached an agreement to from 35 or 40 distribution partners to 5 or 6.” bring the two shows back to the service, as well as a selection of pro- In the long-form arena, 2010 brought a pullback by Viacom, gramming from MTV, Comedy Central, VH1, TV Land, BET and which yanked its popular “The Daily Show” and “Colbert Report” other Viacom channel brands to be added to Hulu Plus. And Hulu from Hulu in March after a disagreement over splitting ad revenue CEO Jason Kilar mounted a vigorous defense of Hulu’s business (Viacom continued to stream the shows on its own site). After the model in a detailed blog post. announcement, Laura Martin, an analyst at Needham & Co., told As the landscape continues to settle over distribution through The New York Times: “The content companies continue to experi- various websites, new devices are introducing turf battles over distri- ment with how to monetize their premium content on digital plat- bution to the living room, from early entrants Boxee, Roku and forms. Hulu is a failed experiment for Viacom.” Reports have also Apple TV to 2010 newcomer Google TV, which has rankled tradi- surfaced that Hulu’s broadcast partners ABC and Fox were contem- tional content creators who fear loss of revenue from cable operators plating pulling exclusive content from Hulu, a move that would if viewers opt for Google TV over cable.The TV set—developed with greatly challenge Hulu’s nascent business model. Intel, Sony and Logitech—features Google’s Android operating sys-

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WHITE PAPER THE ECONOMICS OF ONLINE VIDEO 2011

CHART 10

VIEWING BY DAYPART

In just one year, consumers increased the number of minutes they watched online video in every daypart

NOV. 2009 JUNE 2010 NOV. 2010 1YR % CHANGE Early Morning 6,337 13,380 11,197 76.7% Daytime 27,671 44,293 38,222 38.1% Early Fringe 15,434 18,774 19,660 27.4% Prime 14,460 21,117 19,725 36.4% Late Fringe 9,441 12,069 11,822 25.2% Late Night 12,731 15,282 14,449 13.5% Weekend Morning 6,572 8,879 9,223 40.3% Weekend Afternoon 11,938 12,506 14,217 19.1% Weekend Prime 9,280 9,015 11,116 19.8% Weekend Late Fringe 4,457 4,438 4,944 10.9% Weekend Late Night 7,020 6,480 7,373 5.0% All Day - Weekday 86,074 122,262 112,360 30.5% All Day - Weekend 39,266 40,523 45,836 16.7% Total 125,340 156,433 154,627 23.4%

Source: comScore

tem found on its mobile phones, and its Chrome browser.The aim is thing. ‘This doesn’t stop people from watching online content on to incorporate TV-set access to news sites such as USA Today, and their TVs,’ McQuivey said. ‘It just frustrates them.’” music sites like Pandora and Napster, not to mention Twitter, Flickr For now, it’s all a moot point—that is, until Google TV sets hit and Skype.As Eric Schmidt said at the launch event May 20, the goal the consumer market, which was scheduled for the fall of 2010. On is to “control and personalize what you watch ... make your TV con- Dec. 20, Schmidt said manufacturers had been asked to hold off on tent more interesting. It’s more than just a TV.” the launch while Google fixed additional software bugs. Some TV networks have balked at that vision. Google TV’s Meanwhile, Apple has sold a middleman device for internet-to- entry is a potential threat to cable revenue for networks, which get TV streaming video since 2007.The second version of Apple TV was paid by the cable operators to carry their channels. If consumers go released in September 2010 and hit unit sales of 1 million by year’s through Google TV directly to network and cable content, the oper- end. Content available includes iTunes, YouTube, Netflix and others. ators might drop them from their systems—meaning a devastating Roku may be an also-ran in the set-top device area, streaming loss of revenues to the networks. Netflix movies from the internet to TV. It sold around 1 million Although TBS, TNT, CNN, Cartoon Network, CNBC and HBO units during the 2009 holiday season and was expected to sell movies-on-demand have agreed to distribute through Google TV (as around the same number of units by the end of 2010. well as web-based Netflix and Amazon video-on-demand), ABC, Boxee, like Google TV, rankles the networks’ aims. In an odd NBC and CBS have blocked access to their shows via Google TV. twist of fate, it is Hulu that refuses to distribute through this device, Speaking at the UBS Global Media and Communications blocking its programming from showing up there (at the behest of Conference in December 2010, CBS CEO Leslie Moonves said of his its network partners). However, Hulu Plus, for which subscribers refusal to distribute through Google TV:“We are a primary provider pay $7.99 per month, will become available through Boxee in 2011, of premium content. We are going to get paid for it.” as will Netflix content, also previously blocked. At the Consumer On the networks’ plans to block access, The Los Angeles Times Electronics Show, Boxee unveiled a partnership with CBS to carry reported: “Forrester Research analyst James McQuivey said that full episodes of the network’s shows for purchase. blocking access to network shows on Google TV wouldn’t stop peo- Producers of web-original content have been more receptive to ple from watching shows online because simple workarounds— new devices. Said Next New Networks’ Podell: “We’re on Google such as hooking up a laptop to the TV set—can accomplish the same TV, Boxee, Apple TV. We have to be there to experiment.”

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THE ECONOMICS OF ONLINE VIDEO 2011 WHITE PAPER Cable: TV Everywhere, Cord-Cutting

no doubt, cable executives go to sleep each night with visions of ers. Comcast and Turner also said the two will continue to explore giant scissors. But “cord-cutting,” the term for consumers who ways to unlock even more current content for customers, includ- ditch their cable subscription to watch online, has shown little ing the implementation of authenticated live streaming of Turner evidence of being anything more than an imagined threat—so networks through both Comcast and Turner websites and/or far. That hasn’t stopped cable companies from developing strate- applications. The Turner content on Xfinity platforms is expected gies to appease consumers who prefer to watch online. to accrue to Nielsen C3 ratings across TV and the internet start- According to J.D. Power and Associates’ annual U.S. ing in mid-2011, and eventually to phone and tablet devices. Residential Television Service Satisfaction Study released in Meanwhile, Time Warner also teamed up with Samsung to October 2010, cable subscribers were slightly less satisfied with provide direct access to its cable content from Samsung TVs, their monthly pay-TV bills than telco or satellite TV customers, without the need for a cable box (though it is required the view- down 14 points from 555 to 541 on a 1000-point scale. Cable er be a cable customer). Comcast signed a similar deal with the subscribers, who pay an average $71 monthly fee, were also TV maker. more likely to feel ripped off than telecom or satellite-TV cus- Comcast, which recently closed its acquisition of NBC tomers, with those who planned to switch in the next year citing Universal, will likely still experiment with which content to price as the factor. Cable operators are responding with the continued rollout of offerings under The total loss of subscribers from the eight U. S. cable TV Everywhere, a term meant to imply operators in the third quarter of 2010 was 711,000, with six device-agnostic distribution of traditional TV programming to cable subscribers. At companies experiencing their worst quarterly losses ever, the close of 2009, Comcast was the first to according to SNL Kagan. roll out a TV Everywhere concept with Fancast Xfinity,marketed to subscribers as a way to stream to any device, through an internet connection, stream.And caution is prudent. During the 2010 Olympics, NBC, the same content shown on cable. The cable operator signed deals the official network of the games, streamed some but not all with more than 30 networks for streaming rights. Time Warner events, catching the attention of the chairman of the Senate rolled out its TV Everywhere concept in early 2010 with limited Judiciary Subcommittee on Antitrust, Competition Policy and content, the biggest being the launch of ESPN streaming in Consumer Rights, who cited the selective streaming in voicing November. his concerns over Comcast’s takeover of NBC. In a letter to NBC On Feb. 1, 2011, Comcast and Time Warner signed a long- Universal President-CEO Jeff Zucker, Senator Herb Kohl (D- term agreement that provides Comcast digital cable customers Wis.) wrote: with access to programming from Turner Broadcasting System, “I fear that this practice of locking up certain content only networks, including TNT,TBS, CNN, HLN, truTV,Turner Classic for pay-TV subscribers may be a preview of what is to come Movies, Cartoon Network and Adult Swim. The content will with respect to TV programming shown on the internet, partic- appear shortly after initial airing at no additional cost to ularly in the context of the proposed Comcast/NBC Universal Comcast’s customers on www.xfinityTV.com, Comcast’s On merger. Video over the internet has the potential to become a Demand service, applicable Turner Web Sites and Xfinity and significant competitive alternative to traditional pay-TV sub- Turner branded iPad, iPhone and Android-based tablet and phone scriptions, and it appears policies such as the one applications with plans for live streaming later this year. described…may have the effect of limiting the prospects of such With this agreement, Comcast digital cable customers will be competition.” able to access Turner shows On Demand and online, including Still worse in the minds of TV Everywhere critics is that “The Closer,” “Men of a Certain Age,” “Southland,” “Conan,” cable companies have bullied programmers into signing exclu- “Lopez Tonight” and “Piers Morgan Tonight,” among many oth- sive contracts for their content, said Andrew Schwartzman,

