The State of Online Video 2015


Article ImageBack in 1979, The Buggles prophesized the enormous power of visual content and nascent technology with their hit “Video Killed the Radio Star.” More than 35 years later, video is still making a killing—not on MTV, but on virtually every screen connected online. To fathom how pervasive internet video’s reach is in our country alone, consider that comScore’s Video Metrix says more than 196 million Americans view online content videos today, equating to approximately 78% of U.S. internet users. In fact, according to a New York Times survey, 34% of Millennials report viewing less TV than online videos or no TV at all.

Nowadays, the most popular categories of online videos are funny video clips (enjoyed by 52%), movies/movie clips/trailers (46%), music videos (39%), news/current events (35%), instructional how-to videos (33%), and TV shows (33%), per a 2013 study. Movers and shakers in the online video realm continue to include content providers such as YouTube, Facebook, AOL, and Yahoo; streaming sites that include Netflix and Amazon; platforms such as Brightcove and Ooyala; video ad players such as BrightRoll and LiveRail; content delivery network providers such as Akamai and Limelight; and YouTube partner channels such as Vevo and Maker.

Eyeview CEO and co-founder Oren Harnevo says the online video industry continues to thrive for several key reasons, not the least of which is the increased migration of eyeballs to smaller mobile screens. “The true catalyst for this growth is the ability to create customized, personalized brand connections through digital technologies,” says Harnevo. “The power of TV commercials has always been their ability to deliver narratives that capture the consumers’ emotions. Today, we have the ability to take that further than ever before and personalize those narratives to unique individuals.”

Jason Thibeault, senior director of marketing strategy with Limelight, attributes increased consumer consumption of videos to unstoppable technological innovation. “HTTP or chunked video is enabling playback on a huge spectrum of devices, something that wouldn’t have been possible a few years ago with Flash and other proprietary video streaming formats,” Thibeault says. “And the growth in video analytics is providing video owners unprecedented insight into the consumption of their content.”

Additionally, online viewing services from mammoth providers such as Verizon and Comcast are completely changing the relationship between online video and TV. “The world is moving toward the consumption of video from anywhere—wherever you are and on whatever device you have. And advertisers are taking advantage of these opportunities too,” says Charles White, chief revenue officer at Mirror Image Internet, Inc., who cites Omnicom Group, Inc.’s recent announcement that it is advising marketers to shift up to 25% of their TV dollars to online video.

Today, online videos—particularly video ads—are organically built into the digital experience for users, making them ubiquitous. “People search for video content, connect through social, and inform themselves through blogs—and at nearly every step along this experience are online video ads. Users understand the deal: They watch ads and their content is free or subsidized. What’s changed is that marketers have learned that the cornerstone to advertising is relevance. Data now is helping marketers personalize the message to each individual,” says Harnevo.

THE YEAR IN REVIEW

In 2014, major players from all sides of the spectrum—including media companies, advertisers, and agencies—turned a corner in terms of recognizing the importance of aligning their video strategies to the changing habits of consumers, says Scott Ferber, chairman and CEO of Videology.

Convergence between TV and video was another major theme during the past 12 months. “Television-centric brand advertisers now want to buy video across screens the way they have been buying TV for years—only better, with more automation, more data, and greater accountability,” says Ferber.

Some experts point to the second release and greater adoption of the new H.265 video codec as well as the Interactive Advising Bureau (IAB)/Media Rating Council (MRC) standard for viewable display impressions (at least 50% of pixels in view for a minimum of 1 second) as major events in 2014. “There is a massive performance and pricing difference between real in-stream and video banners. But having an IAB standard measurement is the first step in the right direction,” says Harnevo.

Additionally, a greater demand for high-definition (HD)—and even ultra high-definition—was heard in the past year. “4K video is coming. There is demand for it, but it will be incredibly difficult for content producers and broadcasters to adopt all of the technologies and tools they need to make this full transition,” Kurt Michel, director of product marketing/media for Akamai, says. “Many have just made the switch to HD, so the concept of upgrading again is technically and financially daunting.” Indeed, viewers increasingly want broadcast-quality experiences across all their devices, creating a major challenge for online video providers, Michel adds.

Ferber says there are two macro trends that have been driving online video for a while and which will continue to require innovative new solutions. He says audiences are increasingly consuming more content on more screens, and technology is truly the only scalable way to connect targeted audiences across devices. “These truths can cause challenges for media companies and demand new ways of doing business to drive value for consumers and advertisers alike,” he says.

A LOOK AHEAD

The year ahead promises to be an exciting one for online video. Companies that deal in this currency can reap all the benefits, provided they’re ready for what’s coming. “Consumer impulse and binge-like video consumption will be a game changer in 2015,” says Michel. “Content and mobility are king, and more people are going to want the content they want when and where they want it.”

In the coming months, White predicts improved intelligence in the delivery of video as well as better ways to serve the best types of advertising, optimize subscription-based business models, and integrate multiple types of premium offerings. “Also, a lot more businesses will begin to see video as a necessary core competency—much like design or written content creation—and focus on building an in-house video team for their core content,” says Wistia’s CEO and founder Chris Savage. “That doesn’t mean professional video agencies will die. Companies will still use those sources for major video pushes, but they will recognize the value of more consistent video content.”

Lastly, expect televisions to develop an even bigger inferiority complex in 2015. “TV will come to be regarded as just one more screen—no different or more special than your tablet, desktop, smartphone, or wearable screen. You will no longer see it as having some dominant role,” Harnevo says.