As the founder of ventunotech.com , I might have been biased on my thoughts when I wrote the article below. Hence posting it here for a reality check.
Every media distribution technology was built upon its predecessor. Television did not simply appear – it evolved from the radio. TVâ€™s evolution is marked by a series of milestones; and several inventors, scientists, artists, financiers, corporations and even nations contributed to its progress. Most radio operators considered TV as an investment in future technology and did not see profits till the late 40s worked on two business models, namely subscriptions and advertisements.
Online video, like TV, is an outcome of a series of milestones rather than a single event. Traditional media companies embraced the internet, both in the web 1.0 and 2.0 era, and have worked with both subscription and advertisement models. They have had little success with the subscription model making it clear that what worked in one medium will not necessarily work in another.
In the TV world, the consumer is bored of the normal linear scheduled television programming because you canâ€™t interact with it, view it when and where you want, and easily distribute it. The content producersâ€™ revenue potential is limited in the absence of on-demand services, limited artistic freedom, and lack of global reach. The marketer cannot target and measure his campaigns, and hence hopes their ads work and have little control over the effectiveness of their marketing spend. Online video overcomes all these obstacles, paving a new way to consume, create, and distribute, video content.
In India, the success of online video depends on PC and broadband penetration. We add roughly 5.5 million PCs per year and our total broadband connections is 2.5 million against a target of 9 million by the year 2007! In spite of the low penetration, Alexa.com lists youtube.com as the 6th most trafficked site in India making it clear that even at these penetration levels online video consumption is healthy. Reducing the cost of PCs and broadband connections and governmentâ€™s speedy release of spectrum to enable rollout of 3G and WiMAX services and use of power lines will accelerate the broadband growth.
Success also depends on more players creating and publishing online videos. Traditional media companies are sitting on a huge inventory of quality video content. This is not available online because of costs involved for conversion to online format, effective monetization avenues, and complexity of building and maintaining a video infrastructure. Internet companies are not skilled enough to create quality video content and video sourcing avenues, too, were not only limited, but also is very expensive to them. Right approach to bridging this gap would exponentially increase online video content in a very short span of time.
Indian online ad market is 400 crores today and this is expected to touch 4000 crores by 2012. What percentage of this is going to be from video ads or ads leveraging videos depends on the video ad inventory available and effective means to target and measure these ads. Once this is in place there is little that needs to be done, as the benefits of video ads far out weigh text/banner ads, to move existing and new advertisers to leverage video ad inventory.
The recent spurt of ad networks in India, elicited comments like â€œIndia doesnâ€™t need another ad network, but more publishersâ€. This is truer in the case of video as there is not only a lack of content, but also a lesser number of publishers. For this reason ad networks will fail as they are prone to just add video ads to their existing offerings. A better approach is to create an eco-system where content producers, content publishers, advertisers and platform owners come together to create value for all stakeholders.