Brian Wallace is a social media consultant. He authors a blog at nowsourcing.com/blog.
With the economy showing no signs of bouncing back in 2009, consumers will inevitably be searching for channels of escapism, means to momentarily forget their everyday woes, financial and otherwise. Although most e-businesses are bracing for the worst, herein lies a tremendous opportunity for growth in the online entertainment industry.
Admittedly, the concept of a singular online entertainment industry is a bit overwhelming, for its segments are diverse and sprawling: websites ranging from e-production companies to video aggregators to web 2.0 entertainment news portals can all be classified under the industry’s umbrella. But despite the industry’s breadth, which is evolving at this very moment and in need of constant re-definition, there’s still a formula for success moving forward in a rocky economy.
Innovation
Competition in the industry is unquestionably fierce. Dozens of new websites are popping up every week, and traditionally brick and mortar companies are expanding to the online space. In regards to video, a November Neilson report concluded that in the third quarter 2008, TV, online, and mobile viewership were, across the board, at all time highs. In order to break away from the masses and grab the greatest marketshare possible, innovation is absolutely critical.
In 2008, Hollywood innovated traditional online efforts with virtual environments for projects such as Lost and The Dark Knight and energized their fan bases. Youtube changed gears and started streaming HD and offering full movie clips. And some ventures, such as Seth MacFarlane’s Cavalcade of Comedy, turned traditional ad models for online entertainment on their head. In this highly spectated deal, Macfarlane is creating 50 shows for Google, all sponsored by Burger King, and distributed through AdWords.
In a climate where consumers and advertisers are clinging to their wallets, how do you create something that’s simply too appealing to ignore?
Conservative Scaling
Even with increased traffic and engagement, the online entertainment industry isn’t exactly a piggy bank – and meaningful monetization won’t be a reality for many years. Meanwhile, EMarketer’s prediction that online video advertisements would shoot from $500 million in 2008 to more than $5 billion by 2013 stands in dramatic need of readjustment. Companies like Brightcove, Netflix, Revision3, and Veoh are tallying significant job cuts. These cuts are appropriate, and wise industry players will scale at a conservative pace.
The entertainment and celebrity news segment vividly illustrate the importance of conservative scaling. Take, for example, News Corps’ Page Six website, which launched in December of 2007 with over 16 employees. Operating independently of the NY Post’s Page Six print column, it was shut down citing inopportune market conditions.
Meanwhile, most successful entertainment and celebrity news sites in 2008 have flourished on the backs of only a handful, or fewer, full-time employees – and grown at exponential rates. Perhaps most impressively, the Cleveland, OH based Gossip Girls recorded approximately 6000% growth in traffic and a jump from $67k to over $700k in revenues in 2008 (according to my phone conversation with CEO Brad Mendall), all with less than 10 full-time staffers. PerezHilton, meanwhile, was operated by a staff of one, Perez himself, until recently.
Knowing when to take on more personnel, and how many, is particularly critical in economic downturns. Sure, job and payroll cuts are options, but they hurt both team morale and forward momentum.
Consumer Focus
The ability to connect with consumers provides web-based businesses its most powerful advantage over brick and mortars. And the application of this ability for the online entertainment industry is far-reaching: providing consumers with an intuitive and user-friendly interface, creating a mechanism for discussion and feedback, responding to consumers with both crowd-sourced proposals and solutions.
Plus, there’s the need to communicate without any pedestal involved, from an honest, sometimes peer-to-peer perspective. As the average consumer has become increasingly conscious of where he/she is allocating his/her money, companies that establish respectful relationships with their user bases will be at a considerable advantage.
Hulu, commonly praised as 2008’s preeminent online entertainment success, tallied 12 million monthly users and 145 million monthly video streams just 8 months after its launch. But what makes the site truly unique, and ultimately head and shoulders above competitors like Joost, is that it seems to truly connect with its users: a simple yet sleek interface, easily navigable content, and a strong brand image of providing (or at least earnestly trying to provide) the best and most demographically relevant content.
Similarly, there exist a handful of video portals, such as Funny Or Die and Spike’s PG Porn, which produce content that demonstrates a real kindred spirit with audiences. Collaborative projects like Massify and MeDeploy also fall into this category. Picking up on pop culture trends, incorporating relevant and niche lingo, and even leveraging the success of other relevant sites for jokes/storylines creates a lasting impression suited to spread from one community to the next.
Even though online entertainment doesn’t inherently seem like a collaborative process, the more a company can make their users feel valued, the more value they will bring to the company.
Our economic recession means a greater number people will be spending an increased amount of time online and open to new means of diversion. This will inevitably be a time for many online entertainment companies to throw in the towel, but for some, it will be a springboard to capture wider, more engaged audiences and maximize financial growth.
Jeffrey Appelbaum contributed to this report.
Brian Wallace is a social media consultant - get in touch with him on his blog, or follow him on Twitter, Plurk, and LinkedIn.
Image courtesy of iStockphoto, ktsimage
Tuesday, January 13, 2009
HOW TO: Survive in Tomorrow’s Online Entertainment Industry by Brian Wallace
Do tough times draw TV-viewers to Web?: Eric Auchard
-- Eric Auchard is a Reuters columnist. The opinions expressed are his own --
By Eric Auchard
LONDON (Reuters) - In the first global recession of the Internet Age, budget-conscious consumers are showing they no longer have an endless appetite for every new gadget or media service.
