Over the past few weeks, I’ve had the opportunity to speak about the digital video landscape at conferences with BeetTV, VideoNuze, and Brightcove, and I wanted to share some observations.
Digital video is experiencing an unprecedented outpouring of attention, innovation and creative energy. Even with the challenges that come with any emerging business opportunity, there are many reasons why digital video is at an inflection point and poised for extraordinary growth. Here are five:
1. Consumer behavior is changing in fundamental ways. Individuals are being empowered with devices, like tablets and gaming consoles, which offer the ability to more easily consume media. Over three-quarters of US adults will watch video monthly by 2014, and professional content consumption is currently growing at three times that of user-generated content. Markets respond to consumer-led trends, and this one shows no sign of slowing down.
2. The critical path items for digital video are known. Recently one of the largest global media companies told us that they employ five engineers for mobile video delivery for every one engineer they employ for desktop video. That 5-to-1 ratio isn’t scalable or sustainable. While all critical path items are not yet solved, hurdles, like device fragmentation, improving user experience, and developing better metrics to buy and prove the value of video advertising are being tackled actively.
3. Monetization possibilities are evident and evolving. In a recent survey, consumers between the ages of 15 and 24 — tomorrow’s mainstream — were the most likely to engage with digital video advertising, suggesting that individuals are growing increasingly comfortable with ads while watching TV on desktops and devices. Digital video ad loads are still small relative to TV, pointing to a monetization multiplier effect as more professional content comes online. A recent study also shows the growing popularity of paid media consumption on tablets: 18% of consumers use tablets for viewing paid video content, up from 11% a year ago. We are heading toward a perfect storm of monetization opportunity.
4. Major programmers and operators are leaning forward. Large media companies are motivated by consumers’ desire and ability to access content in new ways, and are responding with innovative tools like the Xfinity App for iPad. For several major upcoming sporting events, you¹re going to see creative partnerships between broadcasters, distributors and Adobe that allow viewers to access content (live and VOD) across different platforms and device types.
5. Advertising Follows Engaged audiences – and Digital Video Engages. Proprietary research from Adobe Auditude shows that mid-roll video ads, the most engaging commercial position, easily outperform completion rates of pre-rolls and post-rolls. With an 87% completion rate, mid-rolls are performing close to 30% better. Professional content with engaging, TV-like ad experiences represents tremendous opportunity. The creative possibilities for better digital video and mobile advertising experiences are endless, and exciting.
To position Adobe’s customers on the leading end of these evolving trends, we are thrilled to be continuing our work building Project Primetime. Adobe’s Project Primetime helps media companies bring their linear, live and VOD content online to any connected device with greater revenues from ads and subscriptions. By combining Adobe’s streaming, protection, advertising and analytics technologies, Adobe is in a unique position to address the most significant challenges that will enable the transformation of digital video.