Ecommerce Report on Online Videos

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  • 1. A report on Online Video Industry Puneet Gupta (09BM8037) Varun Bajpai (09BM8059) VGSOM, IIT Kharagpur
  • 2. Table of ContentsIntroduction.................................................................................................................................................. 3Online Video Industry ................................................................................................................................ 3 Video Sharing ......................................................................................................................................... 3 Intermediaries ......................................................................................................................................... 6 Video Search........................................................................................................................................... 6 Video eCommerce ................................................................................................................................. 7 Video Creation & Editing ....................................................................................................................... 9 P2P ........................................................................................................................................................... 9 Vlog-o-sphere ....................................................................................................................................... 10Current Industry Facts and Figures ....................................................................................................... 11The Future of Video Monetization ......................................................................................................... 16Porter 5 Forces Analysis for Industry .................................................................................................... 21SWOT analysis for Online TV Business ............................................................................................... 22Closing Thoughts ..................................................................................................................................... 23References ................................................................................................................................................ 24
  • 3. IntroductionThe success story of YouTube and particularly its popularity and potential reach hasfascinated a lot of web startups. The outburst of social networking sites like Facebook,Orkut, LinkdIn, MySpace and there encapsulation of videos in the recent past is only anindication of the needs online population. The report aims to look at the online videoindustry at present and the potential it portrays for a successful business venture.Online Video IndustryThe present video industry can be categorized into following (Sokullu & MacManus):- • Video Sharing • Intermediaries • Video Search • Video eCommerce • Video Editing & Creation • P2P (Peer To Peer) • VlogosphereVideo SharingOne of the most popular categories of online video industry has been Video Sharingand it is synonymous with YouTube. Video sharing sites allow you to upload your videosand share them with others. But even if you are not a content producer, you can watch
  • 4. others movies. So this is a very consumer-oriented industry that has been popularizedvia blog-based viral marketing.YouTube outperformed its competitors and has become a clear winner in video sharing.And Google didnt skip this opportunity in the online video space, as it took advantage ofYouTubes legal hassles and snapped the market leader for the relatively small sum of$1.65B. Even though Google already had its own video sharing site, Google Video, thisacquisition showed Googles ambitions in the online video space.Yahoo Video remains well behind Google Video and YouTube. Also Yahoo Video doesnot support as many video formats as the others do. For example, you cannot uploadyour videos directly from your mobile, because this format is not supported yet. Yahoois trying to increase Yahoo Video usage by making it a part of their other wellestablished properties. For instance, you can see Yahoo Video stories on theirhomepage.
  • 5. PhotoBucket, a crucial component of most social networking sites and the number onephoto sharing site, did not miss the big opportunity in online video space and has avideo component too.MetaCafe - The Israel based company is estimated to be the second biggest player inthis space after YouTube. The company does not limit itself to its home country and hasbig international ambitions. It was recently rumored to be acquired by Yahoo for $200M.The company is backed by top tier VC companies like Benchmark Capital and AccelPartners. MetaCafe does not have a time limitation like YouTube, and offers a richdesktop client for easy uploading. Their unique revenue sharing program was a greatinnovation in this space.The site wants you to program your own channel with your favorite movies, music andclips, then broadcast it from your web page, blog or MySpace. This is a well thoughtthrough viral marketing tactic, but the sites traffic seems low at this time.
  • 6. IntermediariesTo legally host your commercial videos on YouTube or MetaCafe, intermediarycompanies need to be contracted. Their main duty is to connect publishers, videocreators and advertisers.BrightCove connects video creators with web publishers. This is a huge company thatraised ~ $60M from investors including New York Times in their latest round offinancing. Their syndication marketplace consists of approx. 1319 channels.SayMedia - Connecticut based company empowers the video publishing of bigconsumers like TED events, Bebo, Hi5 and America Online. Raised $12M in Series Cfrom August Capital and Josh Kopelmans First Round Capital.Video SearchAfter the acquisition of YouTube, Google now focuses its Google Video property onvideo search. This is a smart strategy, because the Google brand largely means search.
