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2012: The Year Ahead for Online Video

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2011 was a heady year for the streaming media industry, as it continued its transition from a niche novelty to a mainstream powerhouse. To put the year in perspective and to look ahead to what 2012 might bring, Streaming Media spoke with some of the leading players in the industry. Here’s what they had to tell us.

2011’s Hits ...

Steve Plunkett2011 was “a foundational year for streaming media,” says Steve Plunkett, Red Bee Media Ltd.’s director of technology and innovation. “The iPad firmly established itself as an important destination for video with both the iPad2 launch and the release of iPad-specific apps from the likes of the BBC and Channel 4 demonstrating the strengths of the form factor,” he says.

The U.S. cable TV industry’s TV Everywhere concept wowed Boxee, Inc. co-founder and CEO Avner Ronen, as did the web/movie release deals signed by Netflix, Inc. with Relativity Media and EPIX (the latter owned by Lions Gate Entertainment, MGM, and Paramount Pictures). Expect to see major broadcasters getting their teeth deeper in this sector, Ronen adds: “Getting re-trans fees and increasing online audience/ engagement is key to their future success.”

Ashwin NavinFlingo CEO and BitTorrent, Inc. co-founder Ashwin Navin was impressed that, for the first time in history, legitimate video traffic (specifically Netflix streaming) exceeded all the P2P traffic generated from BitTorrent usage. “As a co-founder of BitTorrent, Inc., we strongly advocated media companies to work with online video providers to enable sensible business models for content as the best way to combat piracy,” Navin says. “It looks like 2011 will be marked as the inflection point for online video distribution.”

On the enterprise side, MediaPlatform, Inc. president Greg Pulier says 2011 was noteworthy for its “proliferation of new mobile video options.” Musing on the trend, he observes, “The way businesspeople consume video is changing radically. That’s been a big advance this year.”

On a more fundamental level, the public’s embrace of streaming media is rocking the traditional entertainment industry to its very foundations. “Creators have direct interaction with advertisers; creators have direct interac- tion with their audience — the paradigm shift hit full stride in 2011,” says Steve Woolf, blip.tv’s VP of content. As a result, “Advertisers and media buyers are becoming aware of the value that the online audience delivers.”

... And Misses

So what didn’t pan out in 2011? Apple TV and Google TV, says Red Bee Media’s Plunkett. “Cable operators’ rollout of TV Everywhere,” quips Boxee’s Ronen. As is often the case in real life, execution didn’t meet expectation.

Michael ChorpashOptibase VP of sales Michael Chorpash didn’t observe any technological letdowns. Instead, “The slow economy with the uncertainty and concerns is a disappointment,” he says.

As for Revision3 CEO Jim Louderback? His biggest regret was “the lack of any substantive work in Washington to codify and legislate Net Neutrality.” Louderback is also worried about “the bandwidth caps being instituted by broadband and wireless services,” which can only hurt the growth of streaming media services.

Taking a big-picture view, blip.tv’s Woolf says that the industry has yet to shake off the stigma attached to web streaming. “We have a perception problem with the general consumer public about online video; it’s still thought of as amateur hour,” Woolf tells Streaming Media. “This is changing rapidly but is one of the big remaining hurdles to mainstream attention on original web series.”

Looking Ahead to 2012: Expected Trends

OK, so the 2011 post-mortem is done. So what trends drive streaming media in 2012?

“Increased choice of quality niche video content, thanks to the push of YouTube,” replies Boxee’s Ronen. Also, “OTT will become a significant source of revenues for studios,” due to web distribution deals struck with companies such as Netflix, he says.

Here’s a big trend: A recent survey commissioned by blip.tv indicates that online viewing is moving from lunchtime (at work) to prime time (at home). “Audiences are beginning to add original web series into their nightly viewing habits,” says Woolf. In other words, streaming media may be doing to traditional TV what TV did to radio in the 1950s.

To capitalize on this shift, Woolf expects content providers to offer longer, better-produced original web series. “Those longer shows will have the ability to improve their monetization with new tools like commercial breaks, which is something blip will roll out later this year,” he says.

At the same time, celebrities such as Brent Spiner, Kevin Pollak, Kiefer Sutherland, and Kevin Spacey will continue to produce web series in the year ahead, and more stars will join them online. These celebs are moving to the web to gain more creative control and to reach their fans, who they are already interacting with via Facebook and Twitter, directly; another reason for the move to the web is because traditional TV jobs are scarce. As Spiner told Streaming Media recently, “I want a show and the networks aren’t exactly breaking my door down to get me.”

Now on to streaming media technology trends: “I see an increased focus on HTML5, better wireless infrastructure, and unfortunately continued caps on bandwidth and usage, which will continue to depress the industry,” says Revision3’s Louderback. “On the plus side, I expect smart TVs and smart devices to continue to get better and the user experience to finally become useful and usable.”

Red Bee Media’s Plunkett expects streaming to grow for non-PC devices, which will expand in number and variety. This notwithstanding, “Connected TVs and IP-enabled set-top boxes will grow in importance during 2012,” he says. The reason: “Consumers enjoy watching TV on a TV.”

Flingo’s Navin is also bullish: “Manufacturing of Wi-Fi-enabled TVs, Blu-ray players, [and] TV streaming boxes finally achieved economies of scale ... and in 2012 we’re going to see tens of millions of devices sold for extremely low prices,” he declares. “You’ll be able to buy a 42" flat-screen Wi-Fi TV for less than $500, a Blu-ray player for less than $80, and a streaming box for less than $50. This will drive increased adoption of connected devices, and that’s a huge catalyst for streaming media consumption.”

