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The Big Bang: Media & Entertainment Year in Review

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The shift, already well underway, will continue forward with dichotomous advertising models growing: aggregated viewerships (such as traditional broadcast television and cable TV) and highly targeted, highly engaged viewers, which can be found on social networking sites and other key internet properties.

Online media advertising models flourished throughout the year, just as online media subscription services deteriorated. At the Streaming Media West show, several panelists on Jose Castillo’s "TV’s Last Gasp" session pointed toward three equally appealing types of online video advertising: preroll (content played before a viewer watches the intended video), postroll (ads played after the intended video), and interstitials (like traditional broadcast, where ads are inserted at key points in the video).

Preroll advertising settled on two rules of thumb in 2007: 15 seconds maximum or no more than 20% of the total length of the video being viewed. The latter is more pertinent for news programs or social networking sites, which often have very short video content, with the feeling being that most viewers won’t tolerate a video ad that is perceived to be almost as long as the desired video clip.

While cost per thousand (CPM) rates were at an all-time high in 2007, exceeding primetime broadcast rates in some instances, the number of sites with the potential to insert video ads is also increasing. That probably means an inventory glut within the next 2 years, but no overall decrease in the efficacy of or advertiser interest in preroll advertising.

But what about subscription models? Some companies are still staking their claim to subscriptions as a viable alternative, even though some of the fundamental issues with subscriptions (such as limited portability) have yet to be addressed.

Fitch also argues that media measurement on the web is still limited enough that "changes to audience measurement metrics have made it difficult thus far for advertisers and media buyers to justify more dramatic changes to their media mix."

The difficulties endemic to establishing a successful subscription business were exemplified by one of the year’s notable acquisitions. RawFlow, a provider of peer-to-peer streaming technologies, purchased Aggregator TV, a London-based company that distributed video content on a subscription basis. With VC funding from several key partners, Aggregator had more than 50,000 paid subscriptions each month. Yet that market size was too small for the backers, who sold the entire platform to RawFlow, which plans to use it to syndicate content for smaller players on a subscription basis.

"We believe that the content management and payment system on the Aggregator platform fits perfectly with [our] long-term strategy," said Mikkel Dissing, CEO of RawFlow. "Even small- or medium-sized content providers should be able to make money from the content they provide."

Like most entertainment tools, users download and install RawFlow’s viewing tool, which also contains an encoding tool. This is, in some ways, not dissimilar to Flash, which now has a player update that supports four flavors of Flash Video: Sorenson Spark, On2 VP6-E (standard-definition), On2 VP6-S (high-definition), and H.264 (both standard- and high-definition). While the new Flash player only has built-in live webcasting abilities for VP6-E and Spark, the adoption rate of this and previous Flash players is such that almost every machine now has the ability to webcast without adding software.

Enter Social Media
While media power didn’t shift to the masses, user-generated content did create some of the year’s most memorable events, and no discussion of entertainment and media would be complete without a discussion of the continued rise of social media sites. From Facebook, which had a late-2007 valuation equivalent to that of Ford Motor Co., to MySpace, with its vast user-base, and YouTube, with its de facto launch pad for public relations, political campaign, and general video content, social media attracted significant attention in 2007.

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