Tuesday, November 30, 2010

Tony Soprano And The Future Of YouTube

I am what media research organizations would classify as a light television viewer - someone who watches just a few hours per week at most.  Based on our demographic profile, light television viewers like me are extremely sought after by advertisers.

Up until recently, about half my limited television viewing time was spent lazily channel surfing with no specific idea of what I wanted to watch - just bouncing up and down the channel line up with a glazed look on my face until something grabbed my interest.

The other half of the time was, and still is, spent watching stuff I specifically intended to watch.

And other than our weekly family "Glee"viewing party (including, quite inappropriately, my 8,10 and 12 year-olds), the Sunday Jet's game, the odd big live event (Academy Awards, Grammys, Superbowl, etc) and the occasional breaking news story, most of this "appointment television" occurs on my timetable via DVR or VOD technology, or a Netflix DVD or stream.

It takes a pretty fine-tuned TV advertising plan to reach me.  And it is getting harder.

Over the past 6 months or so, I have almost completely replaced the channel-surfing portion of my TV diet with YouTube clips, watched on our family's 22" iMac down the hall in another room.

With a beer or glass of wine in hand, I now surf YouTube, which has, under the wary and litigious eyes of the biggest media companies in the world, aggregated an unrivaled library of video entertainment.

YouTube reported last week that 35 hours of new content is uploaded to the service every minute, twice the amount from just a couple of years ago.  And while much of it is family videos or silly user generated attempts at viral fame, a significant amount is copy-right protected content from the likes of MTV, HBO and AMC, uploaded in reasonably good quality by individuals wanting to share and discuss their favorite pop culture moments.

Here is one of the clips I watched the other night...


... one of the greatest scenes in television history, uploaded in decent quality by a random YouTube subscriber with no apparent connection to HBO.  The big question - where are the ads?  My guess is that a pre-roll ad unit in front of a seminal TV moment like this is worth... $25 per thousand? $50? $100?  A $50 CPM against the current 2 million view count represents $100,000 in potential revenue for this one clip.

Or why doesn't HBO insist (I am assuming they know this clip exists) on promotional messages for current HBO programming?

Next I watched this...

... from the 2003 MTV Video Music Awards - one of the funniest openings ever of any awards show. (Was there any doubt Jimmy Fallon would become a superstar?)

But also uploaded by a random YouTube subscriber with no authorization.

And this content is owned by MTV, the company that threw down their gloves and sued YouTube in a very public dispute just a few years back.

According to an article in The New York Times last month, some of the big entertainment and media companies are beginning to work with YouTube in finding mutually beneficial ways to capitalize on the site's enormous social media power.

The article described an unauthorized clip from Mad Men that Lions Gate (the rights holder) allowed to remain on YouTube in exchange for a 50% ad revenue split.
If YouTube can structure deals like they did with AMC with HBO, MTV and all the other premiere content owners, the revenue opportunities are substantial.

Of the approximately 2 billion daily video views on YouTube, 14% include ads, helping the company finally reach profitability this year with over $400 million in revenue.  Just doubling the ad load could bring YouTube within range of $1 billion, putting it in the same ad revenue league as some of the larger cable networks.

YouTube has ambitious plans to convince users like to me to start browsing the service on my television.

NY Times tech columnist David Pogue recently wrote that browsing the web on TV is an idea whose day will never come.  Not sure I agree.  At a party recently, a group of us stood around a web-connected TV laughing at some random YouTube clips.   For the most part though, surfing YouTube in it's current form is a solitary, small-screen, head-phone insulated experience.

However, might YouTube, with so many resources at their disposal, be able to reformat the experience for lean back viewing, integrating longer form programming as they develop better relationships with their network partners? 

They are working on it.  Here is a link to a job posting for a new position at Google:  "Product Manger, YouTube on TV".

And might YouTube's growing clout provide some leverage to Google in their grander Google TV initiative?

Whether they succeed in bringing the service to TV or not, YouTube is clearly a major force for the entertainment and ad industry's to reckon with.