Thursday, August 30, 2007

Quality Control

Here's a synopsis of Jupiter's latest research report on our sector (with thanks to Trevor):

"JupiterResearch’s February 2007 survey of 2,319 online consumers found 46 percent of online consumers watch online video monthly or more frequently. Also, 43 percent of online consumers who connect to the Internet by broadband watch online video at least once per week.

According to a JupiterResearch executive survey of more than 335 online marketers
(conducted in May 2007), advertisers have clearly taken notice of this trend. Thirty percent
of marketers indicated they would create online video content as a means of increasing
consumers’ engagement with their brand. The same survey also shows the number of
online marketers using in-stream preroll ads will increase by 180 percent, and the number
of marketers using in-stream mid-roll or post-roll ads will increase by 145 percent during
the next 12 months.

Online video is seen as a mechanism for encouraging site visitors’ engagement
(e.g., increasing the duration of site visits), enriching site visitors’ overall experience,
and generating new advertising revenue streams with premium CPMs. Although prior
experience and the success of sites such as YouTube suggest short-form video remains
king online, advertisers are reluctant to advertise against user-generated video. As such,
monetization strategies remain uncertain. Consumers also express interest in viewing
premium content such as full-length TV programs. This interest suggests next-day
streaming efforts offered by major broadcast networks will find an audience. Because
advertising models around premium content are already established, there is a relatively
much clearer business case for the video initiatives of established online publishers and
traditional broadcast networks.

However, continued success regarding the adoption of video across the Web and success
of associated business models will be dictated in large part by the overall quality of
the viewing experience. JupiterResearch’s survey offers insight into the actions and
opinions of consumers when they encounter difficulties in viewing online video and the
implications for online publishers adding video to their sites. Sites offering video that is
frustrating to use or slow to render can adversely affect site visitors’ loyalty and adoption
of all types of online video content. Based on the survey results, JupiterResearch offers
the following key findings:

• Online video that is interrupted for buffering purposes and playback that is slow to begin are
the greatest sources of frustration with online video. Buffering issues are the number-one
problem online video users encounter. During the past 12 months, 44 percent of online
consumers who viewed online video (referred to herein as online video users) and were
frustrated with the viewing experience attributed their frustration to playback interruptions
due to buffering. Also, 35 percent of online video users who were frustrated with their viewing
experience felt the video took too long to begin playing.

• Sluggish playback and the presumption of a slow Internet connection are mitigating online
video adoption. Forty-two percent of online consumers said preference for consuming
video on the TV was a deterrent to watching more PC video. The second most widely cited
deterrent was a simple lack of time (29 percent of online consumers). Regarding technological
limitations, however, 27 percent of online consumers said their Internet connection was too
slow to handle online video, and another 23 percent said they would not watch online video
because it took too long to begin.

• Web sites with an unsatisfactory video experience can expect to lose site visitors.
Sixty percent of regular online video users (i.e., those who watch online video at least
once per week) are relatively less likely to return to a site for video content if the viewing
experience is poor. Also, 43 percent of regular online video users said they would seek their
video content from a competing Web site, and 27 percent said they would be relatively less
likely to visit the Web site again for any reason.

• Online video users are willing to accept advertising as a means of gaining free online video
content. Thus, Web sites must maintain a satisfactory online video experience. Eighty percent
of online video users accepted the presence of advertising as a trade-off for providing free
online video content.

• More than one-quarter of online consumers are interested in bandwidth-intensive video
content, such as full-length movies and TV programs viewed from their PCs. News clips
and short video clips or segments are intriguing to 35 percent and 33 percent of online
consumers, respectively.

• Second only to the ability to enlarge the viewing area, the most popular advanced feature for
online video is the ability to download to a PC for later viewing. Twenty-six percent of online
consumers said they would be interested in the ability to download full video programs or
content to their PC. Video publishers must focus their technology efforts to minimize video
downloading times."

Quality, not quantity, then. Just like TV1.0. This report supports what we've seen over the past 5 years and more at Narrowstep - despite all the hype about short form, there is huge market for long form High quality content.

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