Fee vs. Free Online Video. (Emarketer) The eMarketer report “Marketing to the Online Video Audience” highlighted this split among online video viewers. Most would prefer to watch video for free, but a significant minority is willing to pay in order to avoid at least some advertising. That suggests a hybrid model of reduced advertising along with smaller fees-similar to cable TV.
A recent announcement from both Sony and Netflix has the DVD/Online video service being integrated into future Sony TV’s. While this is a pretty significant leap forward for the future digital living room, what about Sony’s other services – primarily Crackle and the PlayStation Network?
Sony’s online video service, Crackle, recently went to a Hulu-type premium content model and has many of Sony’s catalog movies on the Crackle service for viewing. But so does Netflix.
The PlayStation Network (PSN) has movies you can stream for a nominal cost (like Xbox) and again features Sony Pictures related content. This content is also available on Netflix.
So my question is – where is the content strategy around all of this for Sony? I know this helps brings a unique feature to the Sony Electronics line of TV’s but is it at the expense of growing the consumer base for both the PlayStation Network and Crackle? Or is it a more likely scenario of Sony playing nice with Netflix for now until their other online content services have matured. It’s no secret that Netflix will have it’s hands full fending off competition from in-store DVD kiosks like Redbox for it’s current DVD mailing service, and by the time streaming content delivery has matured, at least Crackle content should be integrated into Sony TV sets. Hmm…maybe there is a content strategy after all.
With E3 coming up this week, the rumor mill has been churning away in overtime. Gizmodo had news that there was going to be an announcement that the Xbox 360 was going to have an integrated Hulu player. Hmm. I guess this is kinda signficant but why not just use PlayOn Software to continue to stream Hulu, YouTube and other content online video content to your Xbox 360? It’s really not that hard…
If PlayOn is new to you, check out our blog post on it here.
Biologists define symbiosis as the relationship between two creatures who rely upon each other. The relationship is called mutualistic if both creatures benefit; if only one benefits, the relationship is called parasitic.
From Business Insider comes an article that Hulu is the 10th Most Watched Channel on YouTube. On the surface, this might be viewed as a classic mutualistic relationship. YouTube and Hulu have both benefited from something the other has to offer.
YouTube has benefited from having Hulu’s premium content on their network. Some of Hulu’s content like Family Guy, has quite a presence on YouTube with a few Family Guy clips exceeding 5 million views (at a minimum). Add in Simpson’s episodes, Saturday Night Live clips, and other NBC/Fox related content, and it’s apparent that Hulu is a vital source of premium content to YouTube. YouTube itself also seems to be getting very dependent on premium content as the other Top 10 most viewed channels on YouTube include UniversalMusicGroup (#1), SonyBMG (#2), and CBS (#8). All this is a result of YouTube failing to grow revenue off of their UGC (User-Generated Content) videos and shifting gears to feature more premium content on the site that they hope to monetize.
Hulu itself is on a meteoric rise with growth over the last year alone at 490%! Though this rise still only commands 3.9% of the overall Online Video segment, it’s clear Hulu is benefiting from increased exposure on YouTube’s network. Though Hulu’s business model has been criticized and predicted to fail, they have defied critics to become the #3 online video network on the web. Hulu also recently signed a deal with Disney which gives them even more exclusive online content cementing their status as the premium online video network.
So this is a classic Win-Win right? Well no. It definitely seems that Hulu is becoming the Parasite in this increasingly Parasitic relationship.
To start with, though YouTube is benefitting from the premium content Hulu offers, YouTube cannot run ads against this premium content. Though I don’t know if Hulu paid the minimum $200,000 required to have a brand channel on YouTube, even this cost doesn’t come close to the revenue that would be generated off of ads against Hulu’s premium content. Hopefully YouTube is charging Hulu much more than $200,000.
Adding further insult to injury, Hulu is running Hulu animated bumpers before each of their clips on YouTube. (Bumpers are short animations that run before clips signifying the creator or owner of the content.) So in essence, Hulu is promoting their own online video network on their rival’s network. This reminds me of the NFL playoffs awhile back where the upstart Fox network had just signed on the NFL and did a cross-broadcast with NBC during the Fox portion of the playoff broadcast. When it came time for NBC to reciprocate, they basically blew off Fox. I sense a similar lack of respect going on here but, ironically, Fox and NBC are now in bed together with Hulu.
Finally, making matters worse, Hulu is also running Hulu branded animated ads on the clips while they’re running – on YouTube! Sample clip below:
So how is this all relevant to Online Marketers and Advertisers? For now, not much as YouTube will continue to promote brand ‘contests’ and premium brand channels that marketers will gladly pay for. Premium brand channels are still a great way for brands to showcase their video content within the YouTube community. The Axe Effect brand channel is a great example of a premium brand channel but these are definitely not ‘free’ like normal channel sites such as Pepsi’s main brand channel.
One other area where YouTube is trying to grow revenue is by leasing out it’s real estate with home page takeovers like recent efforts for Wolverine and Sprint. But is that enough? 2008 revenue projections from YouTube would say no and even plans to try to monetize premium content might not be enough. With Hulu already owning the premium content space, it’s only a matter of time until advertisers and brands get wise to where the ‘valuable eyeballs’ are and move their dollars over to Hulu. That leaves the question – what’s YouTube to do?
IMO, YouTube is not going to win the premium content battle. Sure, they can always offer premium content on the site but that’s not what built YouTube into what it is today. YouTube was built by community members and User Generated Content. This is where Where The Hell Is Matt?, The Evolution Of Dance, and The Global Rendition of Stand By Me all reside and generated eye-popping numbers of views. This IS YouTube.
YouTube should overcome most of these challenges. Efforts that embrace the community in unique ways like The YouTube Symphony, are definitely steps in the right direction. However, YouTube does need to address the Hulu issue and address it soon. At first I thought the image above captured the Hulu / YouTube relationship perfectly. However, after digging around a little more and seeing just how uneven this relationship really is, I thought the PG-13 graphic below better encapsulated how Hulu must view this entire relationship.
We Are Organized Chaos (WAOC) is Zugara’s (www.zugara.com) interactive marketing and advertising blog where we’ll be featuring some great projects and discussing upcoming trends in the digital world. Work — good and bad — will be critiqued. Hope you’ll enjoy reading our insights and thoughts on interactive.
