Is YouTube Red Poised To Be The Next Netflix?

Originally published at TVREV.com on October 22, 2015

YouTube rolled out it’s new subscription service Red yesterday in an announcement that was full of surprises.

To begin with, the $9.99 service includes both Google’s gaming and music applications, along with the ability to watch videos commercial-free. Videos are downloadable too, for offline consumption. And then there’s original content, consisting of series starring some of YouTube’s best known creators.

So how does it all stack up? TV[R]EV takes a look.

Music
This is a very clever addition as it ties in Google Play users while targeting the millions of people who use YouTube (and by extension, Vevo) as their go-to music source. Red will allow users to utilize a feature called Background Play that (as the name implies) allows videos to keep playing in the background even when you open another app. This will be a huge bonus to anyone who wants to listen to music on YouTube without having to keep the app open and the phone on— it essentially positions YouTube as a competitor to Spotify and Apple Music and more than justifies the $10/month fee.

Downloading
The ability to download video for  offline viewing is probably the single most requested feature for OTT sites. Most forbid it due to fear of piracy. Amazon, however, took the leap last month, allowing users to download video for future viewing and now YouTube follows suit. This will be a very desirable feature, though it’s probably more desirable for long-form content than for short-form, given the ability to facilitate a binge-viewing jag, YouTube’s decision to allow it is more of a “nice to have” rather than a “must have.”

Gaming
YouTube’s Gaming app is a Twitch competitor, designed to give users access to game-related video (as opposed to actual games.) Including this in the YouTube Red package is a smart move though, as it gives another group (hardcore gamers) a reason to sign up for Red.

Original Content
YouTube needed to do this— there’s not much “professionally produced” content that hasn’t been snatched up by Netflix, Hulu and Amazon, and there’ not much professionally produced content from their own stars. What Originals does is give series-like structure to creators like Pew Die Pie, hopefully transitioning them from free-form videos shot with barebones technology into something much slicker and more easily marketed to both advertisers and audiences.

The danger here is that the transition might alienate their creator’s current fans, by making them appear too “corporate.” At the same time, there’s the danger that many of these creators might not transition well to more structured formats. Fortunately for YouTube, they don’t need “many” of them to make the transition— just one or two per season will do, provided those one or two become the sort of breakout hits that help YouTube Red obtain and retain subscribers.

It’s also unclear how much the creators are being paid for the new programming and how it matches up with the ad revenue they’re currently drawing. The split clearly has to be in their favor to make the new formats worthwhile.

The Name
As Digiday was quick to point out, RedTube is a well known porn aggregator. Oops.

The Prospects
While YouTube Red will be able to sweep up a lot of YouTube’s hardcore adult fans, the real difficulty is going to be with the middle school and high school students who make up a sizable percentage of their base.

It’s not that the service isn’t worth $9.99/month—as noted earlier, the music service alone is probably worth that for someone who’s not currently using Pandora or Spotify—it’s just that the potential subscribers’ parents aren’t likely to see the value of YouTube Red’s proposition. $10 a month is a lot to ask parents to pay so that their special snowflakes don’t have to watch commercials. It’s a lot to ask too, if the only value is that the special snowflake gets to watch Pew Die Pie in more structured, series-type videos.

That’s why we see Red as being a tough sell to parents, with lots of conversations that contain some variation of “I’m not paying ten dollars a month, so you can skip through commercials.”

So the question becomes how many of YouTube’s adult users are willing to put up the money for something that (music service aside) doesn’t offer a whole lot of additional value, particularly since YouTube’s ad serving system, which lets viewers skip ads on many videos after 5 seconds, is not particularly intrusive. Similarly, original short form series with YouTube stars are intriguing, but probably not $120/year worth of intriguing.

We’ll reserve our final judgement for when the product is rolled out for real, but until then, the chances for success are looking just okay.