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WHITE PAPER THE ECONOMICS OF ONLINE VIDEO 2011

CHART 11

OVERLAP IN TV AND ONLINE VIEWING

TV-only viewers compared with cross-platform viewers ■ TV ONLY ■ CROSS-PLATFORM

35% 32% 30% 27% 24%

19%

13% 11% 9%

18-24 25-34 35-49 50-64 65+

Source: comScore

president-CEO of the Media Access Project. The concern is that Charter lost 63,800 and Cablevision lost 24,500. The total loss in exclusivity could freeze out online competitors such as YouTube, that quarter across the eight U.S. operators was 711,000 sub- Boxee and Roku. scribers, with six companies experiencing their worst quarterly Whether due to TV Everywhere or the ongoing maturity of losses ever, according to SNL Kagan. the online streaming business, cord-cutting is not happening at Indeed, brand loyalty to cable operators and networks may be any significant level, said comScore’s Dan Piech. “We’ve done driving some of the potential shifts in video viewing. In an October studies around the concept of cord-cutting. That is definitely not 2010 survey, Needham & Co. asked respondents to “please list happening. It is happening in the low single digits and that’s true which TV channels you must have available online for you to turn also among the younger demographics” (see chart 11). off your TV subscription.” Others are similarly bearish on cord-cutting. The Most respondents who wrote in a single broadcaster went on to Convergence Consulting Group of Toronto, for example, predicts write in all four, possibly indicating they saw no real brand differ- that about 1.6 million U.S. households will cancel their cable sub- entiation between the broadcasters. As Needham & Co. analyst scriptions by the end of 2011, as more content becomes available Laura Martin explained: “Most folks think of the four broadcast- online. Research firm SNL Kagan projects that 8.1 million house- ers as a monolith. This may be because consumers actually watch holds, or 7% of all U.S. homes with a TV, will substitute internet shows on all four broadcast networks, or it could be because they video for a traditional video service like cable by 2014. have no idea which network their favorite shows are on.” Time Warner and Comcast both reported third-quarter 2010 It’s the shows, not the networks, that consumers follow. subscriber losses as double those of 2009, citing the economy as In the end, the good news for everyone is that the whole pie is the dominant reason. Comcast lost 275,000 basic-cable sub- growing. As comScore’s Piech said:“The resounding message is that scribers in Q3 2010, while Time Warner Cable lost 155,000, TV and online aren’t cannibalizing one another—both are rising.”

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THE ECONOMICS OF ONLINE VIDEO 2011 WHITE PAPER The Metrics Wars: Research

you don’t need to invoke John Wannamaker to know that at the three-screen panel,” Piech said last December. “It uses the online heart of any major new ad-supported medium are strong metrics. tracking we already have, plus their TV viewing (DVR) and access Online video, like much of content online, is highly trackable, but to their mobile reach.Video Metrix will stay the same over the next standards are still in progress and a debate remains over whether six months and in the short term, we’ll do custom products with online video should be measured in the same way as offline audi- this panel.” ences are, particularly if online video wants a larger slice of budg- The cross-media products will allow comScore to look at total ets set aside for traditional broadcast and cable. As Lance Podell, unduplicated reach, a key area for determining true reach. “For CEO of Next New Networks, sees it, the principal questions are: example, no one has any way of knowing whether there are incre- should online video be measured the same as or differently than mental views of an ad on Fox.com over views on Fox TV, but the TV, and is the value of online the same as TV? industry has been clamoring for such a metric for the past five David Hallerman, senior analyst at eMarketer, recommends years,” Piech said. video metrics based on server-based data (a view, start-rate, comple- Addressing the question of the interplay between TV and online tion time, mouse-over, sharing) rather than survey data (metrics viewing of TV programming, a study by comScore showed that such as awareness or intent, which are reported by Insight Express online video typically adds an incremental 6% to the size of a TV or Dynamic Logic). Those metrics can be vital to determining audience for original scripted programming. That incremental “intent to buy,” said “Beyond Viral” author Kevin Nalty. That viewing audience is even greater among 18-24 year olds (13%) and intent-to-buy notion is often not captured by server metrics, Nalty 25-39 year olds (9%). said, although some cookies provide advertisers with data about Nielsen, likewise, is conducting a PC-to-TV sample of 20,000 purchases that occur long after a video view. people to show broad penetration and understand the duplication “Even if you get the money for spending something on Hulu,” between the two. “A lot of clients [traditional TV networks and noted Forrester’s McQuivey, “those million people who watch on cable] want to understand the reach of their programs or networks,” Hulu don’t show up on Nielsen, so you can’t take them back to the said Nielsen’s Gibs. “It’s important to understand the total number client and leverage them against a higher CPM.” of GRPs [across platforms] but also to understand the flow between The hope is for an online GRP (gross ratings point) metric, platforms. Understanding the flow is going to be the next major dubbed iGRP by some, to enable comparisons between online video thinking around audience measurement.” marketing and TV ads where that metric has been the gold standard Additionally, independent third-party media measurement firm for decades. New metrics will also help distinguish ad videos from Visible Measures last November introduced a service called Share content videos. There is some contention, comScore’s Piech said, of Choice to show advertisers how often consumers choose to watch that the high video numbers being reported are including what brands and their competitors in online-video advertising. The met- some term “incidental” viewers who happen on a page that has a ric focuses on standalone advertising content that users opt to view video ad in the margin. The new Video Metrix 2.0 from comScore, on their own (they aren’t streamed in with their video content and launched in July 2010, will help address some of those issues by dis- viewed incidentally but intentionally). These online ads can be tinguishing between video ads that run as pre-roll, post-roll or music videos, film trailers, webisodes, user-generated content, and interstitials within video content, and standalone video ads. brand advertising that viewers intentionally seek out on their Video Metrix 2.0 will focus on GRP measures. “Video Metrix own—such as the video ads from Old Spice featuring former NFL provides a month of data for a set of entities and then we provide a wide receiver Isaiah Mustafa and his Twitter responses (the cam- GRP in terms of reach and frequency,” comScore’s Piech said. paign garnered a 73% share of voice in the male-grooming catego- “That’s been a bit of a comparison. But the big difference between ry, according to Visible Measures). online versus offline is timing.The currency for offline is the day of “When consumers can watch whatever content they want and the show plus three days of DVR viewing. But that doesn’t hold still choose to watch and interact with a brand advertisement, it online because it can be viewed at any time.” demonstrates genuine brand interest and preference,” said Visible ComScore is also partnering with AT&T to start measuring Measures founder and CEO Brian Shin. The company’s Video across various devices. “With AT&T, we’re developing the first true Metrics engine, which measures internet-video reach, also captures

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WHITE PAPER THE ECONOMICS OF ONLINE VIDEO 2011

CHART 12

CONCURRENT ACTIVITIES WHILE WATCHING TV OR ONLINE VIDEO

What TV viewers usually do when watching television: NATIONAL SAMPLE, 980 YOUTUBE VIEWERS, 655 NEXTNEWNETWORKS, 1,516

Surf the internet 60% 60% 62%

Use a computer for e-mail,games, 53% 47% 52% school or office work

Do other things around my home 52% 47% 52%

Talk to others around me 52% 42% 48%

Talk on the phone 43% 28% 26%

Pay full attention to what I’m 11% 15% 15% watching and nothing else

What TV viewers usually do when ads air on TV:

Change the channels 44% 48% 51%

Do things around the house 35% 33% 28%

Pay attention to the ads that interest me 32% 27% 26%

Use a computer/access the internet 32% 37% 32%

Talk to other people 28% 22% 24%

Fast-forward through the ads if on DVR 26% 24% 33%

Watch the ads but don’t pay attention 22% 22% 26%

Mute the TV 14% 19% 19%

Talk on the phone 11% 7% 4%

Read a magazine,newspaper or book 9% 8% 6%

Other 3% 4% 4%

None of these 2% 3% 4%

Source: Frank N. Magid Associates

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THE ECONOMICS OF ONLINE VIDEO 2011 WHITE PAPER

CHART 13

LESS ADVERTISING IS NOT A DRIVER OF ONLINE VIEWING

Reasons to watch online

Missed episode on TV 71%

Convenience 57%

Less ads 38%

Like to see past episodes 25%

Prefer the online 13% experience

Don’t subscribe to cable/ 7% don’t have a TV

Source: comScore

audience engagement such as how online audiences interact with A 2010 study from Next New Networks and YouTube focused video content by hitting “play,” “rewind” or “forward-to-a-friend.” on engagement:“We looked at things people do while watching TV (Visible Measures produces the weekly “Top 10 Viral Video Ads” versus the things they do while watching online video,” said Next updates with Ad Age.) New Networks CEO Lance Podell. “With TV, the list was enor- Not to be left out, Nielsen, the stalwart of TV measurement, mous: going to the bathroom, cooking, talking to your spouse, etc. began testing Online Campaign Ratings metrics. “This new Online, the list shrinks dramatically. Engagement is much higher system will provide marketers with a better understanding of online. People who are watching TV don’t have as many ways to their ROI, and will give media companies a much-needed tool engage with advertisers. Online, there are so many ways you can’t to prove the value of their audiences,” said Steve Hasker, presi- do it on TV,” Podell said (see chart 12). dent-media products.The metric lets marketers and media com- As the metrics wars play out, the audience continues to grow. panies measure the combined reach of TV, the web and mobile For August 2010, comScore reported that 178 million U.S. inter- advertising. “Reach alone doesn’t tell the whole story, and net users watched online video content in August for an average Nielsen intends to combine the ratings with cross-platform of 14.3 hours per viewer (178 million users watched online video advertising effectiveness metrics to provide a complete view,” in July as well). The total U.S. internet audience engaged in more Hasker said. than 5.2 billion viewing sessions during the course of the month. Nielsen Online Campaign Ratings began testing with advertis- According to comScore, consumers spent 48% more time online ers Procter & Gamble and Verizon Wireless, as well as Facebook and watching video over the last year versus the year prior, while the agency Starcom MediaVest, in late 2010. number of unique users is holding, with 85% of all online indi- Currently, demographics are a major component of advertisers’ viduals watching videos online. interest in metrics—but over the next five years, going beyond These viewers are also seeing more ads, and are willing to con- demographics to understanding engagement will be increasingly tinue seeing them. “Shows online have begun to run full ad loads important, said Quantcast’s Gerber. Engagement can be measured [equivalent to their TV counterpart]. We’ve noticed that without a in terms of interactivity—clicking an ad or mousing over some- doubt, there’s not much negative feedback or drop-off in viewers,” thing, sending a video link to friends, or commenting on a video. Piech said (see chart 13).

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WHITE PAPER THE ECONOMICS OF ONLINE VIDEO 2011 Advertising

when it comes to monetizing video content, Hulu is the clear sages to TV shows as proxies for people.” leader. Despite YouTube’s sizable audience, the Google-owned Kilar recognizes that content owners “need to make a fair video site has only slowly begun to carry ads, in part because of the return on their significant investment in creating content,” and unpredictable nature of its user-generated content. Hulu, made up asserts that “content owners will license their best content in the exclusively of sanctioned network content, is the No. 1 safe haven best windows to those distributors that pay the most on a per-user, for advertisers moving into the online video space. Partly due to per-month basis. Content owners will bundle their content to the Hulu’s aggressive promotions, the price of internet video advertis- degree customers will respond, simply because it is in the content ing has also risen. “Hulu’s innovating in advertising models more owners’ economic interest to do so. If enough customers refuse to than anyone—they’re doing new kinds of advertising and getting purchase their bundles, then the bundles will either be reduced in feedback on ads,” said Forrester analyst James McQuivey. price/scope (possible) or dismantled (far less likely).” Hulu CEO Jason Kilar laid out some thoughts on Hulu’s Hulu, Kilar writes, believes it can get more ad revenue than tra- future in a blog post accompanying the news of a new deal with ditional players. “We’ve invented patentable technology that has Viacom to stream its programming. Traditional TV has too many enabled us to deliver much more relevant video advertising and to ads, Kilar writes. “Users have demonstrated that they will go to do so in a manner that generates much higher recall and purchase great lengths to avoid the advertising load that traditional TV intent than other video advertising services.” Hulu anticipates places upon them,” which is driving the use of DVRs and online reaching half a billion in total revenues (advertising and subscrip- viewing. Consumers also want TV to be more convenient for tion combined) in 2011, up from $263 million in 2010, up from them, with programs that start at a time they choose, not one that $108 million in 2009. is dictated to them. “Consumption of original TV episodes will Despite Hulu’s success in generating ad revenue for its parent partners (or, ironically, because of its success gaining those viewers), ABC, NBC and Fox ‘For over 60 years, video advertising could only be bought have begun to feel nervous that their own rat- via a TV show’s projected audience. The result has been ings points may suffer, with real results for Hulu. Even NBC, Hulu’s initial and closest many wasted impressions and an often irrelevant partner, has started to pull back some of the ad experience for consumers. In the near future, advertisers inventory it had previously given Hulu, giving will demand the ability to target messages to people.’ over those spots to its own network sales team. Two of Hulu’s top shows, “30 Rock” and “The Office,” also are sold exclusively by NBC. And eventually mirror theatrical movie attendance: big opening Friday Hulu executives were reported to be upset when NBC recently nights, but more consumption will be in the days and weeks after- made a deal with Netflix to show “Saturday Night Live” episodes. ward. Consumers also want the freedom to be able to watch TV Nonetheless, McQuivey said, “Even if Hulu’s owners hate it, the on whatever screen is most convenient for them, be it a smart- value of what they’re learning about interactive advertising is proba- phone, a tablet, a PC, or, yes, a TV,” Kilar writes. bly too important [for them to cast it off] forever.” As for what the future of advertising looks like, Kilar has a In the blog post, Kilar writes that, despite the introduction of very clear vision: “Advertisers are increasingly expecting to pres- Hulu Plus, Hulu will continue to have a free, ad-supported service ent their advertising messages to just their desired audience … as part of its offerings for many years to come, and that Hulu will and not to anyone else. For over 60 years, video advertising could continue to experiment with windowing to arrive at how this model only be bought via a TV show’s projected audience, which served can best serve content producers. And he gives a nod to TV as a blunt proxy for a certain target audience. The result has been Everywhere efforts when he writes that viewers will also be able to many wasted impressions and an often irrelevant experience for either subscribe to Hulu Plus, or authenticate that they already pay consumers. In the near future, advertisers will demand the ability for TV service, in order to watch other types of content. to target their messages to people rather than targeting their mes- Adam Gerber, chief marketing officer at Quantcast, sees online

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THE ECONOMICS OF ONLINE VIDEO 2011 WHITE PAPER

CHART 14

REPURPOSED TV ADS VS. WEB-ORIGINAL CONTENT RANK THE SAME

Comparison of attrition rates: percentage of people who viewed the video ■ HALFWAY ■ COMPLETED

