Online Video Stats

Nielsen, as well as a number of other companies, measure the number of streams viewed on online video destinations every month.

October was no exception, although the figures were more interesting than usual. mainly because while the top two of YouTube and Hulu remained the same, there were some big changes after that. And it could be the start of a trend set to get stronger over the next few months/years.

YouTube Beats All-Comers

First, the non-surprise. YouTube topped the Nielsen chart for streams in the United States by a huge margin. The Google-owned site racked up 6,632,964,000 streams and 105,923,000 viewers.

Hulu ranked second as it has for a goods few months now. The site managed 632,662,000 streams and 13,472,000 viewers, which though impressive enough isn’t even a tenth of the numbers YouTube can boast.

Facebook Jumps To Third

Then the surprise hits. Facebook has jumped from number 10 to number three in the space of a single month. The social networking site racked up 217,765,000 streams and 31,594,000 viewers – the latter being more than double the number enjoyed by Hulu.

According to CNET, Nielsen Vice President of Media Analytics Jon Gibs, said in a statement:

“Facebook’s rapid growth in online video during the last year illustrates the site’s evolution from simply a communications focused tool to a media portal.”

“Social networking sites are evolving from a venue for catching up with friends to a platform for personal expression, allowing consumers to share their experiences in the full variety of content formats available online.”

Conclusions

This is a potentially pivotal moment for Facebook as it could (and only could) signal a new trend where YouTube is being abandoned in favor for the social networking site.

Facebook has millions of users worldwide who want to share videos with their friends and family and the system Facebook has built-in provides everything they need to do so.

While I can’t see Facebook ever catching YouTube for sheer number of streams every month, Hulu is certainly catchable.

From Mail To The Web

In the 12 years since Netflix launched as a purely by-mail DVD rental company, the world has changed considerably, particularly with the Internet becoming the distribution method of choice for all kinds of media, including of course television and movies.

So it’s no wonder that the company decided to introduce a streaming video service as part of its subscription package a few years ago. And the way things are going, it’s that part of the business which provides the future direction for Netflix.

Three Ways To Heaven

Last month saw Netflix announce its Q3 earnings. Ignoring the financial results, the interesting news was threefold: the company is planning to go international; there was talk of a new device being added to the streaming line-up; ‘Watch Instantly’ viewing figures showed the service to be very popular.

As of yet we haven’t heard any more about the international plans, but the other two points raised have been expanded upon.

PS3 Netflix Streaming

The day after the Q3 earnings report came news that Netflix’s ‘Watch Instantly’ was heading to the PS3 in the United States. It’s been available on the Xbox 360 since last year’s dashboard update but is now coming to the Sony games console as well.

With an installed user base of nine million avid gamers and media consumers, it’s an inspired move. And it ends the exclusivity deal Netflix had with Microsoft for the best part of a year.

According to a corporate blog post today, the PS3 discs which are required for Netflix’s ‘Watch Instantly’ to be used have started to be shipped today. 100,000 Netflix subscribers and PS3 owners who requested the discs are the first batch to receive them, with more to follow in time.

Watch Instantly Watched Incessantly

This news comes as a survey conducted by One Touch Intelligence, and reported by Contentinople, shows how mainstream the use of ‘Watch Instantly’ has become. 62 percent of subscribers say they’ve used the service at least once, while 54 percent said they stream at least one movie or TV show every month.

While most still stream directly to their computers, 24 percent stream content to a connected device. And that figure is sure to increase as the range of products streaming ‘Watch Instantly’ grows.

A Streaming Future

Surely now is the time for Netflix to start considering a streaming-only subscription option as Netflix CEO Reed Hastings has previously implied could happen. While physical media such as DVD and Blu-ray are still important, the future is clearly both digital and streaming. And Netflix is in the best position to take advantage of this evolving market.

Epix

When Epix was first announced back in June, I described it as a ‘Hulu for movies’ and an indication that Hollywood and the movie industry was finally waking up to the need for free or cheap, easily-accessible Web destinations to consume content legally.

After all, the music industry failed to do this for years and it lead to the situation we are in now where despite Apple iTunes and a wealth of other places to stream or buy music (my favorite being Spotify), piracy is still a huge problem.

