The captive audience is gone

The captive audience is gone
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As more people view more video content on their smartphones, tablets, and connected devices, John Farrell, director of YouTube Latin America foresees the audience for online video will be greater than that viewing traditional TV by 2020.

While this is a massively bold prediction, the signs are there. According to Netflix CEO Reed Hastings, the company streamed more than 4 billion hours of video and added more than two million new subscribers in the first three months of this year.

The company’s push into exclusive content and its much acclaimed political thriller, House of Cards, starring Kevin Spacey is paying big dividends.

Commenting about the move to original programming, Ted Sarandos, Netflix’s chief content officer once famously declared, “The goal is to become HBO faster than HBO can become us.”

He thinks it’s just a matter of time before cable and television companies eventually adapt to become more like Netflix. “The Internet is attuning people to get what they want when they want it. House of Cards is literally the first show for the on-demand generation."

Online video bingeing

Indeed wrapping up original programming with instant gratification is a major point of differentiation for the company at the moment. Rather than drip feeding their programmes week by week in traditional TV style, Netflix released the entire 13 episodes of House of Cards on 1 February. On the back of the success of this show, the company is planning to release a number of other original titles over the year using the same approach.

Online video streaming is becoming the new norm. Here in Australia where Netfix is not available, (though not wholly inaccessible), online video content consumption is soaring. According to Nielsen VideoCensus March 2013, 11.5 million Australians streamed online videos during March this year and viewed a total of 1.77 billion streams, spending something like 5.02 billion minutes to stream the content.

Nielsen reports that on average, Australians spent 7 hours and 17 minutes watching online video and viewed 154 streams in March. The top three sites for online video streaming in this country are YouTube (by a country mile), followed by Facebook, and Vevo. ABC Online Network, news.com.au and smh.com.au also rate in the top ten.

At the same time, Ooyala’s Global Video Index: 2012 Year in Review, offers key insights into how viewers consume video online around the world, and highlights the growth of video consumption across mobile devices. The number of hours spent watching streaming video on tablets and mobile doubled in 2012, and iPhone users watched twice as much video on their phones than Android users last year.

Of course, as viewers spend more time consuming online video content from online video streaming companies like Netflix, advertising dollars will flow accordingly. The rapid growth of online audiences will fundamentally change not only the way viewers consume video content, but give advertisers on these platforms a much more accurate picture of how the audience is interacting with their ads.

Interestingly, speaking at the FT Digital Media Conference in London in April, WPP CEO Sir Martin Sorrell said that Google was about to become its biggest recipient of global ad dollars. And Google has an army of salespeople ready to pounce.

Extra Reach Tool

This year Google is pitching that it can overcome TV's biggest weakness: the expense of reaching light TV viewers. “National TV buys can pretty easily reach heavy TV users, but advertisers have to spend more on reach and frequency to find the last few when they happen to tune in. This year, all of Google's salespeople will be armed with what they call an ‘Extra Reach Tool’ to show TV advertisers that viewers can be reached for less money on YouTube.”

The wealth of online entertainment options that are now available to consumers anywhere, anyplace means more and more Australians are simply time shifting their favourite TV shows, bingeing on entire TV series over a wet weekend, and grabbing chunks of content via YouTube channels when it best suits them.

This shift in behaviour will drive innovation in programming with new formats for content production and distribution.

To find out more about online video in Australia, download our podcast with Simon van Wyk in conversation with John Treloar, Ooyala’s Managing Director for Australia and New Zealand.  

Simon van Wyk is Founder of HotHouse

 

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