42.4% Repurposed, :15 19.4%

57.2% Repurposed, :30 30.1%

29.6% Made for web,:30-:60 17.0%

44.2% Made for web,:60-1:30 32.2%

36.5% Made for web, >1:30 23.4%

Source: comScore

video positioned as a complement to TV, needing to speak the lan- main factor toward speeding the growth of online TV will be the guage of TV. Others, like AOL’s Jeff Levick, president-global adver- development of a new ratings metric inclusive of both TV and tising and strategy,see the ad buys coming from interactive budgets, online, as networks will be more likely to make content available not the TV groups yet. All agree, however, that online video is past online if a better way can be found to market the value of those the point of advertisers asking whether online video is viable. online audiences to advertisers. One comfort for advertisers won- Instead,“Video is all across the web—it’s expected, from a consumer dering if they have to create new ads for online:Tube Mogul found point of view and advertiser point of view,” Levick said. “For con- that whether ads were repurposed TV ads or made for the web, consumers, video is TV on the web. That’s the point of entry. From the sumers reacted to them much the same way (see chart 14). advertiser side, it’s becoming part of the buy with every campaign.” Still, more marketers are grasping the ability to create stand- Video networks and publisher sites use different techniques for alone video efforts that work. Old Spice’s viral campaign racked up delivering targeting based on user registration or third-party data. views to achieve a 73% share of voice in the male-grooming cat- Data and targeting companies deliver concentrated buys. The most egory, according to Visible Measures. Nike’s “Rise” campaign, widely adopted technique is basic demographic targeting. “Targeting launched in October 2010, featured Miami Heat star LeBron James is nothing other than what people have been talking about on the TV asking “What should I do?” According to Visible Measures, side for years—addressable TV,”Gerber said.It never came to fruition responses and spoofs related to the campaign surpassed the num- because it was dependent on set-top boxes, but that concept is being ber of views of the original. done today at a significant scale on the internet. Video has largely been sold on the basis of individual shows or “It is the same thing we’re doing with audience on-demand in channels, and through network buys. Early 2010 saw the first ad display,” said Sean Kegelman, senior VP at Publicis unit Vivaki exchange enter the market. And some questioned whether it Ventures. “It’s the idea of addressable audiences for display and would impact rates, since non-video ad exchanges can drive down now for video and, ultimately, for TV.” rates for other types of online advertising. New metrics may be needed to drive online-video marketing, Competition, which has only increased, means that ad rates are however, because without them, ad agencies are expected to stick falling or holding steady. In March 2010, Hulu slashed its rates in with what they know. “The agencies are comfortable in what the face of improved offerings from ABC, NBC and Fox. they’re doing—they’ve been doing it for decades,” Piech said. “So Currently, ad rates remain reasonable. “We have never had a it’s a conceptual shift to buys online versus traditional TV buys.” quarterly CPM average less than $13,” said Tod Sacerdoti, Brad Adgate, a researcher for Horizon Media, suggests the founder-CEO of BrightRoll.

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WHITE PAPER THE ECONOMICS OF ONLINE VIDEO 2011 Conclusion

it is safe to say that online video isn’t going anywhere but every- generated content, as tools for creating and uploading video become where—and battles lay ahead. It is unknown what kind of leader- cheaper and more accessible. Companies like AOL, seeking how to ship Larry Page will bring to Google as its new CEO, and how that define their content offerings, will focus on “premium” original may impact Google TV’s efforts, but cable and networks will be content created for the web. And more consumers are increasingly closely watching developments as they try to keep Google at bay, finding that they are impressed with the quality of original web and out of the living room. video (see chart 15). Cable TV companies will continue to wring their hands over the The biggest winners of all may be the advertisers, facing an ever- internet eroding their core business, while the networks will sup- growing supply of inventory. That is, if, as AOL’s Jeff Levick pre- port them in that fear. That may only lead the way to more online dicts, 2011 is in fact the year when online video is finally added to video, seeking to co-opt the competition. If a cord-cutting future marketers’ budgets. happens anytime soon, it would mean a mass exodus from cable, as just 7% of all homes, according to the most radical report, will migrate from cable to the internet in the next few years. ➜ Laura Rich is a freelance journalist and media consultant based in Boulder, Meanwhile, silly cat videos will continue, as will still more user- Colo. She can be reached at [email protected].

CHART 15

CONSUMER ATTITUDES TOWARD WEB-ORIGINAL VIDEOS

A majority of viewers agree that web-original videos offer a quality entertainment experience, on their own terms

NATIONAL SAMPLE, 555 YOUTUBE VIEWERS, 722 NEXTNEWNETWORKS, 1,596

Web-original programs provide quality 58% 57% 78% entertainment whenever I want

Web-original videos keep 53% 46% 69% getting better and better

Many of the web-original videos online are 53% 47% 65% good enough to be shown on television too

I wish there were more web- 42% 46% 66% original videos on the internet

I have certain websites I rely on for the 69% 47% 43% best web-original videos online

I’m always looking for new 42% 38% 59% web-original videos to watch

I think of web-original videos 38% 38% 47% as the new TV

Source: Frank N. Magid Associates

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THE ECONOMICS OF ONLINE VIDEO 2011 WHITE PAPER The Wide World of Web Video A who’s who of some of the players in this fast-changing space. All figures for Videos Viewed come from the ComScore Video Metrix for November 2010. Note that ad views may sometimes be greater than video views because a single video, like an episode of a TV show, will have more than one ad. DISTRIBUTORS DISTRIBUTOR WHAT IT IS WHAT TO EXPECT TOP PROPERTIES VIDEOS VIEWED AMAZON SITES Includes both Amazon.com and On IMDB.com, movie trailers of new and Amazon.com, Video views: IMDB.com. Amazon.com has some classic movies, and full-length episodes IMDB.com 47.8 million product videos, but most of the volume of TV shows like “The Biggest Loser.” Ad views: is driven by IMDB video trailers. 8.1 million AOL One of the first and most established In September, it acquired TechCrunch, TechCrunch sites, Video views: websites for news and entertainment. one of the hottest technology news sites, Patch.com, web of 348.9 million It offers a variety of original video as well as 5Min, a how-to video hyperlocal news Ad views: content, such as the “Ask Rod” video production company. It also partnered sites. 216.9 million series in small-business news. with the production studio Vuguru, which will produce at least six original videos for AOL. BLINKX A public video search company founded Over 35 million hours of video in Much of its video Video views: in 2004 by Suranga Chandratillake, who categories including news, comes from 246.8 million studied Computer Science at entertainment, health and fitness, mainstream U.S. Ad views: N/A Cambridge. A competitor of YouTube, it technology, teen pop and video games. media, like is traded on the London Stock Exchange Bloomberg and with headquarters is in San Francisco, as MSNBC. well as offices in the UK. BLIP.TV The leading distributor of indie web More than 48,000 independently Small shows such as Video views: series on sites such as YouTube and produced web shows, mostly from small “Old Jews Telling 29.1 million AOL. It provides services such as and semi-pro producers with devoted, Jokes” and “The Ad views: advertising sales, marketing and niche audiences. Cinema Snob.” 28.6 million analytics to small content creators.

BREAK MEDIA Short-form video that appeals to young Mostly lowbrow humor, with lots of Curated amateur Video views: men. On top of its original video portal, slapstick. videos, NBA, NHL, NFL 117.2 million Break launched a family of male-skewing Ad views: sites including CagePotato and 52.8 million Chickipedia, and it operates a robust ad network as well.

CINESPORT A web video syndication company that Daily sports clips of your local football, Websites of The Video views: offers sports highlights to local media baseball, basketball and hockey teams. Chicago Tribune, 101.7 million companies throughout the U.S. and L.A. Times and Ad views: Canada. It provides sports video content Boston Globe. 27 million to over 70 media websites, including those of the New York Post, Los Angeles Times and Boston Globe.

COLLEGEHUMOR Founded in 1999 by Josh Abramson Funny videos, many originally produced. CH Originals such as Video views: and Ricky Van Veen, it is one of the The “Jake and Amir” series continues to “Jake and Amir,” 31 million leading comedy video sites. Since be the most popular. A recent “Hardly Working” Ad views: 2009, has been owned by Electus, a rebranding of the site puts video front and “Bleep Bloop.” 13.2 million joint venture between IAC and former and center, and emphasizes webisodes. NBC co-chairman Ben Silverman.

DAILYMOTION The YouTube of France. In 2009, it User-generated videos as well as studio User-generated Video views: raised $25 million and had a revolving content from the likes of Warner Bros., fare, plus clips from 110.3 million door of CEOs, but former Doctissimo MTV, JibJab and Hulu. Fox, Spike and MTV; Ad views: CEO Cedric Tournay has headed the how-to videos from 4.4 million company for more than two years Howcast; and the now. original series “Squatters.”

