Matthew Evans and Keith Richman spent nearly an hour on a Digital Media Summit panel discussing the future of the Internet video market but it was what the two men talked about afterward that was most important. Two hours after the discussion ended during the March 13 event, Evans, vice president of digital media for NBC Universal, and Richman, chief executive officer of Break.com, knocked out a deal at the historic Roosevelt Hotel in Hollywood to sell an original NBC-produced show for Richman’s Web site. “That’s the kind of stuff we are focused on creating business,” said George Kliavkoff, chief digital officer for NBC Universal, and also Evans’ boss, during a discussion with Michael Stroud, CEO of iHollywood Forum, host of the summit. That’s also an indication of how quickly relationships form and deals are made as media conglomerates maneuver for a greater online presence. From the millions that News Corp. and Sony have shelled out for the social networking sites Myspace and Grouper, respectively, there is no question media companies see lots of value in these sites. Less certain is how to make those sites profitable. Should they be advertising driven and, if so, should the ads come before the content? After? In the middle? Or should the sites be subscriber-driven? Or maybe a combination of both? Tolerance for online ads only goes so far. Viewers tend to stick around for, say, a repeat of an ABC or NBC show streamed at the networks’ respective Web sites but are more likely to move on if ads interrupt viewing of amateur homemade videos on other Internet sites. A balance needs to be found between entertaining content and getting the message out about a particular brand, Evans said. “We’re going to take it one step further and create content with the advertisers from the ground up,” said Evans, who is charged with creation of original, video-based programming. According to statistics from market research firm Screen Digest, user-generated content made up 47 percent of all online videos and generated $200 million in U.S. ad revenues in 2006. By 2010, it is expected that user-generated content will make up 55 percent of online videos and generate $900 million in ad revenues. In an age of participation, passive entertainment directed at an audience doesn’t cut it anymore. Certainly not with tweens and young adults for whom instant access from a PC, laptop, cell phone or other portable media device is a given. “The platform doesn’t matter,” said Disney’s Paul Yanover, online executive vice president and managing director, during his keynote address at the summit. “What matters is the experience.” While social networking sites initially attracted younger users, their reach has expanded. Facebook, for instance, initially limited itself to college students. They later added high school students but it was just last year when a user of any age could join the site. The mainstream audience of parents and families is the target audience of Disney Online, Yanover said. In redesigning its Disney.com Web site, the content reflected the “iPod world we live in” said Yanover. Changes to the site make it more interactive yet maintain it as an extension of the Disney brand. The Extreme Digital component was described by Yanover as a combination of an operating system, game console and social networking site all based on Disney content. “It’s not a Web site anymore,” Yanover said. “It’s a complete environment; a world of moveable widgets.” Disney-owned ABC Television pioneered streaming of its hit shows at the network’s Web site. When NBC started putting full episodes of its primetime lineup online, the network feared it would cannibalize the ratings, Kliavkoff said. What it found was just the opposite, he continued. Surveys of online viewers revealed that some were watching to catch up on episodes they had missed.
