April 18, 2006
Seems like everywhere I turn is some mention of broadband and/or mobile video. Whether it be startup business plans, major announcements, blog posts or news stories, it sure seems like this has become the latest "big thing" to talk/write about. I am not sure whether to be excited or worried. Probably both.
The big news, of course, was last week's announcements by Disney and Fox. Much has been written on those — and I am hoping to post a synthesis piece tying together the various themes in the discussion over those announcements. Haven't had time yet but will get to it soon.
I had heard at the Cable Show, and saw announced today, that yet another video-sharing site, Veoh, is getting funded. Please feel free to rant at me if I ever become the10th VC to fund a video-sharing site. I won't go so far as to say I am a skeptic, but I think it will be fascinating to see if/how YouTube and its brethren find a viable business model. As a side bar, PaidContent points to this amusing parody of the kung fu battle amongst video sharing sites.
Which brings me to what I think was a more interesting piece in yesterday's Wall Street Journal (sorry, subscription required) explaining how consumer packaged good companies like Kraft, P&G and Unilever are, despite initial reluctance, now turning to web advertising in a big way. Yet another indication that the Internet advertising economy will continue to enjoy robust growth.
Of course, I must confess one reason I liked the article is that it made very nice mention of some of the successes Heavy.com has had with major advertisers like Unilever.
But it also reinforced one of the reasons why I've spent a good chunk of the last 12 months in and around broadband video — because, although a still nascent (at least until a few weeks ago) category, it is clear that there is alot of money to be made in broadband video by those who understand how to develop content that is at once wildly popular with its consumer audience while also a wildly valuable medium to its advertiser audience.
This is precisely the challenge YouTube et al. are grappling with. As summarized in a USA Today article this week, "[YouTube] expects to reap ad revenue in the first half of this year but is cautious. To remain relevant, it needs to serve paying advertisers without looking like a sellout to its millions of average users."
The difficulty in executing this strategic balance is exactly why I quickly got so intrigued with Heavy.com in the first place last fall. While the Heavy guys cleary have a knack for developing, and eliciting from their user base, compelling video content that their audience keeps coming back for in droves, they were one of the first groups, I think, to really crack the nut on monetizing the "young male edgy humor/satire" category. They have developed a distinct voice/personality/brand, and it is precisely this same personality that appeals both to their users and their advertisers. A tricky but powerful thing to pull off.
I am one who tends to believe that a rising tide lifts all boats. Lest we forget, AdSense not only created the defining business model for Google, but it also created the defining business model for the entire Internet search category.
So, while it is both exciting and scary to see so many broadband video sites getting funded and/or launched, I nonetheless continue to be encouraged when I learn that major advertisers like P&G and Unilever are substantially increasing their budget allocations to sites (like Heavy) who understand how to deliver them a product they need and value.
Here's to wishing lots of success and ad dollars to the whole sector!