  • 7. YouTube was already the number one video sharing site and Google Video hasexclusive access to all YouTube and Google Video data - which makes Google Videosearch much superior to others.A successful video search service from AOL. AOL had this capability after acquiring thesuccessful startup Truveo in early 2006.Blinkx differs itself from the crowd with its innovative interface, which shows a previewof videos in the search results. They also get satisfactory results from a variety of sites.TV Eyes is different, because it crawls not video sharing sites like YouTube - but realTV channels.Video eCommerceVideo eCommerce sites allow to legally stream the latest cinema movies and TV showsfrom computer.
  • 8. Guba was one of the first to enter this market, being founded in 1998. They are not onlya video eCommerce site, but have free offerings and also a video sharing component.But video sharing on Guba is very small compared to video eCommerce. One of Gubasco-founders left the company after the YouTube acquisition and said in an interview thatYouTube won the big prize - and there will be no more big prizes in the industry!Amazon Unbox can be easily described as the iTunes of videos. Unbox allows you topreview and buy a wide selection of TV shows and movies for very low prices, startingfrom $1.99. The videos can be watched via an exclusive client app from Amazon.MovieFlix offers videos in Real format. They offer 2 membership programs: free andpremium. Besides the freely accessible videos, you can pay a monthly fee of $7.99 andaccess their 4000 titles - the quality is arguable though.
  • 9. Video Creation & EditingInstead of paying hundreds of dollars in license fees to edit your videos, the followingsites are generally known to be good companions to video editing/sharing sites.This video editing site was acquired by Yahoo right after it got to its public beta status. Itis expected to be embedded into Yahoo Video. This will bring a clear editing advantageto Yahoo over the others. Yahoo is currently far behind Google in the video spaceoverall, hence JumpCut may provide them the edge.Mojiti is a China based company. It allows you to add notations to your videos. Mojiti isalso a video sharing site targeting the Chinese market.P2PPeer to peer is taking an important place in video sharing. Video sharing requires largebandwidth, which is why the burn rate of these sites is very high and only the VCbacked ones survive. P2P is an answer to this problem, by spreading the bandwidthweight to clients using this system. There have been some recent large investments incompanies working in this field.
  • 10. BitTorrent, the Creators of the popular open source P2P file sharing protocol do not ownthe protocol itself, but own one of the most popular clients and a search site. Theyrecently got $20M funding from top tier firms like Accel Partners and acquired anotherpopular bittorrent client µTorrent.Previously known as Azureus are the creators of the Java based popular open sourcebittorrent client. They recently closed a $12M Series B investment from RedPointVentures and BV Capital.Vlog-o-sphereBlogs and photologs have already taken over many people’s lives - being an excellentway to share, communicate and self-express. And now with the commodization of digitalcameras, comes the vlogs - a.k.a. video blogs.. They are either for fun or selfexpression, but a big industry can blossom here - there are a lot of opportunities.Tomorrow’s vlogs, for example, are candidates to replace your favorite daily TV shows.
  • 11. And popular vlogs dont just attract ads, but they also hold the potential to signpartnership deals with video sharing sites. Examples:Rocketboom is the best example of how far vlogs can go. This vlog is dedicated toreporting the latest developments in internet culture, in an original and entertaining way.It looks so professional that you may not able to differentiate it from TV shows youwatch.References: Emre Sokullu and Richard MacManus for their source article, & the research of Ali Dagli ofSavvianCurrent Industry Facts and FiguresAmong the online population:- • 1 in 3 video viewers comment • 2 in 5 upload videos • 1 in 2 regularly share videos • More than 1 in 2 view online video with others • Among 18-34’s, more than 2 in 3 view with others
  • 12. Total Unique Viewers (000) 160,000 140,000 120,000 100,000 80,000 60,000 Total Unique Viewers (000) 40,000 20,000 0Google leads the race in this sector with more than 145 million unique visitors followedby Yahoo and others. This data shows US population.
  • 13. As clearly seen, Indian online population still lags behind the other major countries inonline video streaming. But still a considerate number do and its rapidly increasing.Per month stats for online video in India as compared to USA is:- USA IndiaNumber of Viewers 180M 30M% of Internet Audience 85% 71%Videos Viewed 36B 1.7BVideos per person 200 58Viewing time per person 13 Hr 5
  • 14. The data clearly shows approx similar % of internet audience in India watch videosonline but the viewing time per person and the number of videos viewed iscomparatively less. This may clearly be seen as a growth opportunity in India.The data clearly shows Google to be a leader in viewer’s time in India too. But a majorshift can be seen in the presence of social networking sites like Facebook.
