Summary
1) ‘Content may not be king’ but it is now operating in the realms of royalty as the Viacom and Google dispute is showing and the ongoing need of MSOs and telcos to differentiate their telecom and Internet products in the face of competition and commoditisation.
2) Viacom produces a good range of content – much of it is clearly targeted at the core online users. However, all established content producers are struggling for audience share in an increasingly fragmented digital TV space and are mainly losing viewing share in broadband households.
3) If what the original article states is correct then we can estimate that the potential basic online advertising revenue that Viacom has lost could be in the region of $60m.
4) Google has no option but to delay the formal integration of YouTube and the full launch of Google Video – until it has sufficient content deals in place and legitimate content on its site.
5) This is a great boost for all the independent content producers who can benefit from additional licence fees and interstitial advertising revenues - as well as the potential linkup with Google.
Analysis
·Viacom produces much of the leading and popular content for the current trendsetting and viral (word of mouth) consumers. Its key assets (such as MTV, Comedy Central, BET, Paramount, DreamWorks, and Nickelodeon) make up many clips on YouTube and community/file sharing sites. The entertainment that Viacom produces and the stature that it is held in is a result of significant investment - and so, it has a right to protect that investment.
·Viacom produces a good range of content – much of it is clearly targeted at the core online users. However, all established content producers are struggling for audience share in an increasingly fragmented digital TV space. Ironically, (for Viacom) much of the decline in TV viewing share as a percentage of all media time is being lost in broadband households – where (for instance in the UK broadband households) Internet consumption is overtaking TV consumption. The result of which is reduced traditional spot advertising income and reduced revenue from licensing content to other TV channels.
·If what the original article states is correct in that ”Viacom contends that almost 160,000 unauthorized clips of its programming have been uploaded onto YouTube's site and viewed more than 1.5 billion times” – then we can estimate that the potential basic online advertising revenue could be in the region of $60m (just in terms of impressions). This is still someway short of the $1bn – but I’m sure a good copyright infringement lawyer could lay down the rationale to justify it!
·Separately, this illustrates the quandary that Google is in. It has no option but to delay the formal integration of YouTube and the full launch of Google Video – until it has sufficient content deals in place and legitimate content on its site.
·This is a great boost for all the independent content producers out there looking to distribute their content. Ownership of content rights across platform and geography is a great asset that many independent producers and broadcasters can leverage in discussions with these online and IPTV platforms. Independent content produces can benefit from additional licence fees and interstitial advertising revenues. The old cliche of ‘content is king’ was ridiculed over the last few years. However, if content is not king – then it is now operating in the realms of royalty as this Viacom and Google dispute is showing and the ongoing need of MSOs and telcos to differentiate their telecom and Internet products in the face of competition and commoditisation.