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WHITE PAPER THE ECONOMICS OF ONLINE VIDEO 2011

DISTRIBUTOR WHAT IT IS WHAT TO EXPECT TOP PROPERTIES VIDEOS VIEWED FACEBOOK The world’s largest social-media Anything that its users—all 500 million of N/A Video views: network. Allows users to create them—are sharing with each other. Ranges 189.8 million profiles of themselves, share messges, from professional music videos to home Ad views: photos and videos. videos. X-rated videos prohibited.

DISTRIBUTORS 5.7 million

FANCAST Comcast’s video portal has one of the Comcast’s video portal has quietly “No Ordinary Video views: most comprehensive TV offerings on assembled a sizable selection of TV on Family,” “Jersey 8.8 million the web, including Hulu content and the web. The catch: It’s not all free. Shore,” “Cougar Ad views: separate deals with ABC and CBS. Town.” Fancast Xfinity TV provides cable 4.1 million networks such as HBO and Starz for Comcast cable subscribers.

FUNNY OR DIE An aggregator and creator of funny Combination of user-generated videos Anything starring Video views: videos, most famously Will Ferrell’s and Funny or Die originals, called FOD Ferrell, but also funny, 6.2 million “The Landlord.” The site was founded Exclusives. Users vote on what they interview-style videos Ad views: in 2007 by Ferrell and Adam McKay think is and isn’t funny. The most that feature 902,000 and is run by CEO Dick Glover. popular videos get categorized as celebrities including “Immortal.” Natalie Portman and Conan O’Brien.

GOOGLE SITES Continues to be the largest video- Everything. From video of philharmonic YouTube has some Videos views: (YOUTUBE) sharing site in the world. performances to fistfights in soccer studio content, but 14.1 billion stadiums and Paris Hilton having sex. most comes from Ad views: The high- and low-brow, revolting and users. 241.2 million uplifting, all co-exist on YouTube.

HULU Ad-supported distributor of TV shows More experimentation with pay-video Clips from “Saturday Video views: from ABC, NBC and Fox, among offerings. In November, it introduced Hulu Night Live,” “Modern 787.3 million others. Hulu is backed by News Corp., Plus, a subscription service that provides Family,” “The Biggest Ad views: NBCU, ABC and Providence Equity access to entire episodes and back Loser” and “The Real 1.15 billion Partners, and its expansion continues episodes for $7.99 a month. Housewives” series. to show that people want their TV on the web.

METACAFE An aggregator of short-form video Clips of TV shows, movie reviews, music Clips from CBS’ “The Video views: clips of TV shows, movie trailers, sports videos and some original content. Host Big Bang Theory” 41.5 million highlights and music videos. Videos are Matt Zaller interviews actors. and sports highlights Ad views: user-generated and curated by a team from HBO and Fox. 7 million of 80,000 volunteer editors.

MICROSOFT This includes all MSN portal content; News videos about mostly domestic MSNBC.com, “Meet Video views: SITES MSNBC.com, Today.com, and videos politics, sports, business, health and the Press,” “The 465.6 million from shows including “Dateline,” “Meet entertainment. Rachel Maddow Ad views: the Press” and “Hardball with Chris Show.” 426.8 million Matthews.”

TV.COM The CBS version of Hulu, with full- Full-length CBS shows as well as original CBS shows including Video views: length episodes of CBS shows and entertainment news. “Live to Dance” and 7.1 million short clips of non-CBS programming. “How I Met Your Ad views: Mother.” 4.1 million

VEVO A leading music video site created by The full gamut of Sony, UMG and EMI Katy Perry, Enrique Video views: Universal Music Group , Sony videos along with tools for making Iglesias 510.8 million Entertainment and Abu Dhabi Media Co. playlists and displaying lyrics. Ad views: Powered and hosted by YouTube. 28.6 million

YAHOO SITES Yahoo’s video portal, offering a variety Like AOL, in an effort to develop Short videos of popular Video views: of short videos, from sports to finance original content, Yahoo partnered with TV shows and the latest 550.3 million to local news. Funny viral videos and Electus, the studio run by former NBC viral videos, including Ad views: music videos as well. exec Ben Silverman, to create 12 one featuring “the 143.8 million episodes of a web series called “Ready, homeless man with the Set, Dance.” golden voice.”

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WHITE PAPER TV NETWORKS TV NETWORK BACKGROUND ONLINE PRESENCE VIDEOS VIEWED ABC TELEVISION ABC was the first network to distribute full episodes of network Full episodes of ABC shows such as Video views: shows on the web. It also once had the most online viewers, but “Desperate Housewives” and “Grey’s 131.3 million has fallen behind over the years. However, its low video views Anatomy.” Ad views: count this year relative to CBS and Fox may be misleading since 175.8 million ABC News videos were not included in this number.

CBS INTERACTIVE This is the only network among the Big Four that doesn’t CBS’ Audience Network spans much Video views: distribute its shows on Hulu. But there has been much talk that it of the web, including shows such as 197.4 million may soon do so, via Hulu’s new subscription-based Hulu Plus. “Modern Family” and “The Big Bang Ad views: CBS’ TV.com is a competitor to Hulu. Theory.” 280 million COMCAST CORP. Encompasses E! , Style Network, Golf Channel and TV One, It plans to offer live streaming on the Video views: among others. Also operates media sites such as movie site iPad this year. 49.2 million Fandango.com and DailyCandy.com, a free e-mail newsletter Ad views: offering info on trendy spots in 11 major U.S cities. 8.7 million

CWTV Joint venture between CBS and Time Warner. Was the first to Full episodes of “Gossip Girl” and Video views: put TV-sized ads (2 ads in 1 ad break) into its online shows in “Vampire Diaries.” In the past, CW has 52.9 million 2010. It may be doing this, inpart, to offset signficant revenue experimented with holding episodes Ad views: losses in 2009. Doesn’t distribute on Hulu, but does on TV.com. off the web to drive TV viewership. 200.5 million DISCOVERY Discovery made a few significant internal hires, including naming Discovery.com features short clips of Video views: Bruce Campbell chief development officer. It does not distribute shows such as “Mythbusters” and 32.5 million on Hulu, but it has put full episodes on the web as part of TV “American Loggers.” Ad views: Everywhere schemes such as Comcast’s Fancast Xfinity TV. 18.6 million FOX INTERACTIVE Over the past year, Fox has enjoyed much success with hit Full episodes of shows including Video views: MEDIA “Glee.” It jumped to first place in total video views among the Big “Glee” and “Family Guy.” 209.3 million Four, in large part because MySpace, which it owns, was included Ad views: in the comScore count. 96.4 million NBC UNIVERSAL Hulu was born as a project within NBC, and NBC shows such as Full episodes of “SNL,” “Late Night Video views: “Saturday Night Live” and “The Office” remain among the most with Jimmy Fallon” and “30 Rock,” as 112.1 million popular shows on Hulu. The network is surely benefitting from well as web exclusives. Ad views: the success of Hulu, but it ranks the lowest of the Big Four for 64.2 million video views. TURNER DIGITAL Includes CNN, Turner Sports, Turner Classics, TNT and TBS. In CNN.com, TNT’s “Men of a Certain Video views: July, Turner Sports formed a partnership with Sports Illustrated Age.” Plus a section on TBS.com 187.6 million (SI.com), enhancing Turner Digital’s online sports offerings. called Team Coco, devoted to clips of Ad views: Conan O’Brien’s late-night show and 119.3 million commentary about it. VIACOM DIGITAL A broad umbrella of media companies including MTV, Comedy ComedyCentral.com is the online Video views: Central and Nickelodeon. home of “The Daily Show,” while 497.5 million MTV.com and Nick.com offer short Ad views: clips and promo episodes to drive TV N/A viewership.

