The State of Corporate Streaming 2016
There is a very clear difference being drawn between YouTube, which focuses on helping people discover videos that the YouTube’s Content ID program ensures are “originally-created videos,” and Facebook focusing on watching and sharing videos, regardless of their source.
Facebook is, however, also primarily focused on advertisers and therefore views. YouTube has a more balanced approach between content creation partners and advertisers. On YouTube, partner revenue is up 50% year-on-year, a number that has remained steady for the past 3 years.
YouTube also gives viewers more choice over the ads that they watch, therefore connecting brands with a more engaged audience. In fact, with TrueView ads, the viewer has to choose to watch your video or the ad isn’t chargeable.
YouTube has more than a billion users and generates around 4 billion views per day, and in 2015 the number of hours people spent watching videos on YouTube increased by 60% over 2014, the fastest growth in 2 years. YouTube is obviously doing its best to dispute Facebook’s claims about views per day, suggesting that only 30 seconds or more of viewing should count as a view.
Corporates now have to decide whether YouTube or Facebook is the video platform for them. Obviously, a fundamental part of this decision rests on audience demographics, but I expect to see most continue to hedge their bets on what to do with each one rather than making a clear choice of one over the other.
Corporate Video Platforms
The other focus in the corporate world is on video platforms for internal video viewing, video advertising, and external marketing. Last year, according to the latest Gartner Magic Quadrant report, there were two key platforms in the area, Qumu and Kaltura, with Brightcove getting closer to joining the magic quadrant each year, having made significant progress since 2013.
There were several developments on the platforms over the course of 2015. One of the key topics was video advertising and the rapid growth in the use of video ad blockers. Some reports suggest that, worldwide, as many as 144 million people use ad blocking software every month. Brightcove announced new technology that stops ad blocking software on desktop and mobile devices.
Defeating ad blocking is part of Brightcove Lift, the company’s ad optimisation solution. The technology “stitches” ads into video content streams in the cloud, making them harder to isolate and block. These continuous video streams also help viewer retention by reducing buffering times between the video and the ads. Lift can also be integrated with other third-party ad insertion and analytics platforms.
The battle over ad blocking is likely to escalate in 2016, as the ad blockers try to beat these newly implemented “unblockers” and advertisers and media owners look for ways to increase income from Millennials, the most likely demographic to use ad blockers.
The other discussion point around the video platform businesses in 2015 was profitability, and whether we are about to enter a phase of acquisitions and mergers.
Both Brightcove and Qumu, which are listed and therefore release figures publicly, are still posting significant losses. Qumu had a loss of $7.2 million in Q3 of 2015, trimmed its revenue forecast to $35 million from $37 million, and is looking to trim $9 million from its expenses in the next year. Brightcove expects 2015 revenue of between $133.4 million and $133.9 million, slightly ahead of market expectations, but is still likely to post a small loss in 2015.
According to Bloomberg, Kaltura is planning to raise funds, perhaps up to $100 million by the first quarter of 2016, either by further investment or via an IPO, and has appointed Goldman Sachs to help manage the fundraising.
Given the relative lack of profit from three of the main video platform companies, the outlook does not seem very promising for significant profits from the sector in 2016. In fact, given the market conditions as well as the plethora of smaller players at the lower end of the market, I expect we will see some consolidation in the market.
With the proliferation of self-streaming apps and expected steady growth in video platforms, it looks like we are in for another year of significant growth. It will be interesting to see how the visual grammar for the use of self-streaming apps will develop, and if both the apps themselves and their corporate use will really take off and hit a critical mass. Video advertising growth is likely to be similar, with highly significant increases. Whether the video platforms will benefit from this and greater video usage in general remains to be seen.
The total size of the online video platform global market is expected to reach $734.6 million by 2019 but the question remains, given the large number of players in the market: Is this enough to sustain a significant number of competitors?
Even though video is thriving behind the firewall and companies are finding new ways to succeed with streamed content, signs point to rocky waters ahead for online video platforms.
Do today's corporations prefer to build or buy their video solutions? Online video platforms work to differentiate their offerings, while Facebook shakes up the market.