Half-Baked

While piracy is also obviously also a problem for Hollywood, I don’t feel it’s too late for the movie studios to stop the rot. And ventures like EpixHD are the way to go about this.

However, a TechCrunch article by MG Siegler got me thinking. He argues that while EpixHD is looking great, it’s still just another half-baked service offering a small sampling of the thousands of movies available.

Integrated Online Movie Store

What Hollywood really needs is an integrated online movie store with content from all the major studios and a range of the smaller or independent ones.

Even if it cost slightly more to consume the content, a one-stop shop coupled with a user-friendly interface could make it a winning strategy.

Options Galore

As Siegler makes clear, most of us have at least one option for streaming movies already in our houses, be it a computer, a games console, or a set-top box such as Apple TV or Roku. But the problem is they all offer a segmented service, with some studios aligned to some, some aligned to others.

For as long as I can remember, we’ve been able to rent a new movie on the day of release from a Blockbuster or other video store. But online it’s a different story, with the movie studios putting restrictions in place to prevent that level of user-friendliness.

Promoting Piracy

Hollywood is scared of piracy and scared of a wholehearted move to the Internet for fear of curtailing its other revenue streams. But taking this path is only going to have one effect – make piracy the big winner. And with piracy, the studios don’t see a cent of revenue.

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YouTube Revenue Streams

YouTube is a hugely popular site, one responsible for turning millions of people on to online video. But its 400 million-plus worldwide user base so far gets the full run of the site for free, with only adverts occasionally passing in front of their eyes.

Whether a purely advertising-based business model is enough for the site has long been the subject of debate. Regardless, I’m sure Google would like to see higher returns on the $1.65 billion it paid to acquire the site a few years ago.

YouTube Movie Rentals?

The solution could be to evolve the YouTube business model slightly, introducing a paid element alongside the current free, advertising-based one. It was suggested a few days ago that streaming movie rentals could be coming to the site, with a number of movie studios showing an interest.

Movies would be offered for around $3.99, with both sides gaining an obvious monetary benefit from the deal. No such move has yet been confirmed but that hasn’t stopped the speculation ramped up, with financial analysts even making wild assumptions about the possibility of it happening.

Analyst Gazes At Balls

According to Silicon Alley Insider, ThinkEquity analyst William Morrison reiterated his BUY rating for Google today by taking a look in his crystal ball and doing some simple math. He said:

“If Google is able to offer access to newer movie titles to its approximately 400M users globally, we believe that it could become a billion dollar business for the company within a few years.”

Math Lesson

Leaving aside the fact this may not yet happen, the math is also off. It assumes every user would buy one movie rental per year, which isn’t going to happen. Add to that the fact that this service is only likely to be available in the U.S. (as so many are) and YouTube’s users come down to around 120 million.

Not all of them are going to buy 3 or 4 movie rentals from YouTube, especially when there is already competition from the likes of Apple iTunes, Amazon Video on Demand, Netflix, Blockbuster, Redbox, and many others.

Not Forgetting…

Then there is the fact that YouTube is still generally a computer-based viewing option, unless people have Web-enabled televisions or set-top boxes, or are able to connect their PC to their TV.

And lastly is the price. $3.99 might be the accepted standard for new rentals but Redbox is offering movies for a dollar a day and provides serious competition for all the online streaming services, YouTube included. That is if Google actually goes ahead with this plan. Which isn’t yet guaranteed.

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Terrestrial Online Offerings

Here at Web TV Wire, we’ve recently been looking at how the online video sector in the U.K. has started to heat up. The BBC iPlayer is already here and doing very well, with ITV Player and 4oD backing it up to give British viewers a VOD catch-up TV service for the major terrestrial channels.

Just Like Buses…

Then there is the MSN Video Player, which although only older archived shows is another option for British viewers of Web TV. I reviewed Microsoft’s offering a few days ago, deciding that while the content was excellent, the video quality let it down. My view on that hasn’t changed since.

These offerings will soon be joined by Arqiva, which recently bought the infrastructure of Project Kangaroo and immediately promised to use it to launch a video-on-demand service in the next few months. And Hulu, which is planning to start its journey east from the United States by launching a service in the U.K.