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WHITE PAPER THE ECONOMICS OF ONLINE VIDEO 2011

STUDIO WHAT IT IS WHERE TO FIND IT ADVERTISERS AGILITY STUDIOS A boutique shop for the development, production, management, distribution Launched in 2010 on and sale of media properties that can be scaled from the web to TV and other select online video media. Headed by Scott Ehrlich, its first big project was “The Legion of destinations. Extraordinary Dancers,” or “The LXD,” with director Jon M. Chu. In 2010, dancers from “The LXD” opened for the “Glee” cast on their tour. ALEX ALBRECHT AND Los Angeles-based web personalities Albrecht and Rose (the founder of Digg) Revision3, Blip.tv, Hulu, GoTo Meeting, PRODUCTION STUDIOS KEVIN ROSE co-host the popular web show “Diggnation,” which averages more than MyDamnChannel.com, Netflix 250,000 views per episode. Albrecht also has a role in “The Totally Rad Show,” YouTube and elsewhere produced by Revision3. AMANDA CONGDON One of the web’s first breakout stars, who rose to fame as the first host of Blip.tv, iTunes, Hotel Erwin, “Rocketboom” back in 2004. She later worked for ABCNews.com and signed a Verizon V Cast MicPortPro development deal with HBO. She also hosted “SometimesDaily,” a quirky, infrequently produced slice-of-life web show now on hiatus. BIG FANTASTIC A digital-media production shop in Los Angeles that comprises Douglas AOL, Dailymotion, Cheney, Chris Hampel, Chris McCaleb and Ryan Wise. The team has produced MySpace, Sling, several high-profile web series including “Sam Has 7 Friends” and “Prom TheWB.com, TiVo, Queen.” “Prom Queen” has generated more than 25 million views, making it Verizon V Cast one of the most popular web shows ever. In 2010, they produced “Kill Spin,” an original series for Lockrz, a social-commerce company. CRACKLE Sony purchased Grouper and turned it into Crackle, which develops and Crackle, YouTube Showtime, acquires web series for distribution on its site and elsewhere. Original series Ford, HP, include “Star-ving” and “Decisions Decisions.” Crackle also distributes content Expedia from the Sony library, including “Cliffhanger” and “Breaking Bad.” Showtime is currently sampling new shows on the site like “Episodes” and “Shameless.”

DADLABS A parenting-advice show out of Austin, Texas, that runs four times a week Blip.tv, iTunes, YouTube Baby Bjorn online and on digital devices. The show has grown quickly from an independent production to one that’s earned ad support, book deals, widespread distribution and more than 7 million views. DAN LEVY A comedian and independent web video producer. He has been successful in Atom, CollegeHumor, inking deals for web shows with a range of professional web portals. “My Long Crackle Distance Relationship” and “The I Have to Go in a Minute Show With Super Host Dan Levy” have earned about 2 million views. DAVID WAIN Executive producer and star of web series “Wainy Days,” a comedic look at his MyDamnChannel carried dating travails. The first 26 episodes earned more than 6 million views and won “Wainy Days” and a Streamy Award in ‘09. In 2010, the web series “Children’s Hospital,” which he syndicated it to produced with comedian Nick Kroll, was picked up as a TV series by Adult Swim. Dailymotion, Facebook, MySpace, Yahoo, YouTube DECA A studio led by CEO Michael Wayne that funds, markets and distributes original DECA sites, iTunes, Crest, Bank of shows on digital platforms. DECA nurtures talent and personalities unique to YouTube and elsewhere America, BMW, the web and focuses on building web properties packaged for advertiser- General Mills, friendly demographics. Shows include “Smosh,” “Good Bite,” “Parents Ask,” IBM, Target, “Momversation” and “Cool Mom.” Verizon, Visa DILIGENT An agency/studio in Los Angeles that produces campaigns and web video Dodiligent.com, Bushmills, series for a range of corporate clients. It is best known for “Couch Crashers,” a Glamour.tv, Playboy.com Captain web series sponsored by Playboy and Bushmills; “Tressed to Impress” for Morgan, Sierra Glamour.tv; and “White People Dancing” with Fremantle Media. Mist ELECTRIC FARM A digital studio founded by Brent Friedman and Stan Rogow that created the MTV.com Verizon, ENTERTAINMENT web series “Gemini Division.” In 2009, it produced a series called “Valemont” Kodak that ran on MTV.com and was sponsored by Verizon Wireless. In 2010, “Valemont” won Streamy Awards including “Best Interactive Experience in a Web Series,” and it may be made into a TV movie. EQAL A creative team including founders Miles Beckett and Greg Goodfried that LG15.com, Hulu, MySpace, Disney, MSN, created “Lonelygirl15,” one of the first breakout web-video hits. They followed YouTube Procter & that up with “Kate Modern” and later signed a development deal with CBS. In Gamble, 2010, they launched “Real Women of Philadelphia,” sponsored by Kraft’s Equinox , Kraft Philadelphia Cream Cheese.

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THE ECONOMICS OF ONLINE VIDEO 2011 WHITE PAPER

STUDIO WHAT IT IS WHERE TO FIND IT ADVERTISERS PRODUCTION STUDIOS FELICIA DAY An actress-writer-web producer who produced and starred in the gaming- Watchtheguild.com, MSN, centric scripted series “The Guild.” She also starred alongside Neil Patrick MySpace, Xbox Live, Harris in Joss Whedon’s “Dr. Horrible’s Sing-Along Blog.” YouTube, Zune, Bing Video FINE BROTHERS Benny and Rafi Fine, a pair of brothers who produce comedic videos for the Atom, Dailymotion, MSN, web. They are best known for their “Lost” spoofs, which parody the ABC show Funny or Die, Yahoo, with action figures. Their other shows include “Movie Spoilers” and “The YouTube and elsewhere Overthinker.” Comedy Central has commissioned them to create web shows, and some of their videos have earned more than 1 million views. FRED Lucas Cruikshank plays Fred Figglehorn, a six-year-old boy who talks in a high- YouTube, Nick.com Walden Media, pitched voice about his travails growing up. His videos are among the most Zipit Wireless popular indie offerings on YouTube, racking up 260 million views in one year. His YouTube channel is the second-most-subscribed of all time. In 2009 he started shooting a feature film, “Fred: The Movie,” released in 2010, not in theaters but on Nickelodeon TV. GARY VAYNERCHUK The founder and host of “WineLibraryTV,” a daily wine review show borne out tv.winelibrary.com, Viddler, of his multimillion-dollar wine store, Wine Library. He landed a seven-figure YouTube book deal for his book about entrepreneurship, “Crush It,” and speaks at events on marketing and branding. He also produces videos about social media on Viddler. GENERATE A multimedia production shop and management company in Los Angeles that Blip.tv, iTunes, MSN, Ford, Microsoft, creates content for TV, film, the web and other media. In 2010,they produced TheWB.com, Vuze, Brita “The Invested Life,” for TD Ameritrade and launched it on MSN Money. It YouTube and elsewhere partnered with Ogilvy Entertainment and MSN to create this show, which features real people coping with financial trouble. Other shows include “Pink: The Series” and “Republicrats.” HAYDEN BLACK One of the first web celebrities and the creator of popular web shows including GoodnightBurbank.com, “Abigail’s Teen Diary” and “Goodnight Burbank” through his Evil Global Corp. Blip.tv, iTunes, Hulu, Babelgum.com, YouTube IJUSTINE Video blogger Justine Ezarik, is one of the most popular YouTube stars. She Tastyblogsnack.com, GE posts quirky updates about her life and musings on pop culture. In 2010, GE Viddler, YouTube paid her and other YouTube celebrities to spread the word about its committment to green energy, through a web-marketing campaign called “Ecomagination.” IRON SINK A web shop that produces sexually charged comedy series and short clips. It’s Blip.tv, Break, Dailymotion, headed by Scott Zakarin and is best known for “Roommates,” a show that Metacafe, MySpace, generated more than 25 million views on MySpace. Iron Sink is also behind YouTube “Model Ball,”“The Shatner Project” and “Upstairs Girls.” KEITH SNOW After working as a chef for nearly two decades, Keith Snow created the web HarvestEating.com, Kashi series “Harvest Eating,” launching it online in 2006. Since then he has created Kashi.com, YouTube more than 400 videos for the series and relies on a weekly e-mail newsletter to drive traffic to new videos. The show is distributed to PBS stations by KCTS- TV in Seattle. KENT NICHOLS AND The creative team behind “Ask a Ninja,” one of the most popular Askaninja.com, Blip.tv, Scion DOUGLAS SARINE independently produced web shows. iTunes, YouTube KEVIN NALTY He is known online as “Nalts” and has created some of the most popular YouTube , Mentos, YouTube viral videos. He has also won advertisers through his relationship WillVideoForFood.com Crowne Plaza, with digital studio Hitviews. Nalty has amassed more than 800 videos and Holiday Inn more than 160 million views. In 2010, he wrote “Beyond Viral,” offering advice Express on how to promote brands using online video. LONELY ISLAND A group of Berkeley, Calif.-born comedians now based in New York that includes Hulu, MySpace, NBC.com, “Saturday Night Live” cast members and writers such as Akiva Schaffer, Jorma YouTube Taccone and Andy Samberg. The group is responsible for some of the most popular viral videos of all time, including “Lazy Sunday” and “I Just Had Sex.” LOUD PICTURES A Texas-based film, TV and new-media company founded by Blake Calhoun. Blip.tv, Hulu, iTunes, Vuzu, The studio created three seasons of “Pink: The Series,” which has been viewed YouTube and elsewhere 6 million times since it premiered in 2007. In 2010, they created a web series for WB.com called “Exposed.”

