Online Video Business Model – Here It Is Folks – The Evidence – SNL and Olympics

This Adage story is very relevant. Author of the story Michael Learmonth nails it totally.  It is the business model of online video.  All the folks looking to figure out how to monetize online video today – stop and read the Adage article.  The online video business model is in the article.  I’m pasting the entire article below because it strike at the hear of the real value proposition – the content franchise and the user behavior of existing and new audiences.

This is evidence that the cross platform “halo” effect of great content drives mainstream programming and its franchises.  This is at the core of the online video value proposition and an opportunity for video platform startups like Volomedia (I’d say PodTech but it’s dead).   I just talked to the founder (Murgesh Navar) and the CEO (Brian Steel also the Chairman of Pandora) of Volomedia about this in a podcast (soon to be posted – stay tuned).  Volomedia gets this and is building the platform for portable media and cross audience measurement.

Portable media or downloadable media reaches the same audience of those who watch TV PLUS it reaches audiences that don’t watch TV.  Online video media creates synergy and “Pull” with it’s parent content franchise.  It creates aided awareness to the users already consuming both platforms (TV and online) AND pulls in the new audience as evidence by the success of the SNL numbers.

Big trend:  Portable or online video crosses over to TV.  Widgets, portable formats drive offline perceptions.  This is huge.  Saturday Night Live and the recent success of NBC’s Olympics strategy prove this.

I think about all the startups and big companies innovating in online when I read this story from AdAge.  This is the strategy.  It’s a big value proposition – use online video to complement the broadcast franchises.  We saw it with the Olympics – NBC booked over $1b on TV ads with their live coverage online.  Although their online used low cpms and had niche programming – it creates a ‘rising tide of users’ that translates directly to the core asset – TV broadcast.   We are also seeing evidence that this is working in ITunes podcasts as well.

HELLO ONLINE VIDEO BUSINESS MODEL.

Here is the article

NEW YORK (AdAge.com) — Vice presidential nominee Sarah Palin’s appearance was very good for “Saturday Night Live,” bringing the show its best ratings in 14 years.

The clip of Amy Poehler's Palin rap sat at No. 2 on Hulu.com.
The clip of Amy Poehler’s Palin rap sat at No. 2 on Hulu.com.

But the number of people who have watched the clips on the web is closing fast, and will soon surpass the 15 million that watched on TV, if it hasn’t already.

The traction is real
Two clips of the Alaska governor on “SNL,” her fake press conference and appearance on “Weekend Update,” have racked up 6.1 million views on NBC.com. Derivative versions such as those used in news coverage, as well as pirated versions of the clips, have been viewed another 2.85 million times on sites like YouTube, MySpace and Yahoo, according to web video measurement firm Visible Measures.

Combined, the videos have been viewed 8.85 million times since Sunday, an impressive number in four days. But that doesn’t include what may be the biggest source of online viewing: NBCU and News Corp.’s joint venture Hulu.com.

Neither Hulu nor NBC will provide Hulu’s streaming numbers, but they’re likely to be high. Hulu streamed four times as many videos (142 million) as NBC.com (36 million) during September, according to Nielsen’s Video Census. While it’s possible a high percentage of viewers looking for “SNL” clips would go first to NBC.com, it’s also likely that Hulu counts for as many, if not more, views as NBC. The opening skit with Tina Fey holding a press conference as Sarah Palin, while the real VP nominee looked on, was the No. 3 most watched Hulu clip this week, while the clip of Amy Poehler’s Palin rap sat at No. 2.

Hulu numbers are regularly included in NBC’s Total Audience Measurement Index, which tallies viewership for web and mobile platforms as well as TV on a weekly basis for prime-time shows, but not late night.

Added revenue
Online video streams and Nielsen ratings aren’t comparable — the Nielsen viewers are unique; streams aren’t. But the point is that the online clip will ultimately expose “SNL” to a lot more viewers than TV alone. And with pre-roll advertising running on NBC.com and Hulu.com, it is also adding revenue. On NBC.com, a pre-roll for HSBC was shown before the “SNL” skit, while on Hulu ads for products such as Oil of Olay, Right Guard and Travelocity have been shown.

NBC says “SNL” ‘s election-related clips have been viewed 45 million times on NBC.com since the season premiere Sept. 13.

Author: John

Entrepreneur living in Palo Alto California and the Founder of SiliconANGLE Media

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