Online video use has grown rapidly in the past few years as home broadband Internet access has increased from 32% in 2003 to nearly 89% in 2008 (Website Optimization, 2008). 9.2 billion videos were watched on the Internet in September 2007 alone (comScore, 2007). It is unsurprising then, with the growth of online video use, that corporations are eager to find ways to profit off this development.
| Top U.S. Online Video Properties* by Videos Viewed | ||
| Total U.S. – Home/Work/University Locations | ||
| Source: comScore Video Metrix | ||
| Property |
Videos |
Share (%) of |
|
(MM) |
Videos |
|
| Total Internet |
9,211 |
100 |
| Google Sites |
2,608 |
28.3 |
| Fox Interactive Media |
387 |
4.2 |
| Yahoo! Sites |
381 |
4.1 |
| Viacom Digital |
304 |
3.3 |
| Time Warner Network |
198 |
2.2 |
| Microsoft Sites |
194 |
2.1 |
| Disney Online |
92 |
1 |
| ESPN |
89 |
1 |
| Comcast Corporation |
52 |
0.6 |
| CBS Corporation |
48 |
0.5 |
Google, which makes a majority of its profits through related text advertising, launched a video form of its ad service AdSense in February of this year. This service adds related graphical or text overlays to videos on YouTube (a Google property), Google Video, and a host of other online video sources. Many in the industry had anticipated the release of video AdSense as a prime and necessary revenue source for Google after its $1.65 billion acquisition of YouTube has been questioned due to significant infringement liabilities. In February 2007, media giant Viacom filed a $1 billion lawsuit against YouTube for alleged infringement of over 160,000 unauthorized clips. A few months later, NBC Universal joined with Viacom in a friend of the court brief opposing Google’s attempt to dismiss litigation brought by 1992 L.A. riot observer Robert Tur. The outcomes of these cases will have great impacts on legal interpretation of the DMCA.
In March 2007, NBC and Fox joined forces to develop Hulu, an online video on demand site that provides full episodes and clips from NBC and Fox programming, including shows aired on the networks’ cable properties. Unlike YouTube, which succeeds largely due to user content and uploads, Hulu is simply a content provider with little interactivity in comparison to YouTube. NBC, Fox, CBS, and ABC each maintain individual ad-supported streaming video services through their respective websites.
Apple’s iTunes is another major player in online video. Unlike YouTube and Hulu, which offer free streaming content, iTunes gives consumers the ability to purchase video for $1.99, including TV shows, feature films, and music videos. iTunes recently announced a deal with major film studios and premier independent film studios to make new DVD releases available for download the same day they are released to traditional retailers. New films are priced at $14.99 and catalog films are priced at $9.99. Apple’s DRM technology also allows for movie rentals through iTunes, priced at $4.99 for new releases and $3.99 for catalog films. This agreement hinged on the promise of 60-70% profit margins for the movie studios, which is reportedly double the margin of traditional DVD sales.
To summarize: how does corporate power exert its influence on online video? It is clear that major content providers (studios, networks, conglomerates) wield power through advertising, copyright protection, and threat of litigation. The outcomes of current litigation against Google/YouTube will have a profound effect on the future of the medium.
Related links:
http://www.apple.com/pr/library/2008/05/01itunes.html
http://valleywag.com/386323/obscene-itunes-profit-margins-finally-win-hollywoods-heart
http://www.google.com/ads/videoadsolutions/index.html
http://newteevee.com/2008/02/20/google-finally-launches-adsense-for-video/