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STUDIO WHAT IT IS WHERE TO FIND IT ADVERTISERS MEDIA RIGHTS The digital arm of this diversified media studio is the force behind “Seth YouTube AT&T, Burger CAPITAL MacFarlane’s Cavalcade of Cartoon Comedy,” a web series initially sponsored King, Nike, by Burger King and distributed on YouTube and Google’s Content Network. Procter & MRC specializes in connecting creative talent with brands. Gamble and others MEDIOCRE FILMS A production company led by Greg Benson that produces a web series called Crackle, iTunes, MySpace,

PRODUCTION STUDIOS “Greg Answers Questions.” Benson’s wife, Kim Evey, has produced webisodes YouTube and elsewhere of “The Guild.” MICHAEL BUCKLEY The creator of “What the Buck?!,” a celebrity gossip show that runs three times YouTube a week. MR. DEITY Writer and filmmaker Brian Dalton is the founder of Lazy Eye Pictures. He The first two seasons Crackle, created and stars in the web series “Mr. Deity,” which premiered on YouTube earned more than 4.5 YouTube and then was licensed by Sony-owned Crackle. “Mr. Deity” is a comedy series million views. about God and how he manages the universe alongside his assistant, Larry. MR. SAFETY YouTube video creator Cory Williams, whose videos regularly generate YouTube hundreds of thousands of views. Mr. Safety’s “The Mean Kitty Song” earned more than 20 million views, and his popularity has attracted advertisers. MYDAMNCHANNEL A web studio founded in 2007 that finances and distributes award-winning web MyDamnChannel, iTunes, HBO, Puma, shows such as “You Suck at Photoshop.” “Status Kill” is one of its latest shows. MySpace, YouTube Southern Comfort NEXT NEW Next New Networks has raised more than $23 million in venture funding and Nextnewnetworks.com, Special K, NETWORKS creates and distributes some of the most viewed web shows in a range of Blip.tv, Hulu, iTunes, TiVo, Buick genres. Its shows have generated more than 400 million views since 2007 and YouTube include “Barely Political,” “Key of Awesome,” “ThreadBanger,” “Garage 419” and “Fast Lane Daily.” OWEN BENJAMIN A comedian and web producer who created the comedic web show “Gaytown” Crackle, MySpace, Yahoo, for Crackle, generating more than 10 million views. Recent video series “Who YouTube and elsewhere Wants to Be on a Reality Show?” makes fun of the ridiculous things people do for fame. PAIGE HENINGER Two women who started the audio podcast “MommyCast” in 2005 and then MommyCast.com, iTunes, Dixie AND GRETCHEN added a regular video series. The show has received national press attention YouTube, sponsors’ sites VOGELZANG and landed on the home page of iTunes several times. such as Dixie.com REVISION3 Producer of tech and lifestyle shows for digital viewing by a loyal, mostly male Revision3, Blip.tv, Hulu, Sony, audience. The network’s programs include “Diggnation,” “The Young Turks,” iTunes, TiVo, YouTube and Squarespace “Totally Rad Show” and “Tekzilla.” elsewhere

RHETT & LINK A web comedy duo made up of Rhett McLaughlin and Link Neal. Developed hit Facebook, MySpace, McDonald’s, web series “iLoveLocalCommercials,” that has its hosts travel to small towns Viddler, Yahoo, YouTube Coca-Cola, across America and create commercials for local businesses using local talent. Cadillac, In 2010, Rhett & Link produced and starred in a national spot for McDonald’s Hummer, and Coca-Cola (“T-Shirt War 2”). Starburst SMASHFACE Zadi Diaz and Steve Woolf, a husband and wife team in Los Angeles who create Epicfu.com, Break, Blip.tv, Intel the semiweekly web show “Epic Fu,” hosted by Diaz. Dailymotion, iTunes, Metacafe, MySpace, TiVo, Yahoo, YouTube and elsewhere STUN CREATIVE Co-presidents Mark Feldstein and Brad Roth created an advertising, branding Crackle, YouTube TV Guide and promotion agency in Los Angeles that produced the 10-episode web series “The Writers Room.” In 2010, it created a video for the TV Guide Network to promote the premiere of “Curb Your Enthusiam.” TAKE180 STUDIOS A Disney-owned studio that creates “participatory” web series by letting Take180.com, MySpace, viewers contribute to the story line. Viewers are asked to contribute based on YouTube and elsewhere specific challenges from producers. All single episodes are 180 seconds or less.

TIM STREET Creator/executive producer of “French Maid TV,” a how-to video series French Maid TV, iTunes, sponsored by technology firms that features French maids explaining how to YouTube use products.

24 | February 14, 2011 | PRODUCTION STUDIOS HOW-TO-VIDEO PRODUCERS LIVE-VIDEO PRODUCERS 25 | WHITE PAPER WHITE February 14, 2011 2011 14, February | Netflix, Audible.com 176,565 million 133.7 21.5 million Revision3, Blip.tv, Hulu, Blip.tv, Revision3, YouTube iTunes, Promqueen.tv, YouTube Promqueen.tv, and elsewhere TomGreen.com, iTunes, TomGreen.com, YouTube eHow, YouTube YouTube eHow, Howcast.com YouTube, Hulu, MySpace, On AOL.com and across the web via 5min's the web and across On AOL.com has partnerships company The Smart Player. and Corp. Meredith G4, Dummies, with For Network. Style ed by well-timed videos. One of its recent clients its recent One of videos. well-timed ed by address One of the original live streamers, based in San Francisco. It allows brands to brands It allows Francisco. in San based streamers, the original live One of service. pay-per-view own launched its channels and also their own create has video and also live for tools web-based in free, that specializes A company and changed domain in 2009 It bought the livestream.com service. pro a paid Mogulus. name from its National Republican the 2008 webcast graduates, Point West two by Founded It also hosts. popular video more its ads against and sells live Convention with Snoop Dogg.” Access “All like events live exclusive streams A web studio founded and backed by former Disney chief Michael Eisner. It is chief Michael Eisner. Disney former by and backed founded studio A web years, few the past of series web original better-known the of behind some indie rock Fantastic), Big (with Queen” “Prom of iterations including several commissioned AOL In 2010, on Topps.” “Back and comedy Nots” For “All spoof original videos. six make it to The comedian and film actor produces his own talk/variety show, “Tom show, talk/variety his own produces and film actor comedian The web. the for Tonight,” House Green’s On-camera personalities host the popular tech show “Tekzilla,” produced by produced “Tekzilla,” show tech the popular host personalities On-camera “Mahalo Daily.” of host was at CNET and worked previously Belmont Revision3. was GE. was Owner of eHow and operator, with the Lance Armstrong Foundation, of health of Foundation, Armstrong with the Lance and operator, eHow Owner of prolific the most Demand is one of Livestrong.com. site and wellness of Demand has no studio and the web. YouTube for video how-to of producers who submit video or freelancers of a network it organizes rather, own; its requests. to respond that and Google execs YouTube former of a group by founded A company own has its Howcast brands. and for consumers for video how-to produces trending for data search It mines freelancers. of a cadre in addition to studio be themes that can Was acquired by AOL in 2010 for $65 million. 5min accepts submissions of submissions million. 5min accepts $65 for in 2010 AOL by acquired Was in do something to how viewers that instruct producers from videos how-to and has videos own its produces also company The or less. minutes five video. how-to with relevant websites match to technology USTREAM USTREAM LIVESTREAM LIVESTREAM JUSTIN.TV JUSTIN.TV PRODUCER IT IS WHAT VIEWED VIDEOS VUGURU VERONICA BELMONT NORTON & PATRICK STUDIO GREEN TOM IT IS WHAT FIND IT WHERE TO ADVERTISERS HOWCAST HOWCAST DEMAND MEDIA PRODUCER5MIN IT IS WHAT FIND IT WHERE TO 20110207-SUPP-WP--0001,0002,0003,0004,0005,0006,0007,0008,0009,0010,0011,0012,0013,0014,0015,0016,0017,0018,0019,0020,0021,0022 20110207-SUPP-WP--0001,0002,0003,0004,0005,0006,0007,0008,0009,0010,0011,0012,0013,0014,0015,0016,0017,0018,0019,0020,0021,0022

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AD NETWORK WHAT IT IS TOTAL UNIQUE VIEWERS ADAP.TV Ad serving and management for online video funded by Spark Capital, Redpoint Ventures and 50.7 million Gemini Israel Funds.