A Changing Role

What these increasing options are doing is prompting more and more people to watch television via the Web. And for that you really need a Broadband Internet connection with speed and stability. Which is exactly what more and more people in the U.K. are choosing.

Ofcom published its annual Communications Market Report for 2009 last week. It shows how the role of the television is changing in our lives, and a big part of that change is down to the Internet and the way we access entertainment.

BBC iPlayer On The Up

For starters, 15 percent of people who have a reliable broadband connection now watch programs via the BBC iPlayer. Which equates to around 5.2 million people regularly accessing the catch-up service for shows such as Top Gear, Mock The Week, and Live At The Apollo.

That 5 million is almost double the amount of people who were using the service this time last year. A number of factors could be at play here. Online video is more mainstream and so more people will have given it a try and been blown away by the experience. The iPlayer redesign will also have helped, with streaming and download options both being improved upon.

Driving Broadband Take Up

On a bigger level, online video is also driving the take up of Broadband Internet services in the U.K. 68 percent of the nation has now moved on from the modem and narrow band and is surfing at high speed. That’s a 17 percent increase in the space of a year.

That isn’t a coincidence. More people are realizing that to truly get the best of the Internet, including having access to VOD TV catch-up services such as the iPlayer, something a little faster than a 52k connection speed is required.

[Via Broadband Finder]

Net Neutrality Vs. Costs

Net Neutrality is the idea that all Internet traffic should be treated the same, no matter where it’s coming from, or what it’s being used for. It’s an important tenet for the future of online video because here is a medium that, by its very nature, requires more bandwidth than any other.

Cisco recently estimated that, by 2013, 90 percent of total Web traffic will be from video. This is down to the fact that video uses more data than Web pages, images, or text files. As well as the fact that online video is growing ever more popular, with new services being launched and new viewers discovering the joy of video on demand.

ISPs are not happy with the way things are going. Most, at least in the UK, now offer services with unlimited bandwidth and downloads. More fool them, maybe, but while offering customers these kinds of deals, they are starting to complain about being burdened with the costs of delivering online video.

BBC Vs. BT

This month began with the BBC complaining that BT Broadband customers on the 8 megabit per second (MBPS) package were having their bandwidth throttled if they watched the iPlayer at peak times. Customers who do so are seeing their service reduced to under 1Mbps between 1700 and midnight.

Now, according to the Financial Times, BT has gone one stage further, not only defending its actions but threatening that the situation has got to change or there will be consequences. John Petter, managing director of BT Retail’s consumer business reportedly said:

“We can’t give the content providers a completely free ride and continue to give customers the [service] they want at the price they expect.”

“[video sites consuming bandwidth is a] much bigger issue than the BBC iPlayer, it’s true of all forms of video content coming across the web. It’s becoming a more and more pressing issue.”

Petter is essentially asking the video sites to help BT and other ISPs pay for the costs they are generating for them. He even suggests that doing so could guarantee picture quality, which sounds like blackmail to me, or at least you scratch our back and we’ll scratch yours. I guess net neutrality hasn’t reached the UK yet.

Conclusions

I can certainly understand the ISPs concerns, because YouTube, the BBC iPlayer, Hulu, and the like do take a lot of bandwidth to operate. And the emergence of HD services is only going to make this worse. But surely it’s up to the ISPs to individually price their services to cover the costs of carrying online video traffic.

While it may mean we as consumers end up losing the unlimited packages which have become standard, it would seem the only plausible solution in a capitalist system. Especially as I think each and every online video service paying each and every ISP would be an impossible-to-manage idea.

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Explosion In Internet Traffic

Cisco, a company that designs and sells networking and communication technology, today released an updated version of its Visual Networking Index. This study looks at how the Internet is likely to grow between now and 2013, and what sectors will be responsible for driving traffic and bandwidth usage.

The research predicts that total IP traffic is set to hit 56 exabytes of data per month by 2013, up from just 9 exabytes of data per month during 2008. This means that annual global IP traffic will exceed two thirds of a zettabyte (1 trillion gigabytes) by that time. Which is going to put a hell of a strain on the system.

