Voyeurism and the future of Internet video

Global video industry now worth about US$350b and growing

Internet video of the future will be slicker, more widely distributed and more profitable, but the success of this medium to date owes much to pirates, proud parents and people who like to be watched or watch others.

So says Jeremy Allaire, formerly CTO of Flash-maker Macromedia and currently head of Brightcove , which provides technology that lets everyone from independent producers to major broadcast networks deliver video and other content over the Internet (Brightcove in January said it received US$60 million in late-stage funding). His keynote address kicked off Wednesday's sold-out "Brave New Web " conference, a daylong discussion of where the Web is headed that was organized by the MIT Enterprise Forum of Cambridge and that was attended by about 400 people, including entrepreneurs, investors and academics.

"Voyeurism has sort of emerged as a new entertainment category," Allaire said. "I don't think anyone could have anticipated that. We had reality TV, but this is sort of taking it to the next level. The most popular content is highly voyeuristic, and that's something the Internet allows for on a global cultural scale."

Pirated content, which is "just consumers 'helping' copyright holders along" and people publishing videos of their kids' birthday parties and soccer games, also has contributed to the Internet video boom, he noted.

Allaire said that even though Internet video is getting lots of attention these days because of success stories such as YouTube , most people still don't appreciate the size of the opportunity. He said the global video industry is worth about US$350 billion when you add up films, video rentals, cable, traditional broadcasting and more; and that the Internet video market "is truly a rounding error," amounting to maybe .01% of that revenue total. The Internet video market will be rewarded with a big chunk of change if it can shift even 5% of that global market to the Internet over the next 10 years, he said.

The growth of online video is being fueled by a number of factors, including the emergence of digital cameras, application-development technologies and hosting services that make it easier and cheaper to create and distribute video content. What's more, organizations such as newspapers and magazines are themselves morphing into television programmers and video content companies.

"If you look at the share of dollars from that part of the industry and what percentage of their dollars will ultimately shift over to video over the next 10 years, it's pretty staggering," he said, pointing to Brightcove's belief that video on the Internet will one day be as ubiquitous as text on the Web.

Allaire said professional media organizations will have an enormous role in Internet video. Despite technologies that make getting video on the Web easy and inexpensive, "creating good video is really hard and really expensive," he said.

"What we're likely to see this year and next year is a flood of quality video programming coming onto the Web," Allaire said.

Companies are using "blended distribution strategies" to get their video in front of viewers, Allaire said. These include branded channels that go direct to consumers; Web syndication, which involves making content available for others to use on their sites; and tapping aggregation sites where users are known to start their search for content. Brightcove helps its customers in all of these areas, he said.

Content companies are still trying to figure out how to make money on Internet video, Allaire said.

"The dominant [way to make money] is broadband advertising, and we're still in the second inning," Allaire said The formats and policies are still immature, he said.

Getting users to pay for content is another approach, particularly for niche or vertical-market advertising, but this has been less successful than broadband advertising so far, Allaire said. The key here is crossing the "device chasm," in that "you're rarely going to pay money for a high-quality version of something that you're limited to watching on your PC," he said. He pointed to companies such as Apple and Sony that are working on products to make consuming Internet video more palatable.

The bottom line, he said, is that although much content today is free, most content creators want to get paid; and that legal and business processes will be put in place to support that in a bigger way.

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