Even if the network is not considered, with the development and popularization of cables, the share of the television industry is also rising. If the transition from the Internet to the cable is an evolution, then the transition from television to the Internet is a revolution. However, for the traditional media companies in the television industry, the Web exists only as a distribution point.
Although the Web has enabled the music industry to develop efficiently, the music industry is still languishing in terms of revenue and profit. Even if television companies invest in online video, people cannot yet see whether the Web can pay for it. All along, although traditional media companies have wanted to participate in online video projects, the attention of these large companies has always been drawn back by TV drama projects.
For example, Viacom (one of the Fortune 500) invested in Vice's VBS.tv in 2007, but later Viacom switched to MGM (MGM USA) and Lionsgate. Invest in EPIX (a U.S. pay TV channel). Lionsgate has invested $21.4 million in Break Media’s purchase of its 42% share, and can choose to purchase the remaining share of $58 million. If online video is really as good as its supporters say, why is Lionsgate not exercising this right now? The reason is that, although BreakMedia has developed very well and has established a place in the field of online video, for traditional media companies, this income is not at all.
This opportunity is suitable for startups familiar with the web
At present, most online video projects have been initiated by emerging media startups. If you build a traditional media company on top of the Internet, then this is definitely the mistake that a madman will make, and the result will only be a loss of money. This resulted in a loss of US$40 million for RipeEntertainment. It was also supported by venture capital firms (RhoVentures and Columbia Capital) and traditional media companies (Hearst Television and Time Warner). For traditional media companies, spending $250 to $50 million to build an internet company is not a good strategy.
Although this revolution from TV to the Internet is an opportunity for some start-up companies, traditional media companies are not willing to spend their energy on online video projects. These projects do not have any economic incentive or theoretical support for traditional media companies. Although some people don't understand why traditional media companies don't put those offline projects online to make more money, why, on the Other hand, why should they invest in network projects that do not have any distribution rights or traction? This is not necessary for them at all.
Some traditional television companies invest in online video projects
Of all online video projects that have received funds or investments, only a small portion have survived:
LX.tv was acquired by NBC Univeral (US National Broadcasting Universal) and is now serving taxis and local agencies in New York and Los Angeles;
Wallstrip was purchased by CBS (CBS) but was eventually closed down;
Google bought NextNewNetworks and added it to the YouTube division.
At the same time,
HBO (American Home Theater) lost its new media HBO Labs/RunawayBox to Break;
Comcast (USA's largest cable system company) recently abandoned NBC (National Broadcasting Corporation) Global Digital Studio;
NewsCorp. (Australia News Corporation) had previously focused on online media projects, but it now has other larger projects.
It is worth noting that there are some interesting news. For example, Mark Cuban invested in Revision3;
In addition, a few years ago WatchMojo company and Bertelsmann (German publishing company) negotiated cooperation to expand the business of WatchMojo in Europe, plans to translate English video into Spanish, French and German. But Bertelsmann admits that they only focus on how to make use of thousands of hours of video stored in their archives to make money, rather than make new online video to make money.
The psychology of the television industry has killed the development of cyber stars
It is often said that “the television industry has a $70 billion market, while the online video industry only has a $1.5 billion market. When will online video gain a fair market share?†it may never be realized. . Technically speaking, if all the income is calculated, television in the United States is actually a $250 billion industry. This is a large sum of money, which is very clear to traditional television companies.
The main reason why online video has not developed fast enough is:
There are not many good videos attracting advertisers;
In general, Google’s YouTube monopoly has been almost universal in video distribution.
U.S. online advertising has developed rapidly, but 40% of them are online search ads. Only $1.5 billion is spent on online video advertising. This number is not enough to attract traditional TV companies to invest.
Balance Sheet vs. Income Statement
Although Hulu (video site) was sold after its market valuation was increased by 100 million U.S. dollars to 1 billion U.S. dollars, this growth rate is not worth mentioning to the balance sheet of traditional TV companies. However, if Hulu pays billions of dollars in license fees for traditional TV companies each year, then this annual fee will be much more valuable in their income statement. This is why Netflix is ​​now considered a good friend by TV companies because Netflix signs huge amounts of checks every year for these traditional television companies.
It is estimated that the duration of people watching online video in 2020 will exceed the live broadcast of television. For start-ups in the online media sector, creating lean and efficient online video is a business opportunity. However, if traditional media companies follow suit, it will be a bit insane. They should think more about how to use their existing assets to make money, such as repacking existing videos and selling them to online audiences. Although video playback platforms will gradually become unified, the control of video will become more and more important. For these traditional TV companies, the emphasis is not on creating more videos.
