There will be a €œwholesale rewriting of the television business,€ according to Jeremy Allaire, founder and president of online video distribution service Brightcove (which recently raised $16.2 million from AOL, IAC/InterActiveCorp and others). Allaire spoke at the Syndicate conference in San Francisco this week about the advertising and distribution environment that Internet-delivered video will bring. His thoughts mirrored many of the points raised in The Kelsey Group€™s recent White Paper on IPTV.
Allaire outlined the costs and challenges involved in airing video content with current cable and broadcast models. A new program, for example, costs about $100 million to create, distribute and market in a cable broadcast environment. Even after these costs, a channel can be buried within a 500-channel lineup.
He contrasted this with Web video distribution, which will leverage the medium€™s already existing standards such as search engines and RSS (content could still be buried on the Web to use the above example, but it will be easier to find by the right people, i.e. those who are interested in finding it and whose explicit interest is valuable for ad targeting). There will also be cheaper and more attainable production technologies in the hands of independent producers and lower distribution costs when inventory is no longer scarce.
€œToday, the global video industry is by far the richest, most powerful cultural force of all media, and far larger than any other segment. But it’s a business based on scarcity: There’s a limited number of movie theaters, a limited amount of broadcast spectrum, a limited number of devices attached to the broadcast stream," said Allaire. He compared this with Web-delivered video, which will be €œan open publishing and distribution model, where no content owner needs to get carriage to be available globally."
In the meantime, many existing media companies are beginning to create Web channels to feed the demand for online, on-demand video. The combination of high production value news, entertainment and sports and the user-generated and "long tail" content made available by Brightcove and other content aggregators including AOL, Yahoo! and Google, will increase the available video ad inventory. The increased supply will not only decrease its cost — bringing it in reach of local and SME advertisers — but the inventory can also be highly targeted, given that it is being pulled in by users. Aggregate behavioral tracking will also create valuable opportunities for local and national advertisers, akin to the search marketing opportunities available to them on the Web.
There are, of course, many moving parts to the above equation, including hardware, software, content aggregation, service providers and ad provisioning. When and how they will coalesce is the big question, which we€™ll attempt to sort through in the coming months and years. Stay tuned.