Why Aggregation & Context and Not (Necessarily) Content are King in Entertainment
Rafat Ali from PaidContent.org quotes Bear Stearns analyst Spencer Wang’s report on, Long Tail, but focuses on what he calls the mid part of the content and distribution value chain, where he sees the most value in the long run…that mid part is the part of aggregation-and-context players in the market, with the theory that “Value of aggregation and brands increases with exponential increase in content choices.”
Bear Stearns released an analyst report from Spencer Wang taking a look at online video trends [PDF]. While paidContent says that it largely states the obvious, it’s interesting to me to see how the firm backed up the Chris Andersen’s “Long Tail” rhetoric with some external analysis finding the idea holds for web video.
The most interesting data related to what type of video monetization was acceptable to consumers, as well as how behavior was changing in terms of finding new content. Forty-eight percent of survey respondents preferred free video after pre-roll ads, compared to only 45 percent who weren’t interested in any ads at all. Thirty-four percent of users primarily found video through search engines such as Yahoo or Google. But in the demographic sweet spot — men aged 18 to 34 — the acceptability of pre-rolls shot up to 67 percent and the primary discovery means were emails and other contacts from peers and central video sites like YouTube instead of search engines.
Granted, analyst reports from investors should be taken with a grain of salt — though Bear Stearns has done business with everyone from Google to Viacom. The passion against pre-rolls is certainly evident here at NewTeeVee, and the options given in terms of other monetization were subscriptions, paid downloads and none at all. Clickable ads, bugs, mid-rolls and other options weren’t presented. But the demographic shift, certainly, held in other areas of the report:
[W]hen we queried, “What types of videos do you like to watch?,” UGC ranked surprisingly high, as the second most popular content category across all respondents. In the target market of M18-34, UGC is the single most popular content category.
Wang hammers this point to counter the “content is king” outlook by pointing out that no network or studio has ever been able to guarantee the quality and popularity of programming. Inversely, the “paradox of choice” makes the free-for-all online just as big a turn off as the latest Brett Ratner schlockfest.
By playing an editorial role and shaping chosen content to appeal to specific audiences, aggregators can more easily sustain rabid audience interest and will likely be the big winners. Think lifestyle brands like Vice, the niche-focused Next New Networks, YouTube’s focus on community tools, and the automated item suggestions by NetFlix and Amazon as a sign of things to come.
“These themes will likely play out over the long run and may not necessarily affect near-term estimates or operating fundamentals of the major media conglomerates,” Wang concedes. But the if the parallels with the textual web drawn by Wang and trend data from the young adult male demographic are any indication, these companies could be facing a similar future to that of print media sooner rather than later.
Here’s an updated report by Spencer Wang at Bear Stearns (March 2008)
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