Web widens TV opportunity

Web sites featuring free content created by users, instead of big companies, are changing how, when and where consumers watch video.

“The new prime time is during the day in the office,” said Michael Kelly, president of AOL Media Networks.

YouTube has become the poster child for the user-generated video movement. “Broadcast yourself” is the slogan of the San Mateo, Calif., Web site where people watch and share original videos.

The site averages 70 million video streams viewed per day, most of which are between one and two minutes long, Chris Maxcy, vice president of business development for YouTube Inc., said during a recent panel discussion on the future of television at a digital media conference in McLean. “We kind of cater to the ADD generation,” he said, referring to attention-deficit (hyperactivity) disorder.

YouTube and NBC butted heads earlier this year when a clip from “Saturday Night Live” was posted on the Internet site without permission. But apparently all was forgiven as the two companies last week announced that NBC will create an official channel on YouTube to showcase exclusive clips to promote “The Office,” and later will add promotions for its other prime-time and late-night programs including “Saturday Night Live” and “The Tonight Show.” YouTube also will promote NBC’s videos throughout the site.

“Content is king. If you’ve got good content, people are going to find it,” Mr. Maxcy said. “We’re not stuck in a half-hour or hour time slot anymore.”

Providing eye-grabbing video online at any time of the day is the goal of all digital media companies, but how to make money from the explosion of user-generated content as well as traditional TV shows has become the multibillion-dollar advertising question.

Online viewing provides users with flexibility in how they interact with content and ads, said Daniel Blackman, who handles strategic partner development for Google Video. Google is experimenting with download-to-own, rental passes and syndication to try to maximize the money it can make on video.

To ensure Internet commercials get their due, some networks offer shows online with ads that cannot be fast-forwarded, said Larry Gerbrandt, senior corporate analyst at Nielsen Analytics. He added that YouTube’s 70 million streams, even viewed in small pieces, still represent significant opportunities for traditional content providers and advertisers.

Internet advertising revenue reached a record $3.9 billion for the first quarter of the year, the Interactive Advertising Bureau and PricewaterhouseCoopers announced in May. Total Internet ad revenue reached $12.5 billion last year, up from $9.6 billion in 2004.

The market should reach at least $15 billion this year with the “big four” portals — Google, Yahoo, MSN and AOL — controlling half of those dollars, Mr. Kelly said.

“The biggest problem is keeping up with demand,” he said. “There’s more [money] moving online faster than the industry can deal with in a meaningful way.”

Companies are harnessing various platforms to share their content while trying to leverage it to niche advertisers, Mr. Blackman said. For example, Code.tv is an online television network targeting 25- to 49-year-old New Yorkers who earn $100,000 or more.

“You don’t need 10 million people to monetize it,” Mr. Blackman said. Serving a targeted audience cuts down on the critical mass necessary to be successful.

Mr. Blackman said consumers, advertisers and content creators can succeed in the evolving video environment as everyone tries to determine the best way to link advertisers with interested consumers.

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