Although the Web has enabled the music industry to develop efficiently, the music industry is still languishing in terms of revenue and profit. Even if television companies invest in online video, people cannot yet see whether the Web can pay for it. All along, although traditional media companies have wanted to participate in online video projects, the attention of these large companies has always been drawn back by TV drama projects.
For example, Viacom (one of the Fortune 500) invested in Vice's VBS.tv in 2007, but later Viacom switched to MGM (MGM USA) and Lionsgate. Invest in EPIX (a U.S. pay TV channel). Lionsgate has invested $21.4 million in Break Media’s purchase of its 42% share, and can choose to purchase the remaining share of $58 million. If online video is really as good as its supporters say, why is Lionsgate not exercising this right now? The reason is that, although BreakMedia has developed very well and has established a place in the field of online video, for traditional media companies, this income is not at all.
This opportunity is suitable for startups familiar with the web
At present, most online video projects have been initiated by emerging media startups. If you build a traditional media company on top of the Internet, then this is definitely the mistake that a madman will make, and the result will only be a loss of money. This resulted in a loss of US$40 million for RipeEntertainment. It was also supported by venture capital firms (RhoVentures and Columbia Capital) and traditional media companies (Hearst Television and Time Warner). For traditional media companies, spending $250 to $50 million to build an internet company is not a good strategy.
Although this revolution from TV to the Internet is an opportunity for some start-up companies, traditional media companies are not willing to spend their energy on online video projects. These projects do not have any economic incentive or theoretical support for traditional media companies. Although some people don't understand why traditional media companies don't put those offline projects online to make more money, why, on the Other hand, why should they invest in network projects that do not have any distribution rights or traction? This is not necessary for them at all.
Some traditional television companies invest in online video projects
Of all online video projects that have received funds or investments, only a small portion have survived:
LX.tv was acquired by NBC Univeral (US National Broadcasting Universal) and is now serving taxis and local agencies in New York and Los Angeles;
Wallstrip was purchased by CBS (CBS) but was eventually closed down;
Google bought NextNewNetworks and added it to the YouTube division.
At the same time,
HBO (American Home Theater) lost its new media HBO Labs/RunawayBox to Break;
Comcast (USA's largest cable system company) recently abandoned NBC (National Broadcasting Corporation) Global Digital Studio;
NewsCorp. (Australia News Corporation) had previously focused on online media projects, but it now has other larger projects.
It is worth noting that there are some interesting news. For example, Mark Cuban invested in Revision3;
In addition, a few years ago WatchMojo company and Bertelsmann (German publishing company) negotiated cooperation to expand the business of WatchMojo in Europe, plans to translate English video into Spanish, French and German. But Bertelsmann admits that they only focus on how to make use of thousands of hours of video stored in their archives to make money, rather than make new online video to make money.
The psychology of the television industry has killed the development of cyber stars
It is often said that “the television industry has a $70 billion market, while the online video industry only has a $1.5 billion market. When will online video gain a fair market share?†it may never be realized. . Technically speaking, if all the income is calculated, television in the United States is actually a $250 billion industry. This is a large sum of money, which is very clear to traditional television companies.
The main reason why online video has not developed fast enough is:
There are not many good videos attracting advertisers;
In general, Google’s YouTube monopoly has been almost universal in video distribution.
U.S. online advertising has developed rapidly, but 40% of them are online search ads. Only $1.5 billion is spent on online video advertising. This number is not enough to attract traditional TV companies to invest.
Balance Sheet vs. Income Statement
Although Hulu (video site) was sold after its market valuation was increased by 100 million U.S. dollars to 1 billion U.S. dollars, this growth rate is not worth mentioning to the balance sheet of traditional TV companies. However, if Hulu pays billions of dollars in license fees for traditional TV companies each year, then this annual fee will be much more valuable in their income statement. This is why Netflix is ​​now considered a good friend by TV companies because Netflix signs huge amounts of checks every year for these traditional television companies.
Conclusion
It is estimated that the duration of people watching online video in 2020 will exceed the live broadcast of television. For start-ups in the online media sector, creating lean and efficient online video is a business opportunity. However, if traditional media companies follow suit, it will be a bit insane. They should think more about how to use their existing assets to make money, such as repacking existing videos and selling them to online audiences. Although video playback platforms will gradually become unified, the control of video will become more and more important. For these traditional TV companies, the emphasis is not on creating more videos.
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