The Wait Is Over

Originally published at TDG Research on October 22, 2015

After almost two years of waiting, Nielsen has finally delivered on the OTT measurement system for which the industry has been waiting. Called “Total Audience Management” it promises to be a real game changer, boosting industry adoption of TV Everywhere.

This, in turn, will boost the amount of television being watched via OTT. Adoption of the system will launch a new era, dramatically changing the way everyone – from networks and MVPDs to the folks at home – looks at TV.

Nielsen currently has the advantage of being the only measurement system accepted by all parties: advertisers, networks and MVPDs. If the company can deliver on its promise of counting OTT views the same way it counts linear views, it could overcome the networks’ objections to releasing content for viewing on their own or MVPD TV Everywhere device apps.

If anything, networks are excited to enable this type of anywhere, any-device viewing as it will likely increase the amount of time people spend watching television. More viewing time means higher ratings and increased profits.

For MVPDS like AT&T, Comcast, and Verizon that provide both Internet and pay TV service, more OTT viewing via their TVE apps increases subscriber bandwidth use. An uptick in bandwidth use benefits multi-service providers because broadband is generally a more profitable business segment than pay TV.

Also, with Nielsen counting OTT views, TVE apps likely will become more attractive to networks, leading them to release more programming and demand fewer restrictions. This would make for a superior user experience – a win for consumers and providers alike.

Some Encouraging Stats
Nielsen revealed their Total Audience Management product to Adweek this week, while providing some initial stats for an unnamed network drama. This provides very encouraging news for the TV networks.

The first bit of good news: Nielsen found that 55% of the total audience watched the unnamed show live, with 14% watching via a connected device or OTT app (6% and 8%, respectively). Counting those additional viewers should provide a healthy bump to the show’s overall ratings.

But drill down to the 25-34 year old demographic, and those numbers are even more impressive. For that demo, only 15% of viewers watched live, while a whopping 40% watched via a connected device or OTT app (22% and 18%, respectively). Since advertisers covet these younger viewers, the jump in ratings that comes from adding in 40% of the 25-34 year old audience should certainly help raise network ad revenues. It may also reaffirm television’s overall stature as an advertising vehicle capable of reaching young adults.

Broader Measurement
The new ratings system eschews overnight or real-time ratings for a broader window, looking at views over the course of a week. This is more reflective of how people watch TV now, where “real time” has come to mean “this week” (or “before the next episode airs”) as opposed to “tonight.”
It is also important to note that many views are started on one device, continued on another and finished on a third. Allowing networks and advertisers to get accurate ratings for this type of quantum viewing will allow the industry to adapt to the way viewers watch TV today.

Coming Soon: The Rise of OTT
Now that the long wait for Nielsen is finally over, OTT can begin to come into its own. As OTT picture quality rivals that of QAM (the traditional cable TV delivery format), viewers will see numerous advantages to freeing themselves from the actual cable cords – not least of which being the aesthetics. Who really enjoys looking at yards of cable strung throughout the house?

As predicted in my Spring 2015 report on OTT Advertising, OTT viewing should approach 50% of all viewing within the next 5 years, eventually overtaking QAM.

Hands On With Roku’s New OS 7

Originally published at TVREV.com on October 16, 2015

Roku rolled out its new OS 7 operating system the other week without a whole lot of fanfare.
But the features they did roll out should be the cause for much celebration for Roku users. And much fear in Cupertino.

There’s voice-enabled search. A watch list. Hotel and dorm room use. A new and improved iPhone app.

What’s notable is that since many of these new features are contained within the aforementioned new iPhone app, they’re available to everyone who already owns a Roku, any model released since 2011, anyway. This is a huge advantage as getting all these features on a $50 Roku stick is a huge value and and while some of the features on the new $150 Apple TV may be a little slicker, they’re certainly not $100 worth of slicker.

That matters, because for $150, you can hook up three Roku sticks, giving voice searchable streaming capability to every TV in the house. (The average American home has three TV sets.The new app really is the revelation Roku says it is.

