December 3, 2012
As more people consume TV content in places other than their living rooms on a big screen TV, how they interact with that content and with others gets transformed as well. And when this happens, how that content gets monetized and measured must necessarily adapt. But as the old adage goes, there’s no gain without pain, and this brave new frontier known as “social TV” will likely experience a fair amount of turmoil before it becomes more ubiquitous and firing on all cylinders. As a panelist recently on a social TV session at Digital Hollywood, I engaged in a lively discussion with other very smart people from media and technology. In thinking about this complex topic, there are five areas that merit specific discussion: scaling and measurement, advertisers and revenue, platforms, check-in apps, and the challenge and predictions for 2013 and beyond.
Scaling and Measurement
A year ago, online video meant that the users were viewing them on site or on YouTube. Mobile device video views were but a small blip on most publishers’ radar. Today, we are seeing that number change dramatically. Based on the numbers of a cable TV network I’m familiar with, they are seeing upwards of a third of video views now coming from mobile. The biggest growth is coming from mobile apps for shows (as opposed to network apps or TV Everywhere apps). This is a combination of clips and full episodes, and is sure to climb as mobile devices proliferate.
One underlying question here is how the new mobile viewership is measured, and whether or not this measured activity is leading to tune-in on that living room big screen. If this causation can be proven, then the amount of investment put into this can be dramatically increased.
Advertisers and Revenue
Even if causation can’t be shown, monetizing mobile video is becoming a big business of its own. According to research and analysis by Pyramid Research, mobile video revenue is predicted to top $16 billion by 2014. As video viewing moves from desktop to mobile, how this content and viewing gets monetized will likely shift as well. Today, the vast majority of monetization of videos occurs in the form of a video ad before, during, or after the video content. Pre-rolls still dominate this group, accounting for two-thirds of video ad views, with the mid-roll counting the remaining third, and post-roll barely registering. But will users tolerate their precious mobile bandwidth (which is often paid for separately by customers or limited on a monthly basis) to video ad viewing?
There are other forms of monetization that are being tried by many. Examples include paying for individual pieces of content or paying for a subscription. Services like iTunes allow for per-show or per-content pricing while your monthly cable bill provides you with the subscription fee to watch TV Everywhere services. Consumers have gotten used to paying their monthly bill to get TV content, and likely that will be the driver for pay-for-content models. Having said that, consumers today are somewhat mystified, if not grumpy, about the cost of their monthly cable bill, and will likely be due for a rejiggering to keep up with consumer expectation.
So where will this social, mobile, monetized viewing experience occur? As far as hardware platforms are concerned, there are two primary ones: Apple’s iOS (iPhone, iPad, iPod) and Google’s Android (Samsung, HTC, Nexus, Kindle Fire, etc.). With more devices coming out all the time in all shapes and sizes suggest that we haven’t quite nailed down the ideal viewing hardware. Some prefer, and are used to, the larger tablet size (9″ – 11″). However, this can be unwieldy and so competitors have introduced a smaller tablet size (7″ – 8″), which trades off size for greater portability and versatility. Then there are the smartphones (4″ – 5″), where one gets ultimate portability and flexibility, but the viewing experience can be an eye-squinting one.
As for where conversation, interaction, and engagement occurs around television, there are a number of different options available today, and much like the hardware landscape, it’s clearly a situation where we haven’t quite figure out the magic formula. Viewing can happen on a TV publisher’s site, or on YouTube. More and more, content producers are creating video viewing apps for the mobile clients, and even here, there are a number of options: single show apps, network apps, third-party aggregation apps, just to name a few. With so many options, it’s no wonder viewers are confused, and also understandable that when it comes to discussion and engaging with others around TV content, they turn to the largest social networks: Twitter and Facebook. More activity happens around these two places than perhaps all the custom mobile apps combined. Any TV publisher that takes advantage of Twitter and Facebook will likely see dividends from their effort.
Check in apps
A specific kind of service unique to TV content are the various check-in apps that are now available in the iTunes App Store and the Google Play Store. Checking in to a TV show is much like checking in to a location in the real world: you announce to the world that you are at a certain place, or in this case, watching a certain show. It’s unclear to me what the value of this would be to the end-user. The business model is also not totally proven. Getting large numbers of users to check-in seems like a monumental task, and without those users, it’s not clear how a business like this will monetize at scale.
Challenges and predictions for 2013
As we move into 2013, the world continues to change, and so do the habits of TV viewers. More people are signing up for and using services like Twitter and Facebook, all kinds of mobile devices continue to proliferate, and the way online video get propagated and monetized continues to evolve. There are challenges for sure, for both the TV publisher as well as the viewer, and there may well be some successes next year, maybe even paradigm-shifting ones.
Birthing a new business always brings with it a set of challenges, and social TV is no different:
Fracturing and segmentation: the number of options will continue plague the industry, which makes it more challenging for viewers and content creators. Many distribution channels and mechanisms means that consumers will have a dizzying array of choices when it comes to watching their favorite TV shows, but the same means TV publishers will have to spread their efforts to meet consumers at as many of those channels and mechanisms as they can afford.
Low monetization: so far, calls to “show me the money” in mobile and social have resulted in meager results, especially when compared to the linear revenue TV networks see today. Online video monetization is certainly on the rise, but it will have to get much bigger to be material to most TV networks. With the lower revenue, businesses will be challenged to find the funds to help along this industry, and growth could be stalled in 2013.
Non-professional content creators: YouTube has shown that anyone can be a producer of video content. The number of days of video content uploaded every minute continues to increase at a furious pace, and just by the law of large numbers, some percentage of that content will be successfully distributed and monetized. This could pose a real challenge of premium content producers, as their cost of production far exceeds this new post-amateur content creator’s costs.
However, all is not lost. With these challenges will be those that overcome, and their efforts will result in positive change for the industry:
Experimenting leads to innovation: yes, fracturing can lead to headaches for all involved, but with so many companies trying so many things, we are bound to see some truly needle-moving technologies emerge. Amongst the many seeds planted, we are bound to see some tall-growing beautiful flowers in this field. And this includes software, hardware, user experience, and wireless network infrastructure.
Growing monetization: similarly, the many experiments in monetizing online video will lead to some great lessons learned about what works, what doesn’t, and what remains to be tried. Progress will surely be made as many clamor to unlock the potential revenue in the millions of hours of video content consumed.
TV networks and shows learn to be more “social”: as viewers get more immersed in social technology, it will translate to more conversation and interaction online for TV content. At the same time, those content creators who aim to keep up will find better ways to connect with their viewers, and lower the barrier for what separates the content creator with the content consumer. In the end, the best content relationships are two-way, and a better product gets created for a more satisfied consumer.
2013 will certainly be a year to watch in the ongoing evolution of social TV!