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By Gordon Chu | June 23, 2009
The Case for Online Videos
Last Thanksgiving, my sisters and I decided to indoctrinate my mother with the holiest of holy – an email address. This was her first (but certainly not her last) and really her first introduction to what she fondly referred to as, “the www thing.”
Today, she went from the stone age of non-Internet, to having a Facebook account and selling knick-knacks from around the house on eBay. Today, my inbox is flooded with recipes of her favorite foods, news articles of my old hometown, pictures of kittens in bowls, and, of course, her love for viral online videos (she cannot get enough of how Mentos and Diet Coke react).
While I do not have the patience to scour all through Youtube, I am deeply fascinated by the behavior of online videos and avid viewers, such as my mom. She encompasses why Youtube exists (despite still operating at a loss) and why online videos is the media channel of the future.
China has more than adopted the way of online videos. Online is more than merely an option to consume media, it is where all eyes and brands are focused – where media begins, and where media ends. It is engrained in the culture of China’s youth and is as regular of an activity as getting a Starbuck’s coffee or checking your email.
Several weeks ago, we had talked about the sheer size of China’s Internet market to the tune of 298M users (and growing). What we did not make mention is just how much of that Internet use was consumed by video watching. In fact, online videos is the 3rd most utilized activity (behind instant messaging and online music) and eclipses even the viewership of television for certain demographics. To put things in perspective – Youku, China’s leading video sharing site, has more than 50% market share of online videos. Throw in Tudou, 56.com, Tencent QQ, all of a sudden, the whole world of online videos just got that much bigger.
Brands have most definitely taken notice of this whole online phenomenon. Online marketing campaigns are not just an ancillary business to television’s bread and butter – but are an absolute staple to any successful marketing penetration in China. Beyond the sheer volume of viewers, there are other beneficial advantages to why brands are migrating online.
Reason 1 – Follow the consumer. Its no mystery that China’s youth consumes media a different way than just television. Whether this is a function of content, a function of technology, or a function of culture, China’s youth flock to the Internet for media more so than any other media forms.
I was surprised to find out that Fox’s “Prisonbreak” is one of the most popular shows in all of China. So much so, I’m willing to bet China has more fanatic fans than even here domestically in the US. Chevrolet took notice and produced both Internet and television commercials with Wentworth Miller (star of Prisonbreak) starring in an action-filled commercial that resembles the fast-pace of the hit show. The funny thing is “Prisonbreak” has never aired on television nor will it ever. The only way you can catch “Prisonbreak” is – yup – online.
Reason 2 – Offer more to consumers. An online platform has certain advantages over a platform such as television. For one, the Internet offers choices. Yes, there are 3,000+ TV stations in China, but an online platform has millions all at the user’s control. Secondly, and most importantly, an online platform introduces a brand new world for consumers with interactivity.
Nokia is a prime example of interactivity between content and viewers. Recently, Nokia launched an online event streamed live on Youku. Viewers came to the site and were able to choose from four different angles to watch the live event. Still not enough? Viewers were able to join the interactive press room and see their favorite performers answer questions asked by fellow netizens. In all, nearly 7M people came to the site to watch – making the 3-hour event the largest of its kind in the virtual world.
Reason 3 – Instant gratification. This really works two-fold, instant gratification for both the consumers and instant gratification for the content providers. For consumers, this is a no-brainer. All the content they could ever want at the tip of the PC mouse. In the mood for some NBC Heroes? There’s more than enough online channels to fill season 1, 2, 3 and 4. I digress – you get the point.
For content providers, instant gratification comes with information. They want information that is measurable, direct, and fast about their viewers. Television offers little more than a rating and an estimated number of viewers. Online provides richer and instant information about the content. Viewer comments, number of downloads, geographic demographics – all this information is available in real-time. When’s the last time content providers were able to gather that information from a Nielsen box?
Reason 4 – Mobile, the next big thing. Last week, we talked about the introduction of the 3G network to China. Whether it will make a big splash or not in a country already adapting to the different technologies of mobile, that is up for debate. However, there’s no argument about how consumers will adopt the use of mobile in media. One thing we do know, 3G will only boost the consumption of video via mobile with faster access to the Internet.
Nokia’s recent online live event was the first strategic move to put Nokia’s brand on the forefront of online videos. Nokia is, by-large, China’s number one mobile manufacturer brand – and are well aware of the implications of mobile and online video. In fact, in May 2009, China Telecom announced in partnership through Nokia Siemens Networks, they would roll-out high-quality video streaming services across mainland China. Subscribers would have the capability to access multimedia mobile applications such as live TV, video-on-demand, and media download.
So, is this the end of a prehistoric television era? I will adamantly answer that with an affirmative no. Television and online videos are not mutually exclusive and both will exist in the same media ecosystem. In fact, the pie will only get larger as more media channels are developed and as technology dictates how consumers view media. Rests assure, both television and online videos will have their place.
Censorship will play a big role in the balance between television and online. Today in China, SARFT (State Administration of Radio, Film, and Television) heavily influences the content on television through quotas, regulations, and just a general “Big Brother” approach of media in the marketplace. And today in China, SARFT is looking to have the same control online. Whether online will have the same restrictive rules and control as television – this is more of a political and social decision that, and like the China market, will just have to wait and see.
Despite this massive wave of online videos flooding the China market today, I still believe television is and will be the most effective way to market and advertise. Like any other products, technology will evolve and adapt to the way of consumers. The lines of entertainment will be blurred and rather than a distinct online / television division, we WILL see a blur of technologies as well (see IPTV if you want a hint).
For now, as brand managers and content providers, we can view these changes in technology as a blessing – more distribution and more options for us to choose. Going forward, our job is to figure out the how-to. Afterall, if Youtube could have such a profound effect on my mother, I have to believe this is just the beginning of more than just an online revolution. And if you’re like me, this is where the fun begins.
Gordon Chu is the VP of Business Development at METAN Development Group. For comments/questions, email gchu@metanmedia.com.
