On Monday, Aaron Levie of Box tackled a topic via TechCrunch that has been front of mind at Ooyala for quite some time: the disconnect between Hollywood studios, broadcasters and networks, and technology companies in Silicon Valley. There seems to be a misunderstanding about what we do up here in the Valley and whether it helps or hurts the Southland.
Over 1.2 billion people watch video online, with nearly 175 million in the U.S. alone viewing on their desktops, a mobile device, a tablet or a connected TV. Streaming services such as Netflix and Hulu are giving cable networks a run for their money. For some, it couldn’t be more clear that the future of television is already here. But too many others are stuck in the past.
As we know, it all comes down to money—and whether connected content is a catalyst for making more of it or a leech on potential profits. It can be hard convincing an industry that makes boatloads of money to update its business model. But the lines between tech and media are blurring. Newly appointed Yahoo! CEO Scott Thompson
best articulated this trend by affirming his company is not just a technology company, or a media company—it’s both.
We’re amid a fundamental transition in how video content is delivered—from broadcast and box office to broadband. Hollywood never fails to see the difficulties presented by this transition to existing distribution models—but content producers and programmers almost always underestimate the huge, new opportunities just over the horizon.
To take advantage, Hollywood needs to leverage “more efficient channels to reach a broader audience,” as Levie wrote. Key is personalization. Connected TVs allow for the most viewer-specific targeting possible: content (and ads) can be delivered with unprecedented accuracy and effectiveness. About 25 percent of U.S. homes have connected TVs. But with a
dearth of quality content, consumers aren’t yet actually watching them in meaningful numbers.
This is primarily because content providers and rights holders are taking a “toe-in-the-water” approach to entering the connected arena. Some are moving swiftly in the right direction—our work with
Miramax and ESPN are examples, as are the great Web and tablet experiences from ABC, Bloomberg and others. These companies recognize that the technology barriers to building incredible online viewing experiences have long been broken—and that viewers now expect to be able to watch whenever, wherever and on whatever device they like.
We’re now overcoming the final hurdle—monetization. We’re doing this with powerful video analytics that bring new insights—and digital dollars—to cautious advertisers. To take just one example: we’re capturing a wealth of data on consumers’ viewing behavior and preferences, and mapping these metrics to individuals’ social graphs. For rights holders and advertisers, this is powerful stuff.
The viewers are clearly here—1.2 billion people have to be taken seriously. This means the revenue is here, too. It’s clear to us that the economics of the digital video realm will catch up with, and eventually surpass, those of the old world. As online viewing continues to skyrocket and distribution windows for mainstream content shrink, we look forward to working more closely with Hollywood on bringing killer viewer experiences to the connected living room.
We’ve been focused on these challenges from the beginning, working toward the ultimate personalized multi-platform viewing experience through which content owners can happily profit. We love the conversation Mr. Levie has opened, and hope to see more active dialogue that brings a little more tech to Tinseltown.
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