It’s got a very easy to navigate main menu with Search and Remote as the top two options. Choose “Search” and you get a simple screen with just two graphic options: Voice or Text.
Roku performed admirably on our voice recognition tests, easily identifying Rizzoli and Isles and Starsky and Hutch. You can also search by actor names and Roku had no trouble with Mariska Hargitay and got Lupita Nyong’o when we limited the search to “Lupita” The only name it couldn’t get was “Uzo Abuda” from Orange Is The New Black, but overall,the voice recognition was pretty flawless and we’ve been relying on it since.           

Your own personal Watchlist
Calling up a show also gives you the ability to “Follow” it, which means that you’re notified when new episodes are posted on a range of streaming networks, including Amazon, HBO Go, Crackle, Hulu, Vudu, FoxNow, FX and others. Netflix was the only major service conspicuously missing.

But here comes the really amazing part, the thing that sets Roku apart from the pack: the shows and movies you follow are collected under the “My Feed” tab and become your own personal Watch List.

No more having to struggle to remember whether Treme was on Netflix or Amazon or HBO. No more clicking through various and sundry submenus to see whether there’s an episode you’ve missed.
You can add movies and TV shows to the “My Feed” list. Actors too. It adds a personalized program guide layer to Roku that’s been missing from all the other streaming devices, including the new and improved Apple TV.

The remote function on Roku is pretty slick as well. It has an automatic 10-second rewind button, for lost bits of dialog and turns on closed-captioning then too, a schtick that annoyed us at first glance, but which we quickly came to appreciate.

Roku OS7’s final trick is the ability to easily log in in hotels, dorm rooms and other places that have password-enabled WiFi

Here again, things could not be simpler. Roku generates a unique network name and password and you use that to log in on your laptop or tablet. For frequent travelers, taking the Roku stick along on trips is a nice bonus. It’s also something Apple TV can’t do.

Roku’s still the one to beat
With voice commands, a watchlist and a $50 price tag, Roku is still the gold standard for streaming players. The “My Feed” watchlist in particular is a killer feature, giving Roku the DVR-like feature set that streaming devices have been missing. If we were Apple, we’d be worried.

Is Facebook The New YouTube?

Originally published at TDG Research on October 15, 2015

News reports this week indicate that Facebook is beta testing a new Video tab on its mobile app. That’s not surprising, given Facebook’s emphasis on video over the past year – a push that has seen the number of daily video views on the platform go from one to four billion (from September 2014 to May 2015).This is a huge leap, and it’s likely to go much higher still.

So is Facebook going to unseat YouTube? What about the TV networks? Or Netflix and Hulu?

Facebook is well-positioned to take a sizable share of the video market. It serves up video using a very different system than YouTube, making it an attractive alternative to many people. Add to this the strong likelihood that it will start showing video from TV networks (clips or full shows), and you have a strong case for Facebook’s growing dominance in video.

Different User Experiences

Viewers are still, for the most part, finding YouTube videos via search or from an external site link. Once selected, the video plays on its own page, with a list of similar videos on the side. Immediately after the selected video ends, an auto-play feature plays a similar video. But, since many (if not most) users are not logged in, the site has no real data from which to pull, making its recommendations spotty at best.

Facebook’s recommendations, however, are anything but random. They are served up by the Mighty Algorithm. This allows the site to make recommendations based on what individual users might actually want to watch. Gone may be the real sense of boundless discovery found on YouTube, but with Facebook video, you can at least count on the content being of interest to you. For many people this is the ideal experience. They have no desire to browse through YouTube looking for hidden gems, and are happy just to lean back and enjoy whatever videos Facebook serves them.

The social platform can rely on the reams of data it has about users: what they like, where they vacation, who their friends are, etc. Further, once users start engaging with Facebook video, the algorithm can factor in what they watched and what they skipped, using that information to make its recommendations even more relevant.