Video Dominant By 2013

Cisco forecasts that by 2013, 90 percent of total Web traffic will be from video. It already makes up around a third of Web traffic (not including P2P) but the next four years is going to see such an explosion in the use of online video that it’ll likely be the dominant force on the Internet.

This incredible figure is partly down to the fact that video files are usually a good deal larger than text files, still images, or Web pages. But there is also the fact that IPTV is increasingly becoming the primary method of delivery, with broadcast and cable TV set to become the second string choice.

Video Is Everywhere

Another element adding to this predicted growth of online video is the number of mobile devices now capable of capturing video and then sharing it on the Web. Yesterday saw Apple announce the new iPhone 3G S at WWDC 2009 and it’s the first model of the iPhone which is capable of doing exactly that, meaning video is going to be heading both ways from people’s iPhones very soon.

Then there is the growing trend for video communications such as in Instant Messaging conversations and Internet calls using Skype and the like. These may not use much bandwidth individually but if everyone starts using this method to chat to their friends and family then video will once again be at the center of a huge traffic boom on the Web.

Conclusions

Although it’s good to hear that video is going to be such a huge part of the Internet of the future, it does open up the possibility of serious problems. Are ISPs going to be happy with these level of usage, and what will they do to counter or control it? Are the InterWebs likely to slow down for all of us? I guess we’ll find out in four years time.

Hulu is…

Hulu is, by any measure you care to you wish to look at, a success. Its branding is strong, the content is great, viewer number are steadily growing, and it’s even making money. Not as much as it would like, obviously, but then which of the numerous online video companies is achieving the turnover it wants? Even YouTube is struggling despite getting enormous traffic and being known the world over.

Revenue Options

All online video services, barring maybe the BBC iPlayer which is paid for by British license fee payers (sort-of), rely on advertising to pay their bills. Hulu is no exception. Unfortunately, advertising rates, especially online, has dropped considerably over the past year or so. And that has hit online video companies, as well as blogs, Web versions of newspapers and other sites.

There is, obviously, an alternative method of raising money, and it’s one that News Corp has used often, most notably with The Wall Street Journal. News Corp is an equal partner in Hulu, along with NBC Universal and recent buy-in Disney. So, could Hulu soon charge for content, or shift over from the free, advertising-based model to a subscription-based model?

Viewing Figures

The latest comScore metrics for April are out, and the figures show a small (4.4 percent) growth in overall streams, and a drop in unique visitors from 41.5 million in March to 40.1 million in April. It’s not a disastrous result for Hulu, which is still sitting pretty in third place behind Google (YouTube) and Fox Interactive (MySpace). But it does show the incredible growth of recent months may be at end, at least that is if you believe the numbers.

At around the same time as this data was released, there was a little spanner thrown in the works for all those people who currently enjoy watching content on Hulu for free, many of whom have actually dropped their cable subscription thanks to the explosion of free online television options.

Subscription Model On Way?

According to Daily Finance, Jonathan Miller, News Corp’s man in charge of digital services, suggested that some Hulu content could potentially be made available only to paying subscribers. Miller, who is set to attend his first board meeting at Hulu on Monday, said:

“In my opinion the answer could be yes, I don’t see why over time that shouldn’t happen. I don’t think it’s on the agenda for Monday [but] it seems to me that over time that could be a logical thing.”

So it is merely speculation on Miller’s part but its speculation coming from a man who is due to have at least a hand in shaping Hulu’s future. I can well see this happening as the costs go up and the viewing figures start to plateau as they already seem to be doing.

Conclusions

Would enough people pay for Hulu to make it worthwhile setting up a subscription-based revenue model? What sort of content would need to be behind the pay wall to warrant the fees? And would viewer numbers drop off completely if too much content disappeared behind that pay wall?

These questions are all ones likely to be answered in the coming months as Hulu works out where it’s going to go next. But be prepared to accept the free ride may be over soon.

YouTube Stick

YouTube has been getting rather a lot of stick of late. Mainly because it’s facing stiff competition from Hulu, the (at present) U.S.-only online video service. While Hulu deals exclusively in premium content, YouTube made its name, and continues to do so, with user-generated content. You know, videos of babies gurgling or dogs riding skateboards.

