There has certainly been a lot of buzz about Viacom Inc.'s (NYSE:VIA) latest moves with online video. Basically, the company doesn't want to play ball with Google, Inc.'s (NASDAQ:GOOG) YouTube.
For example, Viacom cut a deal with Joost, which is an online video service. And, of course, the company also demanded that Google take-down over 100,000 of its copyrighted videos.
What does this all mean? Well, I had a chance to interview Hilmi Ozguc, who is the CEO of Maven Networks:
First, perhaps provide some background on your company?
Maven enables major media companies to create, distribute and profit from Internet TV. CBS, Sony, A&E, The Weather Channel and many others rely on Maven to power their Internet TV initiatives and the online video advertising revenue those generate.
What's your take on the battle between Viacom/Google? What does it mean for the online video space?
As the television industry is being fundamentally transformed and reconstituted online, there is a huge struggle underway between owners of valuable television content and traditional online content aggregators. New technology platforms (like that from Maven) now make it possible for content owners to go directly to the consumer and massively distribute their content online (through their own affiliate syndication networks) without having to continue to rely on aggregators like Google or Yahoo.
This is the first time since the early days of over-the-air broadcasting that TV networks have had the opportunity to bypass intermediaries (like cable companies and online aggregators) and go directly to the consumer.
It makes sense for them to do so because they maximize their margins, brand control, advertiser relationships and market intelligence about how consumer tastes are shifting in this new world of Internet TV.
Ultimately, content owners are going to win this battle since that's what draws repeat audiences, and therefore advertisers. The big media companies no longer need Google or Yahoo to build huge new online video audiences and ad revenue.
Your belief is that professional content – not user generated content -- is what will really gain traction?
Professional content has dominated television for the past sixty years and that will continue to be the case online since professional media companies know how to leverage the best talent to create and market hit shows and other forms of highly popular entertainment, news and sports.
There will be a great deal of consumer generated content as well, but 80% of the advertising dollars will flow to 20% of the best of professional content (as they do on traditional TV). Advertisers are not interested in putting their messages around random user-generated "cat videos" on YouTube - what they want is access to the 30 million loyal viewers of CSI (for example). That will continue to be the case online.
User-generated media will augment professional content, but it will certainly not replace it.
Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.
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Reader Comments (Page 1 of 1)
2-22-2007 @ 12:13PM
Rick Hanley said...
Great article. Market participants love to run nutty stories up the flagpole as if they are the second coming of christ: user-generated content. This one really got great traction with the average IQ out there. If the average IQ likes it, the sell siders like it...