Long Versus Short Form Video

Facebook has two possible paths when it comes to the TV networks. It can provide networks the opportunity to use clips to increase awareness of, and drive tune-in to current TV shows; or it can negotiate the rights to older seasons’ episodes in a bid to compete with Netflix, Amazon, and Hulu.
Option one makes Facebook an attractive venue for networks to promote current shows or, better still, to have users do the promoting for them. Given the very nature of Facebook, users are far more likely to share a short clip of Jimmy Fallon’s monologue than an entire episode of the Tonight Show. This is why Facebook might be the ideal home for “snackable” video content, i.e., short clips of 10 minutes or less. The shorter format would allow users to share something new with friends without taking too much time away from other activities on the platform.

It is also possible that Facebook might want to go long. The company could line up content deals that would put it in head-to-head competition with Netflix as the OTT operator of choice for the networks’ older seasons. This would certainly appeal to networks, providing them with a (delightfully) rich trove of data about the people who watch their shows. It would also give them pause, since that data would ultimately be owned by Facebook.

That said, we think Facebook will choose to go the clip route. This would give them the same amount of data, without the financial commitment of licensing full-length shows. Users come to Facebook to interact, so sending them off to watch hours of video seems contrary to the sort of use case Facebook desires.

You can read more about Facebook and Social TV in my report on Social TV, coming soon.

Invisible No More

Originally published at TDG Research on October 1, 2015

Two seemingly related events shook the world of viewer measurement this week, giving Advertising Week attendees something to talk about other than adblocking. First, Rentrak and comScore are merging to create a potential Nielsen-slaying service capable of tracking viewers across multiple platforms.

The second announcement, which came right on the heels of the first, was made by Nielsen: the ratings provider has partnered with CBS, offering the network first dibs on their “Total Audience” ratings. This arrangement will combine the ratings from CBS’s All Access OTT app with linear TV ratings.

Both developments certainly shake up the way TV viewing is measured. But the question remains, who will win?

We think Nielsen will continue to dominate the ratings game, but now RentScore (comTrak?) has the ability to carve out a profitable niche as well.

Why We Need OTT Ratings

As we noted in Waiting For Nielsen last spring, the one thing that’s been holding up the industry’s wholesale adoption of TV Everywhere has been the absence of a universally agreed upon measurement standard for OTT TV viewing. Without that, networks don’t get credit for viewers who are watching their shows on streaming services or OTT apps. This means they can’t charge ad buyers for those viewers (which is why the industry has been calling for a method of calculating OTT Views in the first place).

Nielsen has been promising a solution for some time now, partnering with Adobe back in October 2014. Since then, the industry has been waiting… and waiting… and waiting… This is why the comScore/Rentrak announcement this week seemingly comes at a very appropriate time, just as many in the industry are starting to give up hope that Nielsen will ever come through.

Fortunately there’s room for both players to claim a victory. Here’s how:

C7 or C28?

The Total Audience rating that Nielsen is providing for CBS only looks at the first seven days after a show has aired. While that should cover a good-sized chunk of the audience, it does leave a gap: viewers who watch that show after that seven day window has passed. That’s a golden opportunity for comScore/Rentrak, as they count views as far as 28 days out across all manner of devices. [UPDATE: I have been informed by Nielsen that they can indeed count views to "C+infinity", it's just that no one has asked them/is paying them to do so.)

Those later viewers may be very important, as recent research from Freewheel shows that 64% of OTT TV ads were viewed 8 days or more after the show first aired. That’s an important audience segment, and if Nielsen won’t count them, networks and advertisers will indeed come to comScore/Rentrak for results that deliver a more complete picture of the audience.

TVE Unleashed

Once a universally accepted ratings system is in place, the TV networks and other content rights holders will abandon their objections to TV Everywhere. So long as the viewers are counted and they are getting paid for them, out of home will be the same to them as in home and in home OTT will be the same as linear TV.

