The State of Online Video 2017

Feb 20, 2017

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From a meow to a roar: That’s a simplistic, but spot-on, way to describe the evolution of online video, a realm previously ruled by cute and curious cat videos. But it’s now populated by countless contemporary iterations of playable visual content—including those of the short-form, live-streamed, silent, branded, vertical, and viral variety.

To appreciate the omnipresent reach and addictive allure of online video, consider the recent numbers. Cisco’s latest Visual Networking Index findings indicate that, by 2020, IP video traffic will comprise 82% of all consumer internet traffic (compared to 70% in 2015). In addition, it would take more than 5 million years for a consumer to view the amount of video that will cross global IP networks each month in 2020. And according to the “2016 IAB Video Ad Spend Study,” advertisers are shelling out more than $10 million annually on digital video, on average—an increase of 85% from 2 years ago.

Electronic publishers, digital content providers, and omnichannel marketers can’t escape from internet video’s gravitational pull—nor should they try. Instead, say the experts, it’s beneficial to examine the current climate for online video, explore the past year’s trends, and point a deep-focus lens at the horizon to determine what’s coming.

Nowadays, online video is less a term and more a behavior, insists Kevin Nabipour, SVP of content strategies at Allison+Partners. “Statistics prove our preference as consumers is to learn, be entertained, and share through video,” he says. “It’s all but become our default approach for how we search online—we’re quicker to type in ‘how to fix a lawnmower’ into a YouTube search field then go to the company’s website or even a traditional search engine.”

Donna Tuths, global head of digital content at Accenture Interactive, says video is emerging as the medium of choice, as it has the ability to humanize, make content palpable, convey emotion, and deliver on the need for authenticity. “Today, a vast array of web video exists—primarily short, snackable, and shareable content—that quickly conveys a thought, meaning, emotion, information, or how-to,” Tuths says.

The Year in Review

Online video entered a whole new stratosphere in 2016. Live streaming services made a big splash. This was demonstrated by the rollout of Facebook’s Live; Periscope and Meerkat becoming serious players among video platforms; Snapchat making vertical video more mainstream for mobile; and silent autoplay videos hitting big volume (85% of Facebook videos are now watched entirely without sound, per Digiday). This ushered in a new era in which storytellers have to rely more on large text overlays than voiceovers; Twitter ponied up to exclusively stream Thursday night NFL games; virtual reality, augmented reality, 4K, and 360-degree video became household names; Apple announced it will add fragmented MP4 support to HLS (HTTP live streaming); more consumers migrated to unlimited plans on 4G and LTE networks for seamless mobile video streaming; and branded video content became more widespread.

“This was the year that social video really took off and took over. Where YouTube had been the be-all and end-all for video previously, we now have distribution through Twitter, Snapchat, Facebook, Instagram, and Pinterest,” says Dror Ginzberg, co-founder and CEO of Wochit. “It also became abundantly clear that publishing brands can no longer ignore video; they understand that it must be a fundamental part of their overall business strategy.”

Katie Staab, head of video production for Talent, Inc., agrees. “Today, online video is a conversation between the viewer and the brand or provider, which has the opportunity to engage with viewers directly,” says Staab. “Everyone wants a voice, and conversation builds trust and fidelity while assisting in conversion.”

Tuths says a major challenge this past year was that while demand for online video content is skyrocketing, supply is not expanding fast enough. “We are looking at a highly fragmented industry, characterized by many small, sub-scale providers with a number of traditional players in adjacencies as well as new content players. They’re all trying to see how they can ride the video wave,” states Tuths. Every client she represents is feeling the strain, she says—including a beauty retailer who used to produce eight new product videos a month, but now is under pressure to produce 96 such videos monthly.

“While video is growing faster than ever, the majority of views are coming from social and YouTube because media companies and brands have struggled to truly own their own distribution channels,” says Rohan Castelino, director of marketing and business development for
IRIS.TV. “There’s been a move in the direction of publishers investing in video infrastructure to yield the highest return from their own distribution channels.”

Additionally, the use of tools—such as personalization, artificial intelligence, and machine learning—“allow publishers to create ad inventory that would not have existed otherwise by creating streams that target users on a one-to-one level,” Castelino notes. “This enables publishers to face the challenge of growing audience on owned-and-operated sites.”

In fact, IRIS.TV’s internal research data reveals that the potential revenue for 10 million online video views can be between $100,000 and $2.5 million for owned-and-operated sites, versus up to $180,000 on Facebook, $100,000 on Snapchat, and up to $83,000 on YouTube. “The primary issues facing short-form ad-supported publishers have been finding ways to increase video consumption, user engagement, and retention on their owned-and-operated sites and apps,” Castelino says.

Indeed, the shift of content consumption from owned-and-operated sites to social platforms has put publishers in a bind, and “the monetization challenges on social are more pronounced for video too,” says Ginzberg. “And as if it weren’t already difficult enough for content creators to produce the quantity needed to meet demand, every platform also has its own format needs. In 2016, we saw the very interesting phenomenon of platforms dictating formats.”

A Look Ahead

Two top rules prevailed in 2016 that will become more imperative in the coming year, according to Nabipour: You have to produce kick-ass, premium-quality video content if you want to be viewed, and you have to build for mobile first. “Our thumbs will only stop scrolling if the video offers a compelling message, and our attention will only stay through the end if the quality lives up to the standards of the best digital content creators out there,” Nabipour says.

Derick Rhodes, director of footage for Shutterstock, forecasts that the increased adoption of virtual reality (VR) and augmented reality (AR) technologies will continue to shape the industry in the years ahead. “We now need to think about 360-degree shots to create immersive experiences for VR and AR and will see more high-quality 4K video content available over the next few years as well,” says Rhodes. “I also predict increasingly personalized videos and more interactive productions shaping video storytelling in the coming years.”

In 2017, online video providers can expect continued stiff competition in finding a programming niche with a viewer base large enough to be monetized, Charlie Kraus, senior product marketing manager for Limelight Networks, says. “With over 1,000 different over-the-top content services today, attracting an audience and keeping them engaged with your platform will be hard,” says Kraus. “Additionally, multiplatform delivery will continue to be of high importance to content owners, with consumers demanding and expecting high-quality experience on smartphones, tablets, gaming consoles, smart TVs, and more.”

The bottom line? To survive and thrive in 2017 and beyond, you have to be able to create high-value web video content fast, at scale, and at the right price point, says Tuths. She adds, “The question is, who is going to make the right investments to deliver the scale and nonstop innovation online video requires?”   

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