Online video has radically changed the way Americans consume media. People want to watch when it is convenient for them, not when network programmers want them to. The industry’s term for it is “video everywhere” -- from the largest plasma screens to the smallest smartphones. And while online video is ubiquitous, only a small number of companies dominate this new world.
Google Inc. (GOOG) sites, led by YouTube, accounted for nearly 88% of the 189 million unique U.S. viewers registered by video sites in September. The video behemoth was more than twice as large as Facebook Inc. (FB), the second largest site. YouTube, in effect, defines the entire industry.
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YouTube has such a vast audience partly because it was among the first to offer a comprehensive platform for online video posting, viewing and sharing. Those early (and largely amateur) videos have been joined by polished, professional ones that have attracted a much wider audience, both to YouTube and a growing number of online video sites. The content that these consumers view ranges from short clips to full-length movies available to rent or own. Amazon.com Inc. (AMZN) and Hulu are examples of the full-length video option.
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YouTube’s model will be nearly impossible for any competitor to duplicate. The company owns its own advertising network and has begun its own paid video subscription service. The site is also the leading music video publisher as a result of its VEVO channel. The site is also well positioned in the video everywhere world. According to the company, mobile makes up nearly 40% of YouTube’s total number of video streams.
Portal companies like Yahoo! Inc. (YHOO), AOL Inc. (AOL) and Microsoft Corp. (MSFT) are trying to overcome collapsing revenues for display advertising. Their latest business model aims to appeal to marketers who use video ads. These video ads can command 10 times more revenue than display ads. Online publishers and advertisers both benefit from the fact that commercials frequently already have been created for broadcast and cable TV.
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24/7 Wall St. examined the top 10 video sites in America based on comScore’s September 2013 report, “September 2013 U.S. Online Video Rankings.” According to comScore, a video is defined as “any streamed segment of audiovisual content, including both progressive downloads and live streams.” For long-form content (e.g., television episodes with ad pods in the middle), each segment is counted as a distinct video stream. Video views include both user-initiated and auto-played videos that are viewed for longer than three seconds.
These are the most popular video sites in America.
10. CBS Interactive
> Unique viewers: 31.14 million
> Videos viewed: 213.63 million
> Minutes per viewer: 45.3
> Parent company: CBS Corp. (CBS)
Like Viacom, CBS has primarily sought to use online video as a driver of traffic to its TV programming. The company has licensing deals with Netflix Inc. (NFLX), Amazon and Hulu, among others, and that is likely helping push up revenues. In the second quarter of 2013, CBS reported licensing and distribution revenues rose by $181 million year-over-year to nearly $1 billion and cited digital streaming as a primary reason. CBS Interactive also includes technology sites CNET and ZDNet, music site Last.fm and CBSSports.com. Twitter last month signed a deal with CBS, similar to the one it has with Viacom. A cynic might say that CBS Interactive represents the best of the old-line media companies in the brave new online world.
9. Amazon Sites
> Unique viewers: 32.91 million
> Videos viewed: 143.21 million
> Minutes per viewer: 24.2
> Parent company: Amazon.com
The surprising statistic for Amazon is the small amount of time that viewers spend watching video on its sites. The company’s streaming catalog includes movies and TV shows that are long-form videos, and we’d expect viewers to be spending a lot more than a mere 24 minutes on them. One plausible explanation for the short viewing time is that Amazon Prime users actually download videos rather than streaming them. Sales and rentals may be more important to Amazon’s overall business than the streaming business. The social media aspect of video, which feasts on seconds-long content, probably is not a big driver to Amazon content, and likely never will be.
8. Viacom Digital
> Unique viewers: 38.21 million
> Videos viewed: 404.01 million
> Minutes per viewer: 44.7
> Parent company: Viacom Inc. (VIAB)
Viacom owns several TV properties, including MTV, Nickelodeon and Comedy Central, as well as movie studio Paramount. Like other content providers, Viacom licenses and syndicates clips to partners and offers full episodes of some of its TV properties on its various websites. The company has a partnership with Twitter that allows Viacom to embed videos with advertising in its tweets. The company also signed a deal with Sony Corp. (SNE) in August, licensing to Sony the rights to stream Viacom’s TV channels over the Internet, including via the new PlayStation 4.
7. Yahoo! Sites
> Unique viewers: 44.80 million
> Videos viewed: 322.83 million
> Minutes per viewer: 63.7
> Parent company: Yahoo!