As for mobile media: “Mobile is only going to increase in importance,” says Plunkett. “After all, it is the most pervasive of technologies in many people’s lives ... as the devices, networks, and economics become more suited to video, the growth in consumption will be explosive.” But mobile TV is not simply miniature TV, he warns: For content producers to succeed in streaming to this market, programming “needs to be better tuned to the platform and its characteristics.”

At the signal distribution end, Optibase’s Chorpash believes advanced streaming technology will deliver much lower video latency for live feeds. “This is a big issue with many applications,” he says. This is why Optibase has the MGW Micro Premium encoder that delivers “Ultra Low Latency.”

On the business video side, “I think we’ll see a rapidly growing adoption of multicast fusion,” says MediaPlatform’s Pulier. “Most enterprises want to be able to stream rich media externally as well as internally throughout the whole company, which means they have to address the bandwidth constraints of their WAN. Lots of companies have been investigating multicast fusion as the answer and have been kicking the tires or doing pilot projects, but I think 2012 will bring rapid mainstreaming of Flash and fusion to solve the challenges of video in the enterprise.”

Finally, one trend will continue: Viewers will “want to access the same content, stored in a single location from all devices in the appropriate format,” says Eric Hards, Digital Media Services’ manager of web, motion graphics, and streaming. “This will mean the companies with the best delivery on the most devices with, of course, the most content options win.” Hards sees Netflix as having a “good head start, but they continue to falter on customer support. If the cable companies can catch up here, they may win the war.”

Will Advertisers Catch Up in 2012?

Attracting money remains a big headache for streaming media content producers, particularly from advertisers that are comfortable with the old triumvirate of TV, radio, and print.

None of the experts who spoke with us expect this tendency to change radically in 2012. But most are hopeful that advertisers will spend more on streaming media in the year ahead, as they learn more about what this industry can do for them.

“More and more advertisers will [realize the importance of streaming media], but overall the dollars flowing to online video will remain smaller, in proportion, to the time spent and engagement from viewers,” says Louderback. “It’s getting better, but we’re not there yet.”

“Advertisers, brands, media agencies, and broadcasters are becoming more focused on the promise of advanced advertising,” echoes Plunkett. The downside is that the online audience is still “modest in comparison with traditional broadcast television,” he notes. 

“It is totally inevitable that advertising dollars [will] flow into online video, and it’s happening fast.” asserts Navin. “There are huge amounts of traffic and ad inventory available, and the targeting technologies now available coupled with the robust analytics force marketers to allocate bigger budgets to streaming video. Ad dollars always flow in the direction of better data, more targeting, and higher accountability.”

What About 3DTV?

An obvious elephant in the room of any 2012 prognostication session is 3DTV. Will 2012 be a big year for 3DTV delivered over streaming media?

On this topic, the experts are uniformly ... skeptical.

“[We still] don’t see 3D making a huge inroads until they can deliver it without glasses,” says Hards. Louderback agrees: “[It’s a fad,] until you can get rid of the glasses,” he quips.

“I think it’s still niche,” Navin says. “It probably takes off in gaming before home video.”

“Not yet my friend; not yet,” counsels Boxee’s Ronen. “It’s way too early to think about 3D, in my view,” echoes Louderback. “We have tons of other things that need to be solved first.”

“3D is likely to remain an interesting niche, but consumer fatigue in 2012 will likely mean less discussion and showcasing of 3D as a mainstream in home experience,” Plunkett concludes. But he doesn’t count 3DTV out over the long term: “The installed base of 3DTVs with internet connectivity will increase, so beyond 2012 we may see more activity.”

What Will Streaming Media Look Like in 12 Months?

To cap off Streaming Media’s look ahead into 2012, we asked our experts how the industry will have changed by this time next year. (This way, we can pull their predictions from our files when we interview them for our 2012 look ahead article, to see how clear their crystals balls were.)

Revision3’s Louderback expects to see more programming choices, including original web series and rebroadcast from mainstream TV. “Bandwidth will be better, and device support from the smallest smartphone to the biggest smart TV will increase dramatically,” he predicts. “And tablets will continue to become the most important consumption screen of them all.”

Red Bee Media’s Plunkett is also optimistic. By this time in 2012, he expects to see, “More devices, more content, more technology, more consumer interest, more possibilities, and continued excitement and innovation in what is one of the most interesting times to be in one of the most interesting industries.”

“I expect to see longer shows, better production values, and more efforts by major broadcasters to figure this all out,” says blip.tv’s Woolf. “I also expect to see some consolidation in the market. And the dollars will continue to flow into original series, because advertisers are seeing how effective online video is to reach consumers important to them.”

Flingo’s Navin is waiting for “a ‘Pandora for video’ on your TV that will make streaming content more personal and the broadcast experience more interactive,” he says. “Stay tuned ... next year will be a pivotal year for the industry.”

Only time will truly tell is 2012 meets all of the expectations outlined by our experts. Doubtless a number of unforeseen and unexpected game changers will enter the mix in the months ahead; just as the iPad and iPhone did in years past.

But one thing is truly certain: These are truly exciting times to be in the streaming media industry, and the excitement seems guaranteed to grow in 2012. That’s a prediction we’re willing to stand behind. 

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