Viewers will benefit too, as all the TV they watch will be as painless and easy to use as Netflix, allowing them to move seamlessly from device to device without having to worry about restrictions. At which point we will see the dawning of the Golden Age of Measurement.

The YouTube Trap

How A False Equivalency Helped Blind The Ad Industry To How Quickly Interruptive Advertising Was Falling Out Of Favor

Originally published at TV[R]EV on September 29, 2015

Advertising Week is here and the sudden popularity of ad-blocking software has the industry wringing its hands. But perhaps it’s time to accept what is happening and acknowledge that old school interruptive advertising is in its death throes.

What killed it is not a lack of creativity (though there was certainly plenty of that) but rather a shift in culture that left us immune to the notion of sitting through blocks of unwanted interruptions at a time when the slightest bit of boredom is instantly remedied by picking up a smartphone.

The signs of interrupted advertising’s demise have been around for some time now, only the ad industry ignored them by glomming onto a false logic trap of it’s own creation.

Call it the “YouTube Trap.” Wherein agencies would post long-form versions of their most clever commercials on YouTube and millions of people would watch them. “You see,” the agency creatives would crow, “people really do like watching our commercials. They like them so much, they even watch them when they’re not being forced to.”

Yes, but…

Agencies seem to have glossed over the fact that people watch commercials when they don’t have to precisely because they don’t have to: they are happy to watch these funny videos on their own schedules. It’s when they are inserted into a TV show that watching them becomes an issue.

Ad blockers will inevitably make their way to TV. And as we watch more and more TV via OTT, the effect will be quite noticeable. Especially for an audience that’s been trained by years of Netflix (and now Amazon and Hulu) to watch TV without commercials. And as the saying goes, once they’ve seen Paris, it’s hard to keep them down on the farm.

So what will replace interruptive advertising and the $70 billion budget it represents for TV?

Lots of things. There’s the easy fix of YouTube style filtering. The sort that lets you exit a commercial after just 5 seconds. Networks can charge big bucks for the people who stick around to watch the remaining 25 or 55 seconds since we can presume they are somewhat interested in the product.

Product placement is another option, one that’s been around for a while, but which can now assume a place of greater importance. Well done product placement is subtle, and viewers are not conscious that the brand is being showcased. (Compare that to American Idol and Coke.)

There’s also native advertising, which seems to work quite well on the web and should easily adapt to TV. Native advertising is written in the voice of the publication and is meant to conform to and compete with the other content on the site, e.g. not stand out as being an advertisement. The content is related to but not directly about the brand, so that a native advertisement the New York Times did for Orange Is The New Black was a well-reported story about women’s prisons. (Yes, even the Times does native advertising.)

While TV networks are already starting to use their stars in ads that run around a show, there is far more opportunity to create programming that does not feel like advertising featuring actors and writers from the network shows. If nothing else, it’s a great way to showcase talent from the network’s newest shows and get them out in front of viewers again.

Co-branded promotions on social media can also help replace some of those ad dollars. Brands benefit from the halo effect of being associated with a popular show, and the network gets someone to help them finance on online promotion. The key here is to make sure that there’s some relevance between the brand, the show and the promotion

The final way to replace interruptive advertising, one that we think will become quite popular is with branded content. Branded content is different than native advertising in that does not rely on any overlap with the network. Rather, it should be a piece of quality entertainment that is sponsored by a brand and has an overlap with the brands values and tone of voice. Royal Caribbean, for instance, produced a web series starring several well-known YouTube stars that was a teenaged rom-com set on a Royal Caribbean ship. The characters did what characters do in teenage romcoms, they did not stop to point out any selling points of the ship.


While many in the ad industry will bemoan the end of interruptive advertising and the hard sell messaging that went with it, those moans will fall on deaf ears. When consumers actively go out of their way to install software to block advertising, no amount of  moaning is going to save it.