Posts for 'Strategy Analytics'

Paid video forecast to surpass free - A Strategy Analytics forecast that got attention this week says that the global paid online video market will be worth $3.8B in 2009, exceeding the global free online video segment which will total $3.5B. I haven't seen the details of the forecast, but I'm very curious what's being included in each of these numbers as both seem way too high to me. The firm forecasts the two segments to grow at comparable rates (37% and 39%), suggesting that their size will remain relatively even. I suspect we're going to be seeing a lot of other research suggesting the paid market is going to be far larger than the ad-supported market as sentiment seems to be shifting toward subscriptions and paid downloads.

Consumer generated video contests remain popular - VideoNuze readers know I've been intrigued for a while now about contests that brands are regularly running which incent consumers to create and submit their own videos. Just this week I read about two more brands jumping on the bandwagon: Levi's and Daffy's retail stores. NewTeeVee had a good write-up on the subject, citing new research from Forrester which reviewed 102 different contests and found the average prize valued at $4,505. I see no end in sight for these campaigns as the YouTube generation realizes it's more lucrative to pour their time into these contests than training their cats to skateboard. Brands too are recognizing the wealth of amateur (read cheap!) talent out there and are moving to harness it.

MySpace has lots of work ahead to become a meaningful entertainment portal - The WSJ ran a piece on Monday based on an interview with Rupert Murdoch in which he was quoted as saying MySpace will be refocused "as an entertainment portal." That may be the winning ticket for MySpace, but I'm not totally convinced. MySpace has been in a downward spiral lately, with a 5% decline in audience over the past year, a 30% headcount reduction and an executive suite housecleaning. While always strong in music, according to comScore, its 48 million video viewers in April '09 were less than half YouTube's 108 million, while its 387 million video views were about 5% of YouTube's 6.8 billion. Clearly MySpace has a very long way to go to give YouTube serious competition. It will be interesting to see if the new management team Murdoch has installed at MySpace can pull off this transition.

I recently attended a presentation by Martin Olausson, Director of Digital Media Strategies at Strategy Analytics, who shared key findings from his firm's recently fielded digital media survey. Strategy Analytics is a research and consulting firm specializing in information, communications and entertainment. In a follow-up chat, Martin provided a little more color on the data and he also agreed to share a half dozen slides as a complimentary download for VideoNuze readers.

Click here to download the slides.

Some of the most interesting data confirms the shifts that are well underway in how younger people consume video. For example, the weekly TV reach for 15-19 year olds is 64%, while for 35-49 year olds it's 82%. Conversely, the weekly reach for broadband video averages around 25-26% for those in the 15-29 age brackets, but at 35-49 it drops to 15%, and then for 50+ it drops again to just 5%. Broadband consumption clearly skews younger, suggesting a more permanent shift as this group ages.

In addition, 16-18% of 15-29 year olds said they'd be interested/very interested in paying for TV online, while only 11% of those 35-49 said so, and only 3% of those 50+ said so. Similarly, 21-22% of 15-29 year olds said they'd be interested/very interested in paying for movies online, while only 16% of those 35-49 said so, and only 5% of those 50+ said so.

Media and marketing executives need to focus on what opportunities this creates. For example, this might suggest that special offers to download TV programs and movies that have particular appeal to younger people might help accelerate the paid business model. Or that co-marketing deals with other brands that already have credibility and reach into these age groups would help open up the market.

Strategy Analytics also included a revenue forecast for various business models for 2008-2012. The four paid categories, "Download to Own: Movies," "Download to Own: TV," "Download to Rent: A-La-Carte" and "Download to Rent: Subscription" total up to approximately $3.87 billion by 2012, while the ad-supported category totals to $3.48 billion by then.

Martin is most bullish on the subscription model as the big driver of paid revenues, and focuses on Netflix in particular as having a strong online delivery opportunity. While I haven't created my own revenue projections, I still bias toward thinking ad-supported will outstrip paid in the next 3-4 years. If I look longer-term, say 5-10 years out, I can see that shifting to the paid model as today's issues (portability, rights, mass broadband connectivity to TVs, etc.) are resolved at scale.

Taken together, the data adds to our understanding of what's happening in the market today and where things may be heading. If you want further information about the survey, Martin's contact information is on the cover slide.

Click here to download the slides.