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Forget the Long Tail!
For video, it will be the big and mid-size players that win
Bernard Moon (bernard)     Email Article  Print Article 
Published 2006-03-31 14:50 (KST)   
A little over a year ago, I predicted that the PC would become an entertainment epicenter for U.S. consumers, much as it has in South Korea, where more than 70 percent of the residents cite the PC (over TV) as their preferred source of entertainment. (See "Where Technology Is Ubiquitous, Opportunity Abounds," January 2005.) Little did I realize how quickly my prediction could become a reality. A year later, my wife and I are watching episodes of "Lost" on my laptop's 15.4-inch screen. And when we're not doing that we're marveling over the perfectly visible beads of sweat on Kobe Bryant's face, thanks to our 50-inch plasma TV and a subscription to Comcast HDTV. Like the rest of America, our viewing habits are changing based on convenience and advancements in picture technology -- and the ramifications of this for content producers could be monumental.

With their distribution channels disrupted and user-generated content on the rise, the lords of big media and entertainment are looking over their shoulders. And well they should: Thanks to new players like video-sharing services vSocial and Ourmedia, online editing and publishing service VideoEgg, and distribution platform Brightcove, just about anyone can create, edit, distribute, and even receive widespread recognition for his or her creative work today without the help of a major studio. But this isn't a story of the long tail; the hit makers will get richer. Instead, it's a story of the wide range of new revenue opportunities that are available to established and mid-size players in this evolving media landscape.

High-end picture and sound quality versus convenient access represent overlapping but not competing desires for consumers. As witnessed by the growing popularity of Slingmedia's Slingbox (which lets you access your TV from anywhere through your PC) and iTunes, a large segment of the consumer market has come to value the convenience of PCs. Others love their ESPN and HBO in high definition. In this new digital landscape, it's not simply about content but rather type of content and how it's distributed. And it's the companies that are able to look at content in new ways -- both repurposing existing content and creating new formats to suit the changing mediums -- that will come out the winners.

Over the past year, user-generated content has gotten a lot of buzz, becoming the primary driver in the growth of the blogosphere. With sites like Slashdot.org and Instapundit receiving more traffic than most of the online newspaper dailies, and sites like MySpace creating followings for previously unknown bands and artists, we've seen an explosion of amateur video on the web. The sons of Bob Saget are proliferating, and the web is flooded with home videos that may or may not be America's funniest.

Whether in the service of journalism, entertainment, or art, user-generated content is here to stay -- but don't expect the video space to play out in the same way that written text and photos have. You need more than just good writing skills and precision with a camera to produce good video. And there are only so many stupid human tricks, wild college parties, and horrible accident clips a person can watch. All of which is to say, video sites will rise and fall during this novelty stage of online video development, but the ones that stick around will be those with the best content.

Thus, while this may seem like a story of the long tail, it's not. Instead, it's the story of how online distribution channels will allow big media and entertainment to capture even more revenue -- just as the creation of the video rental market allowed them to do in the 1980s. Think about all of that content residing across the globe in the basements of companies like Time Warner and the BBC -- and then think about all the money that could be made from extending the revenue lifecycles of those content libraries into infinity.

I have thought about this, which is why I was disappointed when Yahoo announced last week that it's moving away from creating original content for the web. I thought Yahoo was moving in the right long-term direction by becoming not only an aggregator of content but also a creator of original programming -- perfectly poised as it is to open up new online distribution channels and increase the public's appetite for quality content. If Yahoo chose to pursue this tack, it could easily become the new studio on the block within the next decade.

Yahoo cousin Google, on the other hand, has applied excellent strategy to its moves in the video space. By signing the NBA, the National Archives, and CBS, the search giant has positioned its service well for the long term. Now, it's just needs to take care of its pricing: $1.99 for TV shows and $3.95 for NBA games are too much. If Google (or its content partners) can get those charges down to $1 or less (and provide round-the-clock access), expect to watch its usage and revenues grow. And although advertising models will no doubt evolve as the online video landscape matures, there's no reason that ad-free and ad-supported content can't co-exist for online video.

Just as the big boys can expect to profit from this changed video landscape, so too can the mid-size production groups that are able to develop content to fill the gap between big Hollywood productions and homemade video. Not all shows need to be multimillion-dollar productions -- especially when they're going to be viewed on cellphones -- but viewers are looking for something more than car crashes and practical jokes. Companies like ManiaTV (which creates broadcast channels for its online TV network) and MobuzzTV (which creates shorter clips geared for mobile devices) can profit from this gulf with productions that cost thousands rather than millions of dollars.

Expect, too, to witness the emergence of more filmmakers in the mode of Robert Rodriguez -- the producer and director of such films as "El Mariachi" and "Spy Kids" -- as the market for low-budget quality content for companies like Google Video and YouTube continues to grow. Again, what I'm talking about is a middle market in the video and movie industry where sustainable companies can and are being created.

So where does it all end? Over the next decade, I expect we'll continue to see the growth and development of these middle-market players, who will command more and more influence in the video and entertainment industries. Sharing in (but not controlling) the wealth will be the big studios, which can expect to see their revenues grow even as their stranglehold on the industry loosens. Most importantly, consumers will have instant access to more quality programming than ever before through a variety of mediums. (Twilight Zone and Star Trek whenever we want? Awesome!) I can't wait for the day when I can watch my favorite NBA games in high definition on my Sony PSP (for 50 cents each).
Bernard Moon is cofounder and vice president of business development at GoingOn Networks. He is also a freelance writer and blogger at his personal, politically leaning blog.
©2006 OhmyNews
Other articles by reporter Bernard Moon

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