Can Hulu rescue TV (for nothing)?

Online Media Daily reports that Needham & Co. analyst, Laura Martin, was dispensing doses of reality to a packed house at the OMMA Video conference in Los Angeles last week. Referring to Hulu, she observed that it’s not especially difficult to take $3 billion worth of product (meaning, programming from Hulu’s participating owners such as NBC, ABC and Fox) and give it away successfully online to the delight of millions of users. The question is how to make money from that give-away which, Laura Martin suggested, could take the industry 10 more years to answer.

Actually, we can probably answer the question right now: Hulu won’t make money - not, at least, TV kinds of money. Some money will be made, for sure, but not TV kinds of money. So, if that means Hulu will end up squandering the equity of major media brands by offering $3 billion in programming online for free, better cut and run.

Unless Hulu is really saving TV by being free.

Consider that Hulu attracts 38.5 million viewers according to the measurement service, comScore. With such large audience numbers the business instinct is to, 1) charge for content, or 2)  insert commercials in front of those 38.5 million viewers as many times as possible. Laura Martin has ideas for both, with content fees for archived programming the most easily accessible. Other options that charge for new or existing content and/or rely on the routine of television commercials are more problematic, and Martin thinks it may take 10 years to successfully introduce those options with the audience.

With regards to advertising, Laura Martin estimates that Hulu inserts four ads per hour on Hulu. That compares to 32 30-second spots that are shown every hour on television for the same programming. It’s not clear from the Online Media Daily report if we’re meant to think that 32 commercial breaks per hour represents the model for Hulu, but the delta between four commercials an hour and 32 per hour implies plenty of revenue upside if the Hulu people would just get on with selling more of it.

Sadly (or not), they can’t. While there is programming capacity online to absorb $3 billion worth of inventory it is highly questionable whether there is commercial capacity to absorb the equivalent of $65 billion in video TV advertising, or even some reasonable fraction thereof.

For one thing, as noted by the Online Media Daily story, the average Hulu viewer spent one hour and 17 minutes watching videos on the site in the month of August, which compares favorably to 3.7 minutes for online video consumption, per viewer, across the rest of the Internet. Elsewhere, Neilsen reported that online video consumption in total had climbed to over three hours. These metrics don’t add together, but between the three of them it seems clear that the average amount of time spent consuming online video per month is still not the thing dominating people’s schedules.

In contrast, according to the first number I could lay my browser on (which happened to be at CNN.com), in February the Neilsen Company reported television viewing at an all-time high of over 150 hours per viewer, per month which it attributed to the rise in the number of cable channels (“many, many more cable channels”) and DVR and TiVo devices.

In other words – as we’ve heard before – the introduction of more relevant programming combined with technology to avoid commercials is helping sustain and grow TV viewership. From this we could take it that 32 30-second commercials per hour is not the model, even where the model supposedly exists. People don’t like commercials. This is partly the reason they like Hulu.

While it may seem counter-intuitive, therefore, the brand equity impact of Hulu on the multi-billion dollar equity value of giant television media franchises may be very positive right now, and may go negative the more its caregivers try and transform Hulu into television by introducing more commercial messages.

As a way around some of these problems and possibilities, one can get the sense from talking to online video enthusiasts that they are waiting for the day when 150 hours of viewing time exists without regard to platform, Internet or television, and where screens are connected and become one. This is the “Eventually-the-Internet-will-become-television” argument in which Internet video strategy simply docks with television and its $65 billion in advertising review. It says that traveling at the vaunted speed of Internet time returns us to the spot from which we left. It’s a boring outcome, it ought to seem, for new media, and a rotten one, too, for consumers in a consumer-driven world.

For now, perhaps it’s better to think of the three-hours of time per month that viewers online devote to video as brand-reinforcing time. Contrary to the idea that $3 billion in free programming online is destructive, it may be that it is terribly important to driving programming loyalty and repeated use offline, on television, and to supporting a $65 billion business despite the corrosive effects of fragmentation and commercial-skipping technology.

Once again, new media provides for older generations.

Adify Media’s transparency claims are 14 years too late.

