Online Video Is All That Matters. To Some.

Saturday Night Live with Sarah Palin.

When I read the obituary of Edie Adams (online, of course), I recalled how much I liked her when I was a kid.  And that reminded me of her first husband, the extraordinary TV pioneer Ernie Kovacs.  By then, I was in the mood to see Ernie’s famous comedy routine, “The Nairobi Trio.”  So I immediately Googled it, which brought me to a grainy black-and-white three-minute video clip on YouTube, featuring the Trio’s indelible tune and pantomime act. (Needless to say, I also wandered through other Kovacs’ video segments and caught a few glimpses of the shapely young Edie Adams of 48 years ago.)

The next morning at my health club, some pals were talking about the clever remarks that John McCain and Barack Obama had made at the white-tie Al Smith banquet in New York.  Brief clips were popping up on CNN and the morning TV newscasts.  As soon as I reached my office, I clicked onto CSPAN.com, checked the archive and watched the hour-long presentation – or, more honestly, fast-forwarded through the stand-up comedy stylings of our next president and his opponent.
 
A week later, I “tuned” to Hulu.com to catch the season premiere of my favorite broadcast sitcom, “30 Rock.” It was sort of “appointment viewing.” I put an online video streaming session in my online agenda as soon as NBC announced that the episode would be previewed a week before the actual over-the-air transmission debut.  I say “sort of appointment,” since I could catch an online stream of “30 Rock” anytime that week at my convenience. 

All of this happened just about the time that NBC confessed that its Saturday Night Live sketches featuring Tina Fey as Sarah Palin were getting more views via the NBC.com website than the on the record-setting real-time telecasts.

This is TV on the Web. 

As these video choices suggest, I am not in the “Generation Y” demographic that is lapping up Web video. But, as several studies have shown, viewers of all ages are opting for the online video experience.  An October study for Veoh Networks found that more than 40% of people who watch at least an hour per week of online video are aged 35 or older – including 13% over the age of 55.  Veoh’s study, conducted by Forrester Research, was subtitled, “How Online Video Engages Audiences.”

That’s what NBC was hoping in its advance streaming of “30 Rock”: that it would generate buzz and word of mouth to encourage on-air viewing and cement allegiance to the show.

Right now, online video is still a work in progress with much of the chaos – and dreams – that Ernie Kovacs must have encountered in TV business of the 1950s and early ’60s.  Beyond the battleground about copyrights are structural decisions about “short-form” and “long-form” content, the role of user-generated content and viewing quality.  To television purists who insist on the high-quality displays for the Digital TV era, online video’s limited bandwidth seems irrelevant.  But as an online video purveyor – from a venture called YouNewsTV – told me, “Viewers are willing to watch gritty videos; they accept them as more authentic.”

Predictably, there’s an avalanche of research about online video usage, especially as everyone in the value chain tries to figure out if/how/when this will become as big as advocates believe.  For example, an eMarketer forecast puts online video advertising at $5.8 billion by 2013, an 11-fold increase from today’s half-billion dollar level.

Integrated Media Measurement Inc. says that in Spring, 20% of its 3,200-person panel watched some prime-time network TV online, up from about 6% last autumn.  An NPD Group survey of digital media consumers found that 70% had purchased content on iTunes, the most popular source of video downloads, in the past three months.

An ABI Research study identified that the number of Americans watching video via computers has doubled during the past year, from 32% to 63% of the population, across all age brackets but especially among young viewers. ABI also found that the “frequency and duration of … online video consumption” is increasing rapidly. 
 
Indeed, a Frank N. Magid Associates study found that 28% of respondents who watch online video said that they watch less traditional TV as a result.  The same Magid research also confirmed the snack-sized preferences to today’s early online adopters, who lean overwhelmingly towards short videos such as comedy/joke segments, music videos, user-generated content and news stories or movie trailers.  At least 25% of online viewers tuned into one or more of those categories, while barely 15% said they looked at full-length movies online (although that is still a sizeable audience.) 

Overall, online video viewing is still measured in the hours per month (about 4 hours in most age groups), rather than hours per day (also about 4) that broadcasting and cable channels collectively capture eyeballs.  But it is not impossible to expect, as one researcher envisioned, that the up-and-coming generation will watch a majority of video entertainment via online distribution.  He said they may develop habits “that will mean drastic changes for the video entertainment market.”

Such forecasts have been part of the “new media” landscape for more than a decade, prompting veterans to dismiss the threatened migration is blips on the screen.  To be sure, the confusing array of webcast, downloading and streaming options make online video a lot harder than simple TV-set channel surfing.

But there is no way to ignore that for almost all demographics, there is something worth watching online – enough to shift attention from the “regular” TV set.  The advance of TV on the Web is trickling in through multiple faucets, beyond the Hulu, Vudu and YouTube pipeline.  The Netflix + Roku deal and the Tivo + Amazon arrangement represent the experimentation that is taking place.  Rival distributors, including programmers and broadcasters, are trying to figure out how viewers want to receive big-screen programming.  Sometimes, it doesn’t work, exemplified when Starz abandoned its Vongo service. (Although Starz, part of the Liberty Media empire, is back into online video via other avenues.)

And field trials continue on many other platforms. Sony Pictures Entertainment is running 11 original online series on its Crackle.com site.  PrimeTimeRewind.tv envisions offering a variety of recent network shows. And we’re just beginning to appreciate the opportunities in mobile online video as ventures from mobi.tv and other purveyors reach us anytime/anywhere on handheld receivers, a/k/a phone handsets.
 
Whether it’s timely or historic material – an overlooked new sitcom episode, the President’s speech last night or a memorable Nairobi Trio moment – viewers are heading online.  The only unknowns are how many, how soon – and how to monetize that migration.

Gary Arlen is President of Arlen Communications Inc., a Bethesda, Maryland, research firm.  www.Arlencom.com; GaryArlen@columnsit.com

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