Many users are looking to eliminate overlapping services that offer more of the same old formula entertainment in a different package or on another device.
With iPods, digital TVs, video recorders, multimedia PCs and broadband connections in many households, consumers considering their options now find a range of cost-effective online substitutes for broadcast, cable or satellite TV.
TV programing, not just short-form entertainment, is served up on video sites in markets around the globe at Google Inc's YouTube, Daily Motion, Joost or at Hulu in the United States.
Could 2009 then be the year we seriously ask "What's on the internet?" rather than "What's on television?"
A study released last week by the consulting group Deloitte on media consumption habits suggests that this digital switchover may be occurring before our eyes.
The survey, completed in October, of U.S. consumers aged 14 to 75 found that a majority of consumers already see their PCs as more of an entertainment device than they do TVs.
The data is part of a five-country study of nearly 9,000 consumers that found parallel shifts toward online entertainment formats from TV, albeit with a more pronounced focus on mobile phone usage outside the US. In Brazil, consumers spend an average of 19.3 hours online for personal use versus 9.8 hours watching TV.
In the United States, three-quarters of so-called "millennials" -- young consumers aged 14 to 19 raised entirely in the Internet Age -- say PCs offer more entertainment than TVs.
About half of Baby Boomers agree that PCs offer more. Even a surprising 42 percent of the "Reading generation," people aged 62 and above, see PCs as more entertaining than TVs.
U.S. "millennials" typically spend 18.8 hours a week online, nearly twice as much time as they spend on TV, the report finds.
They watch DVDs on computers for an average of almost two hours. They are nearly five times as likely to listen to music on a PC, phone or music player than to the radio, the data shows.
This all may come as news to "mature" adults -- those over 62 -- which the U.S. survey found watch 21.5 hours of TV per week, double the time they spend online.
But the shift has already happened, however long it may take older generations to catch up, says Ed Moran, Deloitte's director of product innovation in New York, who led the study.
DIGITAL SUBSTITUTES
Forced to consider budgeting their once free-spending media habits, consumers may find getting better connected online to be the best way to cut their entertainment and communication costs.
Market researchers have seen a pick up over the course of the past year in switching behaviors as consumers cut back on premium movie or music packages or video rental subscription services.
For active consumers looking to watch more for less, there are abundant alternatives, albeit ones that may require several hours of battling "customer service" operators to extricate yourself from subscription traps, or in Europe, TV licensing fees.
Savvy consumers are finding "good enough" digital substitutes online that allow them to forego subscribing to pay TV or online video rental services.
That's true already among the young, but is likely to spread among other age groups as they see the value for money.
To be sure, only as these older generations with far greater discretionary spending power switch will the trend spell the end of older media models.
Gartner analyst Mike McGuire says young people with newer PCs are increasingly taking over the functions of programing their own media, given the amount of TV, movie and music content they can stream or download.
TV over the Internet is sneaking up on us, slowly, unlike the music revolution set in motion by online file sharing service Napster a decade ago and laid low the music industry. Internet bandwidth limitations probably limit how many can be channel surfing online at any one time.
But Broadcasters are getting into the act. In Britain, the BBC iPlayer lets Web users replay the last week of broadcast TV and radio programs and ranks as the second most popular multimedia site behind YouTube. For now, overseas users can only hear BBC radio on the iPlayer.
True, watching TV on the web will be held back until consumers can pick and choose on what device and when they see any particular program. Regulators could do more to help break down media bundling in favor of a la carte pricing that allows consumers to pick and choose what they watch while freeing up programing for the Web.
While "live TV" is still a work-in-progress on the web, a growing amount of legitimate news and entertainment is free to view, via laptops or on smaller digital TV displays hooked up to computers.
For all but the most premium film or sports content, there is a growing variety of quality online substitutes.
It's not high-definition on a fat screen but it's playing when you want, at a price that's hard to beat.
-- At the time of publication Eric Auchard did not own any direct investments in securities mentioned in this article. He may be an owner indirectly as an investor in a fund.
(Editing by Chris Wickham)
This article and many more like it, can be found at: http://www.reuters.com/article/reutersComService4/idUSTRE50C0K220090113?sp=trueChanging the Scope of Online Entertainment
I know that I have spoken to many of you about what my plans are for gaining an online presence. This blog is to give you a better understanding of why I am building the site and what type of site it will be. I encourage you all to give any suggestions on what you think I should do, as well as sites to consider when completing this task.
I am in the works of building a website that will get you all of your entertainment needs in one place. As many of you know, finding one website to get your shopping needs, sports, travel, music, tv & movie info, dating & social networking, celebrity news & gossip, and personal development is non-existent. My goal is to give each of you and the growing internet community, a chance to get all of these things from one source. It has been a difficult journey finding which sites are the most visited and what things people search for within each of these categories, but I believe that over the past three months I have been able to compile a list of sites that best suit the general internet user. Over the next few weeks I will be building and improving the capabilities of the site as I continue to add your favorites. Please feel free to comment back with some of your favorite sites to visit and I will be sure to take them into consideration when adding links.
There will be more blogs to come as the site is nearing completion and you all will be able to preview it along the way. I plan to launch the site in early April and look forward to your responses to it.
