Home Marketing Insights Online video advertising is about to become much more lucrative
Online video advertising is about to become much more lucrative E-mail
Thursday, 20 May 2010 06:47

We’ve been saying for quite some time that the arrival of Internet-connected TVs will catalyze a long-awaited breakthrough for online video. The day people can sit on their couches and reach for a single remote that can seamlessly access TV programming and web content, we’ll start to see online video scale to true mass-market dimensions. But that day, most people expect, would come gradually — not anytime soon.

Or will it? As Upfront Week rages on for the major television networks and TV advertisers, recent developments seem to show that TV-Web integration could be much closer to reaching a mass audience than previously believed.

We noted Tuesday that Google, Intel and Sony are collaborating on a “smart TV” platform which they plan to unveil soon, possibly as early as today at Google’s annual developers’ conference. The platform will reportedly be open to developers, and Google is said to be calling on the Android community to create apps for it.

A report from GigaOM Pro expects the global market for TV apps to explode in the next five years, from $10 million in 2010 to $1.9 billion in 2015. The report also says that, by 2015, 60% of all new TVs will have built-in network connectivity, and 70% of the connected sets ship with an embedded app platform and app store.

These are the kinds of stats that get the attention of companies like Google, Intel and Sony—not to mention other consumer electronics and content leaders such as Apple and Hulu. Apple has been trying for years to crack the TV market, so far with limited success despite having a set-top box (AppleTV), a popular content application (iTunes) and a hot new tablet (iPad).

Hulu has built a sizable business as a content portal for first-run episodic TV. So far, this content has been available on an ad-supported basis on Hulu.com, but there are indications that the company will launch a $9.95/month subscription plan. This price point would be comparable to a lower-tier Netflix subscription, which gives customers unlimited DVD rentals (one at a time) and free access to the company’s growing archive of streaming movies.

If Hulu follows through on its plans to at least partially transition from free to paid content, it will not be alone. The New York Times is one of several media companies planning a similar shift, and Apple has been rumored to be shopping a $30-month TV subscription service to networks and content owners.

Meanwhile, online TV directory Clicker.com is making its own push toward becoming a content hub. The company just launched clicker.tv, a Web-based application that helps users find—and stream—video content from varied sources, including Netflix, Amazon and network TV web sites. Clicker’s interface super clean and user-friendly, its streaming quality is outstanding and its content selection is extensive: 650,000 TV episodes, 30,000 movies and 80,000 music videos, according to a story in MediaBeat.

Clicker’s app runs on HTML5, the latest version of the standard language for web pages, which Google is supporting. Not to get into a technical digression, but most Web video had previously run on the nearly ubiquitous—and proprietary—Adobe Flash platform. But no longer. Recent reports say about two-thirds of Web video is encoded with H.264 (translation: HTML5-friendly). Hulu recently made a deliberate decision to stick with Flash instead of HTML5. Apple, on the other hand, has refused to license Flash for the iPhone or iPad, a decision that has blocked a wealth of video content from those devices. By using HTML5, Clicker is assuring itself that its content will be viewable on virtually any platform, from iPads to Android devices to web browsers.

With so many established and emerging players making moves to bridge the gap between the TV and online video universe, the market will get very crowded very soon. That should make networks very happy, because it could mean that online video advertising is about to become much more lucrative.

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