  • 15. The top 4 surfed video categories viewed in India are represented by the data above.The Entertainment Industry dominates this due the large influence of TV soaps andBollywood in this part of the world. The multimedia category includeshomemade/educational videos and cartoons. The conversational media includeschatting and all.If we look at the audience profile in US, we’ll see that the average number of videosviewed by unique visitors peaks in the age group 15-24 in males whereas it peaks in theage group 35-44 in case of females. Also more males tend to view the videos than therefairer counterparts.
  • 16. The Future of Video MonetizationThe video viewing duration is moving upwards as TV content moves online.
  • 17. 2006 2010Ad Spent $324 M $1440 MVideos 63 B 441 BSpent Per Video 0.7 cents 0.4 centsThe above data shows the ad spent in US in this industry.This means that the ad spentin increased only by 344% wherease the videos increased by 600%. This shows thetremendous growth that this industry promises.The projection also shows that the online video viewing growth is outpacing adspending growth.Now let us compare the advertisements, the major source of revenue generations ononline video portals as compared to TV.
  • 18. The data clearly indicates that the ad time in normal online videos or long form premiumTV content is minimal as compared to that on TV presently. Hence a huge potentialmarket lies ahead to be tapped.A simple survey of what viewers really value watching online shed some light on thepotential services to venture into:-More than half the viewers were interested in watching past/ missed episodes online.Also a sizeable population watched online because it has less ads. Hence we proposeentering into Online TV Business. As the lifestyle of people is changing, it becomesincreasingly difficult for them to fix a time to watch their favorite episodes. But today, ifwe provide an opportunity to them to watch whatever they want at whatever time they
  • 19. want, in high quality, with fewer ads than TV, and at a fair price it would create a win-winsituation for all. But the real challenge remains – MONEY.Who should be our target segment? Will they be willing to pay?Studies indicate that nearly 100% of online spenders are video viewers. Hence can beour initial customers and with the improvement in the broadband speeds anddecreasing rates, this industry can be to Television industry what Wikipedia was toEncyclopedias.In the end we close our report by presenting Porter’s 5 forces analysis of the Industryand the SWOT analysis for Online TV Business.
  • 20. Porter 5 Forces Analysis for Industry Bargaining power of customers – High  Many alternative websites available  Switching Cost is low Bargaining power of suppliers – Marginal  Suppliers of videos are often common internet users  The only bargain can be the amount of web space provided to upload the video Threat of new entrants – High  Limited amount of capital required  Services can be easily copied  Scope for innovation like faster download Threats of substitutes – Medium  Social media sites providing comprehensive services, hence eating the share  Highly dynamic industry Competitive Rivalry in industry – High  Many big firms trying to capture this lucrative market  New innovative products on offer
  • 21. SWOT analysis for Online TV Business • Huge untapped market in • Requires high bandwidth India for streaming • TV shows want to increase • Requires detailed contracts their viewership with content partners • Control over postings • Willingness to pay for online content which might be freely available Strength Weakness • Rapid increasing viewer’s base • Customer loyalty towards TV • Reducing cost of the required shows and not infrastructure websites, hence a huge threat • Changing lifestyle of of other players copying people, hence no fixed time to similar business model watch TV • Piracy concerns Opportunity Threats
  • 22. Closing Thoughts  Consumers are viewing online video for convenience benefits  Viewing of originally-scripted content on viewers’ own schedule is the key driver of online viewer behavior  Much of the online viewing of video represents an incremental audience for originally scripted content because it includes viewers who may have missed the live airing  Online viewing represents a significant additional revenue stream to content owners  Time spent viewing online video and video ad dollars are currently a small fraction of TV  There is no decline in time spent watching TV nor in TV ad spending  TV ad effectiveness shows no decline over past decade  The ad load for online video is low relative to TV and could be increased  Avoids content owners nightmare of fast forwarding of ads  Online video represents a compelling opportunity for the digital channel to capture a meaningful share of branding dollars  Online video ad campaigns overlaid on TV can increase effective reach while not increasing cost
  • 23. References www.shimshockgroup.com www.comscore.com www.jasonbergman.me www.mappingtheweb.com www.ecommerceangles.com