Due to its size, Yahoo! has tremendous leverage to make video revenue an important part of its overall sales. The strong presence of video in sports and celebrity content across all forms of media should help Yahoo! implement its strategy to bring more video marketers online. Yahoo! also has developed video partnerships with all four major networks, as well as Hulu. The company’s deal with ABC, which is owned by the Walt Disney Co. (DIS), announced in October 2011, is probably the most important of these. Because Yahoo!’s traditional ad revenue is eroding, it is essential that its advertising initiatives are successful. Yahoo! was once the leader in display advertising, but Facebook and Google have passed it. Research firm eMarketer also reported that Yahoo!’s cut of digital revenue will drop to 7.7% in 2013, from 8.6% in 2012.
> Unique viewers: 48.99 million
> Videos viewed: 617.36 million
> Minutes per viewer: 42.2
> Parent company: Consortium including Sony, Universal Music Group, Google and Abu Dhabi Media
Three of the four major record labels promote their music and music videos on VEVO.com and through the company’s mobile apps. Via a partnership with Google, the company is able to distribute its content through a YouTube channel to more than 200 countries. VEVO might be described as a global MTV for the Web generation. Its ties with the highly selective music industry give it rights to an enormous catalog of music. Direct revenue to the music companies probably is not going to make up for the loss of CD sales.
> Unique viewers: 49.09 million
> Videos viewed: 532.59 million
> Minutes per viewer: 78.6
> Parent company: News Distribution Network
Most of the general public knows nothing about News Distribution Network (NDN). However, based on minutes spent per viewer, the company ranks (a distant) second to Google. NDN is a syndicator and distributor of online video news and advertising. The company distributes online video content from sources that include Reuters, AP, CBS and the Weather Channel. In total, NDN has more than 49 million unique viewers who watch more than 532 million videos a month. The company delivers premium news content to its business customers at no upfront cost and sells the advertising at no cost to its publishing partners. NDN keeps the majority of the ad revenue and splits the rest with the publishers and content creators.
4. Microsoft Sites
> Unique viewers: 49.18 million
> Videos viewed: 644.42 million
> Minutes per viewer: 33.2
> Parent company: Microsoft
Microsoft pulled in just over $3 billion during its 2013 fiscal year from online advertising revenue, mostly from search advertising. In the process, the company lost more than $1.2 billion for its online services division. Among other things, this means that Microsoft’s still-successful Windows franchises have had to support its money-losing Internet offerings for years. Microsoft, as much as any of the top 10 video sites, needs video advertising to work because this may be the sole means to sharply increase its online sales. The company’s Bing search engine has a video section that mimics many features of YouTube.
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3. AOL Sites
> Unique viewers: 61.78 million
> Videos viewed: 976.32 million
> Minutes per viewer: 60.8
> Parent company: AOL
Like several other sites on this list, AOL primarily serves as a portal. Among the most severe problems these companies face is the plunging price of display advertising. AOL continues to generate about a third of its revenue from its Internet service subscriber base, but that revenue is shrinking. The company’s brand group, which includes the Huffington Post and Aol.com, posted 10% revenue growth year-over-year. AOL’s most recent effort to shore up online revenue is the acquisition of ad platform vendor Adap.tv for $405 million. The deal will supplement an already successful video effort. AOL led the comScore rankings in September for the number of video ads viewed -- 3.7 billion -- compared with perennial leader Google, which posted 3.2 billion.
> Unique viewers: 67.17 million
> Videos viewed: 975.05 million
> Minutes per viewer: 25.4
> Parent company: Facebook
Videos on Facebook are primarily posted by users and virtually all are short clips people share with friends. That is likely why viewers spend so little time watching Facebook videos. Beyond the short duration of the clips, management has expressed concern about backlash from members who object to highly visible marketing messages. Users of social media appear to gravitate to short video content anyway. Facebook-owned Instagram lets users upload 15-second videos. Soon-to-be-public Twitter owns Vine, which supports six-second video. So, Facebook faces as big a challenge as any large site to convert its advertising to high-yield video ads.
1. Google Sites (Primarily YouTube)
> Unique viewers: 165.42 million
> Videos viewed: 16.17 billion
> Minutes per viewer: 462.0
> Parent company: Google
Google unveiled its paid-subscription channels, which primarily show feature-length films, in May of this year. Viewers can pay for access to paid channels with a credit card. The company’s movie rental and purchase options have not been major successes, and the move to paid channels could yield a similar result. However, because of YouTube’s size, and Google’s deep pockets (it has more than $54 billion in cash and short-term securities), this paid service remains a major threat to other companies in the industry. One of the most difficult things to achieve on the Internet is the conversion from a free service, which makes up most of YouTube’s content, to a paid service.
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