Handles advertising, publishing and content creation, and was acquired by a similar company, 27.5 million

AD NETWORKS BBE Specific Media, in October. According to its website, Specific Media’s client roster includes 300 of the Fortune 500 companies. BREAK MEDIA A network of male-skewing sites sold by the Break.com team. Break also has a unit that 13.4 million creates both ads and branded entertainment. Properties include CagePotato, MadeMan, Chickipedia and HolyTaco.

BRIGHTROLL A network that focuses on professional video and premium brands. In August, it unveiled the 61.5 million BrightRoll Exchange, a self-service online video ad-buying platform.

CROSSPOINT Launched in May as a division of Auditude, a leading ad technology company. Its aim is to 26.3 million provide marketers greater access to premium online video at scale.

JOOST VIDEO NETWORK An arm of Adconion Media Group, a global audience and content network, Joost pairs brand 25 million advertisers with online video publishers. SPOTXCHANGE It spun off from a marketing technology company in 2007 and has created a real-time marketplace 31.5 million for digital publishers and advertisers. When a publisher is looking for an ad to accompany a video, SpotXchange serves the ad with the highest-yielding bid to the publisher’s website.

TIDALTV.COM A Baltimore-based company founded by former Advertising.com execs that signed deals with 17.6 million cable networks but then retooled as an ad network for TV on the web. TREMOR MEDIA A premium video network that has raised $80 million over the last four years. In November, it 67.5 million acquired Scanscout, a competitor. TUBEMOGUL Tubemogul distributes across all the major video sites with one upload and provides detailed 34.1 million viewing data.

PROVIDER WHAT IT IS ADVERTISERS/PARTNERS AUDITUDE A video ad platform led by former MTV exec Adam Cahan. Auditude powers the placement of Comcast, Dailymotion, video ads in content wherever it is on the web. It has fingerprinted video for hundreds of TV Yahoo, Sony networks and can recognize copyrighted video wherever it’s uploaded by users. BLACKARROW Technology that promises to deliver targeted video ads with on-demand video accessed Cisco, Motorola, Adobe, through a cable or satellite system or via the web. The Platform BLIP.TV Blip.tv runs the business side for indie video producers by distributing content and packaging A vast distribution network it for advertisers, including product integrations and run-of-network advertising. It provides that includes AOL, Verizon services to more than 50,000 web shows. FiOS, YouTube FREEWHEEL A video ad server founded by ex-DoubleClick execs that distributes revenue to content Blip.tv, CBS, Deca,

ADVERTISING SERVICE PROVIDERS SERVICE ADVERTISING owners/distributors and allows multiple parties to sell advertising into video wherever it is on Sling Media the web. INNOVID Tech start up that enables automated product placement in existing video. It makes Fox, NBC, Kraft, Tide placements such as signs or logos look realistic, even on uneven surfaces such as fabric. It has so far raised $7.1 million from VCs. OOYALA A company founded by former Google execs in 2007 that provides video services for Red Bull, Ticketmaster, publishers, including distribution, analytics and advertising. Its player supports live video. Time Inc., TimeOut

OUTRIGGER MEDIA Monetizes internet video content for its advertiser clients, and creates video business EMI, Next New Networks, strategies for publishers. Deca, MGM OVERLAY.TV A Canadian company that places information via graphics, ads or links over video. It also JCPenney, Armani enables click-to-buy on video, so a viewer can click on, for example, the shoes someone is Exchange, Zappos.com, wearing and get more information. Barneys New York

PANACHE Provides digital video ad software that helps publishers maximize ad revenue. MTV Networks, PBS, Adobe

26 | February 14, 2011 | SEARCH DISTRIBUTION/MEASUREMENT COMPANIES 27 | WHITE PAPER WHITE February 14, 2011 2011 14, February | ABC, Fox, ESPN ESPN Fox, ABC, major media Most and agencies companies E! PBS, Warner, Time Platform The Independent producers and The Brightcove Ford, MetaCafe, Platform, Humor College Discovery Communications, Discovery Times, York New The Nast Conde major media Most and agencies companies TMZ, Telepictures, Bros. Warner A higher-quality alternative to YouTube for user-generated video. This IAC company boasts prime boasts company IAC This video. user-generated for YouTube to alternative A higher-quality and a niche. technology, viral tracks It also in online video measurement. leadership establishing startups the few One of and ads. videos web million different 200 Measures audiences. of and the behavior videos A video platform best known for powering video for ABC.com. It requires consumers to download to consumers It requires ABC.com. video for powering for known best A video platform live streaming of capable also high definition. It’s in video is streamed its of most but says software video. data most-cited two the one of and, along with comScore, in TV measurement standard The server with direct panel an offline combines VideoCensus Nielsen’s video. online for sources that it can so both TV and web for a single panel developing to It has committed measurement. platforms. across video accurately measure in the space. players the oldest is one of in 2000 founded platform video-technology/services This million. $80 for it in 2006 acquired Comcast detailed provides with one upload and all the major video sites across distributes Tubemogul data. viewing Brightcove, founded in 2004, raised nearly $100 million and has shifted its business model through business its $100 million and has shifted nearly raised in 2004, founded Brightcove, the major media of many for players management and video video asset provides It now the years. companies. video data for standard be the de facto to with Nielsen A publicly held firm that competes and direct an online panel of a combination uses Metrix Video ComScore’s measurement. the web. media across video and other distributed track to measurement It management. and video distribution digital of in the business startup A North Carolina-based of repositories manage vast to owners and other content studios that allow services provides searching. for content A venture-funded startup led by former Ask.com CEO Jim Lanzone that is positioning itself as a itself that is positioning Jim Lanzone CEO Ask.com former led by startup A venture-funded film and web TV shows, of including all manner online entertainment, for directory searchable series. to according on the web people with TV and movies connect to engine that attempts search Video “happy.” a mood, like entering by search can you instance, For taste. for search It powers in 2006. AOL by acquired and was in 2004 engine that launched A video search and Sports Illustrated. Microsoft Brightcove, web. on the tool video search is the largest video site Google’s One of the few publicly listed video companies (traded on the London Stock Exchange). Blinkx is built Blinkx Exchange). Stock on the London (traded video companies listed publicly the few One of an was in 2004, founded company, The University. at Cambridge developed patents search around it, monetize to attempt models to business has tried various and search in video player early ads. video including selling VISIBLE MEASURES TUBEMOGUL VIMEO THEPLATFORM THEPLATFORM THE NIELSEN CO. THE NIELSEN CO. MOVE NETWORKS NETWORKS MOVE DIGITALSMITHS DIGITALSMITHS COMSCORE COMSCORE BRIGHTCOVE THE ECONOMICS OF ONLINE VIDEO 2011 VIDEO ONLINE OF THE ECONOMICS COMPANY IT IS WHAT WITH WORKS YOUTUBE YOUTUBE TRUVEO TRUVEO CLICKER JINNI COMPANYBLINKX IT IS WHAT 20110207-SUPP-WP--0001,0002,0003,0004,0005,0006,0007,0008,0009,0010,0011,0012,0013,0014,0015,0016,0017,0018,0019,0020,0021,0022 20110207-SUPP-WP--0001,0002,0003,0004,0005,0006,0007,0008,0009,0010,0011,0012,0013,0014,0015,0016,0017,0018,0019,0020,0021,0022

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