Online video still has a lot of catching up to do

Posted Mar 30th 2007 2:09PM by Tom Taulli
Filed under: Google (GOOG)

This week, Convergence Consulting put out a research report for online video.

Despite the hoopla of YouTube, the viewership for online video is still small compared to traditional television. For example, only about 15% of MTV's cable audience checks out videos of the shows. What's more, the advertising rates for traditional television and cable are still juicy.

I had a chance to interview Mark Sigal, the CEO and co-founder of vSocial, an online video site. According to him:

TV remains a great medium

There is a tendency to bucket these stories in absolutes, a-la TV going the way of the dodo bird, which is just not reality. TV remains a great medium designed for a viewing environment, which, if anything, consumers are more deeply invested in than ever, as evidenced by the growth of the home theater industry. We remain a generation of cocooners, and TV suits this mode very well.

Internet video is a complimentary but different medium than TV

Internet video is best thought of as a complimentary but different medium than TV since it lends itself to greater customer control, richer interactivity functions, can run in smaller chunks and on many different types of devices. Generally speaking, people don't want to watch an hour of American Idol on an iPod but they do want to watch a clip, connect with like minds and rate, review and converse. As such, internet video addresses a different aspiration for consumers than TV does. It feeds a short attention span looking to search and quickly nibble. It facilitates self-expression and it enables informal social connections that nonetheless feel tangible and real. Finally, internet video is the ultimate bread crumb strategy for TV and media producers to draw consumers into to a specific program, web site, etc.

Advertising will evolve to feel like extensions of the content being viewed

Advertising will necessarily evolve to work within the internet video universe. It must, since the tolerance for watching a 30 second commercial is unlikely to be there when watching a two minute clip. But then again, it can, since there is so much metadata about the viewer and the content that it becomes easier and more systematic to provide targeted ads that feel like extensions of the content being viewed. Extreme sports clips logically drive ads that pitch skiing or biking equipment. More to the point, these ad units can more readily give the consumer a choice to get product details, get educated or find out where to buy.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

Tags: vSocial, YouTube