YouTube Stretches its Lead

we switched to the YouTube player from our previous Flash player. The change reflects the fact that iPhones and iPods will not display native Flash streams. However, given YouTube’s popularity, Apple developed a special application enabling the units to display YouTube Flash videos. Since Apple has sold about 40 – 50 million of the devices, we want to make it as easy as possible for users to watch Inside Digital Media on their iPhones and iPod Touches.

Prior to the change, Inside Digital Media videos were available on iPhones and iPod Touches as either downloads or free subscription podcasts. Now, you can merely visit our website from such devices via the Apple Safari browser and touch on the videos you want to watch. The rapid growth of iPhones and iPod Touches provides a market that we do not want to miss. This is especially so because the units can be attached to TVs with $50 cable assembles thereby providing users a way to watch our videos on their TVs.

The implication of YouTube’s privileged status on the Apple portable units extends well beyond Inside Digital Media. About 80% of websites with Internet Video rely primarily upon the Flash format, including such otherwise potentially powerful YouTube rivals as Hulu.com. Their videos also will not play on Apple’s portable units, unless the websites choose to use the YouTube player. But, the chances of competitors like Hulu adopting the YouTube player are about as slim as a Cherokee Indian getting elected Pope.

The situation creates a dilemma for the Hollywood studios when they choose to make their movies and shows available on the Internet as advertising-supported streams. If they stick with Hulu, then they forfeit a large part of the portable screen market. If instead they distribute the shows via YouTube, then they pick-up the iPhones and iPod Touches, but they also might find that users of the portable devices attach them to TVs so the videos can be watched in a lean-back viewing environment. Presumably, the studios have instructed Hulu to avoid such a scenario, because they don’t want their Internet-streamed shows to be viewable on the TV.

No doubt, the Cable and Satellite companies feel even more strongly about controlling Internet video streams to the TV. It’s the central reason they are trying to move forward with the TV Everywhere initiative. TV Everywhere is seeking to become an Internet platform containing nearly all of the popular TV programming available, but only permits viewers to watch the shows if they are already subscribers to conventional CATV, Telco, and Satellite video services. The plan is to permit viewers access only if they can be “authenticated” as conventional subscribers.

Unfortunately for TV Everywhere, authentication is going to be a hugely complex problem, largely because of the wide disparity of proprietary networks that have built-up over the years in the CATV industry. However, adding portable devices, such as the iPhone and the iPod Touch compounds the complexity.

As the video incumbents try to work some magic to hold back the clock, everyone else will increasingly post their videos to YouTube. In the end, even the Hollywood studios may find it in their best interests to make content available on YouTube simply because YouTube videos will play on more devices.

In short, you can’t have TV Everywhere unless is plays everywhere. Presently, against its prime rivals, YouTube has the singular advantage of playing the vigorously growing number of iPhones and iPond Touches.

To learn more about how your business can exploit or adapt to such changes, feel welcome to contact us. You may also want to consider buying our research reports Third Generation Television and Future Developments in Video Advertising.

show less...