We are still very much in the nascent stages of online video, that much we know. While the online video space is still very immature, three tiers of online video have clearly emerged. Which one tier will be the most profitable? Which tier will yield the most traction? Which tier will fade? Which tier will ultimately win? In this post, I will attempt to break down the online video space and describe some of the pros, cons and outlook for each sector.Let’s start with a diagram. Hamburger, anyone?
There are 3 distinct tiers of online video as I see it. I’ve divided up the online video space into Professional Video, Semi-Professional Video and User-Generated Video.
Professional video has been the slowest tier to ‘legitimately’ form. Broadcasters and studios have been dipping toes in the online video water, but nobody seems to be getting completely immersed in it, yet. The vast majority of Professional video is still offline being broadcasted exclusively on television, in movie theaters, lying dormant in studio archives or distributed on physical media like DVDs. Much like the diagram shows, professional video is not the most dense tier by any means, but it is the most puffy and glossy of the three. As of today, the top half of the bun has not come close to finish baking. Professional video is still making a very slow migration to the web with vast repositories of professional video not yet being repurposed and repackaged for the web. Eventually, a tsunami of professional video will make its way to the web and will do so in two forms – original made-for-web professional video programming, and repackaged offline professional video. When I say ‘repackaged’, think along the lines of what Charlie Rose is now doing. He’s now slicing and dicing his vast array of interview footage into 600+ two-minute bite-sized video clips for online consumption. This is just one example, but over time many broadcasters and studios will dig into their massive archives of programming and begin the chore of repackaging their content to satisfy the insatiable appetite for online short-form video consumption. Made-for-web professional video will be the last component of this tier to gain momentum. We are likely still years away from seeing broadcasters/studios sink substantial money into original web video. The monetization of online video is currently far too immature to support the high costs of professional video production. I would argue that this will someday signal the end of television’s reign in the advertising spectrum. When major studios start creating original video programming for the web, you can be sure that the monetization of online video will have truly come of age.
Semi-professional video creators are one step above User-Generated video creators because they typically have more skills, more time and are prepared to spend some money to produce online video. A good example of Semi-Professional video are the ‘How To’ videos that can be seen on many video sharing sites these days. Guides to cities, biographies and some amateur episodic productions like Lonelygirl15 are also examples of Semi-Professional online video. Semi-Professional video will be the least dense tier of the online video spectrum as it can not compete with User-Generated video on volume, and over time Professional video’s ongoing migration to the web will dwarf the Semi-Professional tier. In many ways, Semi-Professional is filling a short-term ‘quality’ gap in the online video spectrum. Much of User-Generated video is considered ‘lower quality’ and Professional video is still sitting offline waiting for the monetization of online video to mature so it can justify a Professional-level investment. Hence the reason why ‘lower cost’ Semi-Professional video is gaining traction and eyeballs right now.
In many ways, Semi-Professional video is keeping the seat warm for Professional video and due to the present-day lack of ‘high quality’ online video, it is Semi-Professional video that is enjoying a siesta of popularity and demand.As the online video space matures, Semi-Professional video will be the most difficult tier to defend. The ‘quality’ gap I mentioned above will eventually be met by larger-budgeted Professional video that will be produced or repackaged for the web. Semi-Professional video will also begin to feel encroached upon by User-Generated video. As time marches forward User-Generated video will begin to look more and more like Semi-Pro. We know this because the software to make and produce consumer video is getting better and cheaper with each passing month, and while production/acting talent is not universal, it is incredibly widespread. Now you can begin to understand why the Semi-Pro tier is caught in the middle of a sandwich and will eventually feel squeezed from the two larger halves of the bun. Also, because it is the least dense and diverse of the three tiers, it will likely be the most prone to commoditization. If there are 250 Semi-Pro YouTube videos today on the sites, sounds and history of Chicago – how many will there be next year? In three years?
Far and away the most dense of all three video tiers, no other tier can compete with User-Generated video on volume – both in terms of production and viewership. But despite being the crowned-king of online video, it has become incredibly fashionable to slam User-Generated video and that is largely due to the assumption that this tier will be the most difficult to monetize. Critics of User-Generated video are quick to point out that advertisers are leery to put their brands next to random content offerings that are raw, have low production value or in its worst form, may be offensive.What User-Generated video has over Pro and Semi-Pro is not just volume. User-Generated video offers immediacy and access in ways that the other tiers can not compete with. Media consumers today clearly value immediacy and access over quality and accuracy. We know this because we’ve seen blogs take a chunk out of mainstream media for those exact reasons.
Online video viewers are constantly looking for community and for the ‘next big or new thing’ whatever that may be. It is the undeniable hunger for the unpolished, fresh and undiscovered that will continue to drive the growth and popularity of this tier long into the future.Can User-Generated video be monetized? That is the million-dollar question. This reminds me a lot of the trajectory of blogs and blog content. Many people were quick to slam blogs in 2003’ish because they believed that monetizing blogs was not doable. Who wanted ads next to some random person’s online diary or opinionated diatribe? Over time, as blog content began to fragment and separate into definable niches, niche content networks formed, ad networks formed and advertising technology matured to enable the monetization of blogs. In my view, it is both fallacy and short-sighted to say that advertisers dislike User-Generated video.
More than any other tier of online video – it is impromptu, unscripted video blog content (ie, UGC) that scares broadcast media executives the most. Why? Because UGC gets the most online viewers, and broadcast media is not equipped to compete in this area. Advertisers may not want their brands next to ‘all’ User-Generated video, but I firmly believe that many advertisers would love their brand next to some of it. That folks, is called a technology problem. One of the most important lessons I have learned in my 10+ years as a web entrepreneur is that you don’t sweat technology problems. Inevitably, they all get solved. Essentially, all advertisers want attention and eyeballs, and in time, advertisers will be given the necessary controls and assurances they need to begin capitalizing on the huge traction that User-Generated video offers.
True Video Search Looms As The Ultimate Game-Changing Wild-Card
For all intents and purposes, video search does not exist today. Sure, you can search for videos on YouTube, Google, Video.ca etc. but you are not searching the video itself. The video search of today is really a text-based search of the Title, Description or Tags that surround the videos.The video search of tomorrow, or next year or in ‘X’ years may not be a text-based search at all. Eventually, a true video search will search the actual ‘frame data’ of a video. What do I mean by this? Let’s suppose you are looking for a video of a ‘pink elephant’. Either by typing in the words ‘pink elephant’ or by providing a ‘base image’ the video search of the future will search the actual visual frame-by-frame data of videos. So a 5-minute animated video of a pink elephant which does not have the actual words ‘pink elephant’ anywhere in the Title, Description or Tags could some day be the #1 search result for ‘pink elephant’ simply because it contains 9000 video frames of a pink elephant.What impact would a true video search have on the online video spectrum? The easy answer is, density wins. All of those seemingly unmonetizable, undiscovered User-Generated videos are actually incredibly rich repositories of frame data waiting to be properly indexed and searched.