Would Carl Icahn would be buying up all the Streaming Video if it were a company? 178 million Americans watched 33 billion online content videos in February, while the number of video ad views reached 9.9 billion, according to ComScore Video Metrix.
The race is on between paid and free TV…wait what year is this?
However while the ad views are exploding the advertising revenue per view is dropping. Then why have US media companies started to look to online video for future profits?
It’s called subscription video on demand.
Netflix and Amazon have recently purchased the rights to stream top shows including the CBS hit The Good Wife and The Killing.
According to Sanford C. Bernstein SVOD has become a $1.5 billion dollar business for the six largest media companies and is expected to continue growing to $4 billion per year over the next few years. SVOD revenues represent 1% of aggregate revenue and, due to its gross margins of 85%, 5% of those same companies aggregate operating income.
EMarketer estimates advertising spending on online video in 2013 will exceed $4 billion dollars, up 41% from 2012.
Will advertising or subscriptions become the winner?
Its cable pay TV meets network TV all over again.
Bogging down online video is an oversupply of inventory, up over 60% in the last year, according to Comscore, which has caused prices to drop between 10% and 15%, estimates Brightroll, a video ad company but total dollars spent is still more than 3 times SVOD.
New online video entrants have not been deterred. Conde Nast announced Tuesday the launch of digital video channels for GQ and Glamour and even the Weather Channel is expanding their video offerings with entertainment programming to be presented at this year’s video “upfront”
Jeff Zucker, at the time NBC’s programming head, coined the term turning TV dollars into digital dimes when discussing the movement of TV ad dollars to online video.
According to the Wall Street Journal streaming has not caused ratings or TV viewership declines which may be attributed to the addition of viewing platforms such as mobile and tablets.
But some programmers are not taking any chances and are playing both sides. CBS today announced the launch of its iPhone app (Android version to be imminent). The Good Wife, sold to Amazon for its, Prime streaming service will also be available for free to iPhone viewers. In addition to The Good Wife, CBS will also offer prime time shows including “NCIS,”, “CSI,” “How I Met Your Mother,” “The Young and the Restless,” “The Late Show with David Letterman” and others, all supported by advertising. Daytime and late-night programming will become available within 24 hours after its initial airing. Primetime shows will go live on the eighth day after broadcast.