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Monday, June 20, 2011

Is Video Content King?
was Quarterlife ahead of its time?

In November, Gawker unveiled their more TV-oriented business model. It seemed a natural progression, as Gawker has been moving away from the traditional blog and increasingly veering towards video. When asked by Christopher Tennant of The Fix about Gawker Media's redesign in February, Nick Denton said: "Put it this way: The distinctions between a cable TV network and us will disappear over the next five years."

For internet companies, the TV-oriented business model appears to be the new black. And why not? Video streaming is on the rise. Nielsen's blog notes, "As the traditional television season wrapped up, viewers also increased their time spent watching video content on network-related destinations ABC Family (+28%), Lifetime Digital (+12%), (+12%), and MTV Networks Entertainment & Games (+7%)."

Further, in May 2011 Americans streamed 15,020,811,000 videos, up 2.2 % from April's all-time high of 14.7 billion streams. And now -- just as prime time season ends -- it might be the perfect time for internet content companies to focus on creating comparatively cheap TV-oriented content.

Today, the Financial Times informs us that Ross Levinsohn, Yahoo’s head of media, advertising sales and partnerships for the Americas, wants advertisers to "think of Yahoo like a television network and able to assemble large audiences around its programming." And why not?  Yahoo! has a large audience for video, is one of the top online video destinations (over 26 million uniques in May). Levinsohn, according to the FT:

... uses broadcast terms such as “tentpoles” and “anchors” and rattles off figures to show Yahoo Sports and Yahoo News beating the online audience of rival TV brands such as ESPN and CNN. With 189m unique US users in May, he boasts: “There’s no bigger place in ... digital media than Yahoo.”

Yahoo harboured similar entertainment ambitions in the mid-2000s when it hired media executives to woo Hollywood on the potential for shows online. The strategy’s failure contributed to Terry Semel’s departure as chief executive in 2007.

“Yahoo was ahead of its time,” Mr Levinsohn says. When Semel and former TV executive Lloyd Braun were running Yahoo “the demand wasn’t there but they were right on with the strategy”.

Now, by contrast “there’s incredible demand [from advertisers] for the right video ... We just can’t produce enough of it, but we will”.

... Mr Levinson says he will not be writing $100m cheques for original series, as Netflix has reputedly done, but he is aiming for 10-30 per cent of its content to be its own productions, with the rest aggregated, curated and licensed.
Yahoo produces about 200 episodes of 20 original shows a month, many of them sponsored. Mr Levinsohn, who started his career on US soap operas, notes that having episodes of the Yahoo Sports Minute “powered by Dunkin Donuts” echoes earlier eras of branded entertainment.

So: Is the TV oriented business the new black for internet content companies? And, if so, how long before AOL, which had double digit gains between April and May 2011, follows suit?

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