Video Services Evolution - Part 3 of 5

Appraising Online Video

Reed Hastings - (Chairman and CEO, Netflix)  presented "Internet on TV or TV on the Internet?", the first of the afternoon keynotes at NewTeeVee Live 2008.  I transliterate without quotation marks, though have attempted to transcribe with a minimum of interpretation (which I may do onscreen).

In this, the third section of his presentation, Mr. Hastings appraises six of the attributes present in video services delivered via the internet::

• Flash video has improved the experience on the web.
• YouTube proved that low quality streaming was greatly preferred in the marketplace over downloads, stores (stored files), and players.
• Laptop-based viewing is a benefit for many because it provides privacy.
• The ad supported video-viewing model will continue to be the largest.  Anything that can be ad-supported will be ad-supported because it's easier than everything else.  However, note that the long form tier, such as movies, is degraded by ads.  As behavioral targeting around demographic and usage patterns continues to improve, then the CPMs are rising.  When CPMs rise to a certain level, the number of ads can go down, and the level of commercial interruption will decline to a point where the segment will grow. This is where Hulu is pushing.
• PPV for new releases of the hottest content $3 to $5 for a viewing period, which is where Amazon, Apple, and Blockbuster are specializing
• Subscription is the value tier in the consumer spectrum.