Adify Media (div. of Adify Corp) announced a few new appointments to run sales for their emerging media sales business. Glenn Fishback, late of Turn and Claria, will be the new SVP of Media Sales.

I expect it was someone in their PR department that put these words in Glenn’s mouth in the release announcing the appointments:

“In today’s competitive marketplace, Adify Media has created a unique and differentiated alternative for brand advertisers. No other media provider today can offer site by site transparency and performance visibility, brand safety, and targeting efficiency all under one roof,” said Fishback.

Oops. There is at least one other media provider that offers site-by-site transparency - with all the trimmings, notably site level reporting - and that is the Burst Network. The Burst Network has been transparent, site-by-site, since it was founded in 1995.

You can access the list of all the web sites that the Burst Network represents by searching on “Content” here: http://www.burstmedia.com/brand_advertisers/our_channels.asp

Here’s where you can “access” the list of all the web sites Adfiy represents. Good luck. http://web.adifymedia.com/site/index.php/publishers/

More online video logic.

More on the online video proposition, to go along with the earlier post in this space, from Avi Savar of Big Fuel today in ADOTAS. Says Avi,

“Donʼt make it an ad. If a video feels like an ad, viewers wonʼt share it unless itʼs truly amazing. However, if you give them content they want and find valuable, they are always willing to listen to your brand message. The key is integration of the brand message and how natural it feels to the content.”

And,

“And for how long the video needs to be, no more than 2-3 minutes depending on content. Or make it short: 15-30 seconds is ideal; break down long stories into bite-sized clips.”

May I add that I love the Big Fuel Communications URL, which is, Contenttocommerce.com.

Thinking about online video? Think short.

Recalling a post in this space last February, “Is Hulu like TV?”, Online Media Daily reported on new research that consumers do not use the Internet like television. Based on pretty good sample sizes, independent analyst, Bruce Leichtman, found that only 8% of respondents said they use the Internet to watch re-purposed TV shows. Most people watch video in smaller, short form segments online, whether news or sports or user-generated content. Ultimately, only 3% of adults said they would consider disconnecting their TV in favor of the Internet to watch their programs.

In juxtaposition to Mr. Leichtman’s research, the New York Times had a piece over the weekend on the astonishing online video trajectory of Susan Boyle, the homely “Britain’s Got Talent” performer that delivered a blow for the forces of goodness and light when she debuted on the show several weeks ago and became an extra-ordinary pop sensation. According to The Time’s report, her April video singing “I dreamed a dream” has been viewed 220 million times. Only three videos have ever received more clicks, says Visible Measures, a company quoted in the story.

These two stories should be viewed side-by-side. One says, look, I like TV for what it gives me: the chance to sit with my feet up and a bag of potato chips enjoying a program with my partner/children/roommate. During the commercials we talk about what everyone did that day. The other says, look, I like the Internet because without it I’d never have known about this Susan Boyle woman, and it made me glad to know that really good things still happen in life (without having to sift through days and weeks of programming). We can define the media experience of each in a variety of ways: one is passive and one is active; one is about shared experiences and one is about shared discoveries. Both cater to our social instincts. One is truly global.

But, they are different and will probably stay different because consumers will keep them for different uses. The frustrating part, of course, is that the advertising industry can’t decide how to take advantage of the Internet video piece – which is the 220 million views piece in the Susan Boyle example.

There are legitimate content rights issues in connection with opportunities such as Susan Boyle’s appearance on “Britain’s Got Talent.” We can’t help with that problem from here. But pretending that how the money gets divided does not remain an issue, what should the Internet industry do to position its particular brand of video opportunity?

Think short. Then, think big. The Internet is about segments and slices of content reached through countless entry points. YouTube and Hulu are successful aggregators of video content segments, but to create a viable ad model online video needs distribution. Distributing television style programming won’t scale and won’t cater to the uses and desires of the Internet audience. But delivering short form videos will: “How to” videos, such as home repair and recipes, movie trailers, TV excerpts, music videos, stupid pet tricks, etc.

It follows that with distribution will come context: video content will seek its own levels. With context will come the advertising rationale and – we hope – user acceptance of the associated ad models, such as pre-roll. The key is to make video prevalent online and sensible with regards to how people use the Internet, which is frequently in parts and segments.