With the anticipated surge in spending, media companies are scrambling to get in on the action. This is clear with Viacom’s suit against YouTube and the recent partnership between NBC Universal and News Corp. The two companies are creating a yet-unnamed “online video ad network.” News Corp. President-COO Peter Chernin called “the largest ad platform on earth.” They expect to reach about 96% of the U.S. Web viewing audience (keep in mind that’s web users not online viewers, as you couldn’t even begin to approach 96% of the latter without YouTube).
The video network will be distributed by partners including Microsoft Corp.’s MSN, News Corp.’s MySpace, Time Warner’s AOL and Yahoo. BtoB Online also reports that the video venture has lined up charter advertisers including Cisco Systems, General Motors Corp. and Intel Corp.
Spending on online video advertising will more than triple in the next three years, growing from $775.0 million this year to $2.90 billion in 2010, according to research company eMarketer.
There will be an infusion of ad spending if an audience develops, and you can’t underestimate the audience-attracting magnetism of two large content providers backed by known online distribution channels.
WillVideoForFood’s thoughts? This is getting too big for airlift, folks, and the model depends on rapid transformation of our online/offline viewing habits.
I’m betting on this effort failing. There. I said it.
I’d bet instead on a startup — maybe it’s Joost and maybe it’s someone we haven’t heard of yet — that will marry online and offline video. Could the record companies produce iTunes? Nope. They were too busy chasing down Napster. A couple of content owners can’t lead a quantim change in video consumption anymore than a record label could create iTunes. And rest assured that AOL and Yahoo aren’t signing exclusive deals. They’re happy to get content from any network as long as they have a piece of the ad revenue.
The current proposition lacks the neutrality required for something this transformational. I’m betting on an independent intermediary paving a path.
If I ran the TV networks I’d be partnering with innovative startups and hedging my bets instead of doubling down on the “largest ad platform on Earth.” Source: BtoBOnline.
Note: BusinesWeek reports that Scott Kessler and Tuna Amobi (Standard & Poor’s) feel otherwise about what they call “Newco.” If I was a true blogger I’d tear this article into slices, but you can do that on your own.