The problem for YouTube is that while legally-obtained content from media companies and TV networks is fully-monetizable and consequently profitable, UGC generally isn’t. Mainly due to the risk of copyright infringements occurring. And seeing as 96 percent of YouTube videos are currently estimated to be UGC, this is a problem.

YouTube Carrot

But YouTube isn’t about to turn round and stop accepting user-generated video, despite recently announcing that there is 20 hours of video uploaded to the site every minute. Ryan Junee announced the figure in a post on the Official YouTube Blog.

He states:

“In mid-2007, six hours of video were uploaded to YouTube every minute. Then it grew to eight hours per minute, then 10, then 13. In January of this year, it became 15 hours of video uploaded every minute, the equivalent of Hollywood releasing over 86,000 new full-length movies into theaters each week. Now, 20 hours of video are uploaded to YouTube every minute.”

Masses Of Content, No Money

Which means that since Google took over the site the amount of video being uploaded to YouTube has more than tripled. That being despite Google cracking down on the amount of obvious copyright-infringing content being added to the site. Out of necessity more than anything lest it faced more $1 billion plus lawsuits from disgruntled companies such as Viacom.

20 hours of video-per-minute is a mind blowing amount of new content being added to the site constantly. And it makes Time magazine’s recent allegation that YouTube was one of ‘The 10 Biggest Tech Failures of the Last Decade‘ sound even more ludicrous. If only more of that 20 hours of new content every minute could be successfully monetized and in a way which did more than just pay for the bandwidth being used then Google may just have a moneymaking property on its hands.

Because that is the problem as it stands at the moment. YouTube is making a substantial amount of revenue every year but it’s currently costing more to maintain the site than is coming in. Which is hardly a surprise with all that user-generated content being uploaded on a minute-by-minute basis.

Keep It Coming

Not that YouTube is complaining mind you. Junee goes on to say, “Thanks, and let’s see if we can get to 24 hours — a full day’s worth of video uploaded every minute.” So in essence, keep it coming, even if the public’s desire to share footage of their child or pet doing unusual things is costing the site dear.

And now YouTube is making an even bigger rod for its own back by turning on instant video responses in the comments section of every clip. Sure, Seesmic has been offering the exact same thing for a while now but then it has neither the traffic, the sheer amount of content, or branding power YouTube does.

From Bad To Worse?

Depending on where you live, the type of Internet connection you have got, and the terms your ISP enforces, that image to the right could be a regular occurrence for you. As it stands, the Internet can slow down at times to make loading heavy-graphic Web pages or transferring files a very pedestrian affair.

However, it could be about to get a lot worse, if new research to be published later this year is to be believed. Internet brownouts could become very regular happenings, and online video is being touted as one of the main reasons behind it.

A Internet brownout would see people suddenly finding their computer unusable online as the level of traffic went beyond the current infrastructure. At the moment, consumer demand is thought to be growing at around 60 percent a year, which if sustained or increased could see brownouts start to show up as early as 2010.

Online Video To Blame

Online video is being blamed for this, along with an increased number of people working from home and using the Internet to do so. Nemertes Research claim that the problems could begin next year, with 2012 marking the time when the Internet becomes nothing more than an “unreliable toy”.

Online video is growing at an almost exponential rate. YouTube alone now accounts for as much Internet traffic as the whole of the Web did in the year 2000. Then there are video-on-demand services cropping up all over the place, with Hulu in the U.S. and the BBC iPlayer in the UK being of particular interest.

If the bandwidth demands of online video are bad now, then it’s only likely to get worse. Not only are more people using their computers to watch television on over the Web, but content is increasingly being offered in high-definition, which can up the demands placed on the system four-fold.

Conclusions

The infrastructure is being updated around the world in order to make this dystopian future not become reality. However, super-fast fiber-optic cables are unlikely to be laid quick enough to keep up with the demand. And even if they are then rural areas are still likely to experience problems.

This may just be scaremongering of the highest order but it cannot be denied that the demands being placed on the Internet are increasing all the time, especially when it comes to delivering HD video content over the Web.

[Via Times Online]