What is the NextBigWhat in Online video content [No brainer – its mobile]

Would you agree that the Internet will gradually eat up television’s marketshare in India? Though we can argue that the reach of the Internet is limited while television has more, the recent growth in online video consumption indicates that video is certainly going to be big over the web in India.youtube_india_thumb.jpg

A report released by digital measurement company, ComScore, placed India as a country with most online video views from Asia after China and Japan. The report states that around 44.59 million unique viewers originated from India in June 2012, of which, most of the viewers were 15+ in age and either logged in from home or work stations.

YouTube India claims to have more than 5 million view everyday on its platform with two-third of its viewers in India under 35 years of age. A latest survey released by Google last week revealed that emerging consumer class (which YouTube termed ‘Generation C’ ) watch nearly 30 percent of their YouTube videos on mobile. Smartphone owners spend one quarter of their YouTube time on mobile, while tablet owners spend about 20%.

Last year, during an industry conference, Goggle Indian MD, Rajan Anandan said “YouTube India is bigger than MTV India in 2012 in terms of revenues”. This claim supports the view that online video consumption has started impacting television dominance.

To catch eyeballs of youngsters, last week music channel MTV has made a smart move and launched an Android based tablet ‘Volt’, which is priced at Rs.12,999. The device has television player inbuilt and gives viewers on the go access to MTV.

Video consumption across devices (phablet or PC) is emerging as a common phenomenon in India. According to a recent Nielsen Media Research comparative study of online video usage, India rates among the countries with highest rate of penetration of mobile video in Asia Pacific (along with China, Indonesia, and the Philippines). The study notes that cosmopolitan young adults in India are over 20 percent more likely to use mobile video than their Western counterparts.

From all the data, it appears that video over web is on the way to become big, and obviously most of growth will be steered by mobile.

Till the first quarter of 2012, India had 27 million smartphone users while an estimate by Telecom Regulatory Authority of India (TRAI) projected to have 25 million mobile Internet users’ in the country in 2012, and expected to reach 50 million by 2014. Given such projection of smartphone penetration with proliferation of video friendly 3G and 4G networks, and ease of users’ to catch video on the go, video on mobile is surely a next big thing.

Growth of major publishers and trends

Mobile video search  platform VuClip sees mobile as the next big growth driver for video content in India. Nikhil Naik, Director, India Business, VuClip says “Brands in India are learning to view mobile as a scalable medium where their messages can be delivered more effectively than traditional channels such as television and PC”.

Currently, VuClip’s Click2Vid ad unit provides optimized embedded video ads for the device and automates a consistent user experience across 5,500 devices, and has more than 15 million monthly viewers.

Silicon Valley based video ad network Vdopia, which targets Indians across the world claims to have 2.5 million users seeing ads on its platform with around 5% Click Through Rate (CTR). In addition, the company has witnessed more than 10 million downloads of nexGTv app (mobile TV app) world wide. Launched in January 2012, app user’s consume around 40,000 hours of MobileTV everyday on NexGTv.

In terms of content, 85% of online video views come from BCA (Bollywood, Cricket and News) followed by tutorials, humor and clips of personalized trips. “Demand of bollywood is consistent from users’ side while trends suggest viewership of news video clips have been sporadic,” said Naik.

Preetesh Chouhan,  VP-APAC – Vdopia mentioned that 42% of the users on its network watched movie trailers and 92% of its users are sharing video content. Currently around 15-20% of viewers are from tier 2 and 3 cities, which is believed to be growing fast with penetration of low cost smartphones.

Is television poised to become interactive?

In above points, we argued about impact of Internet on television, however some experts in US and UK have opined that television space will undergo a change to engage with audience. Mark Suster, an investment partner at GRP Partners highlighted in a blog post that global audiences of prosumer video producers will create content that is viewed by global audiences in numbers far in excess of traditional TV.

Suster pointed out  about TV is ushering into era of “participation” which is a much more important trend than “social video” even if it seems less sexy or less investment prone.

Monetization

Like in the online music space, two revenue models exist in online video space – freemium and premium. Though 70-75% of overall revenue constitutes of advertising, players like NexGTv and Vuclip’s mobile portal – Mira (exclusively for women) have started testing the premium model too.

“Personalized online video content can be saleable” said, Rammohan Sundaramt of ad:tech. “Internet savvy consumers can shell out money for video content across cooking, tutorial, cosmetic and beauty, however content has to be compelling and well packaged”  added Sundaram.

Challenges

Lot of brands look at online videos as an extension of TV advertising, and thats where the challenge starts as TV sales and online sales use different selling models. “Some advertisers view online advertising as more expensive than TV” added Chauhan.

Apart from that the major challenge revolves around identification of targeted audiences. On televisions all General Entertainment channels (GECs) qualify as a key medium to reach to women, but such strong polarisation is missing in the online medium.

Over the past one year mobile TV audience has grown at a phenomenal pace, but advertisers still perceive mobile TV to be 3G dependent. “A strong feeling is that if 3G connections are low, how can Mobile TV viewership be high. The challenge is to make the advertisers believe that by reducing bit rate and by using other technologies, apps can serve content  to a wide 2G audience” said Chauhan.

The reasons for lack of quality content online, both short and long form, are limited monetization avenues, and limited distribution/syndication mechanisms for video content in India.

The Road Ahead

With decreasing prices of smartphones and connectivity charges, consumption of video content is set to increase via mobile phones, not just among consumers but also advertisers and content providers.

In 2012 several big ticket movies have leveraged the online video route to reach out to their audience. The ‘Kolaveri Di’ song from Tamil film ‘3’ topped the Indian mobile charts within 18 days of its launch. The song was downloaded 2,10,000 times by Airtel consumers within 3 weeks and became a cult amongst masses.

Similarly, brands can also create a buzz about their product if the content is well positioned. Quite a few advertisers have started creating video ads solely for mobile or web platforms too. It is exciting to see more and more leading brands exploring mobile video as an important part of their overall advertising strategy. Some of the brands that have leveraged this effectively include Pepsi India, Pizza Hut, Cadbury Silk, Nokia, Tata Nano, Fastrack, Samsung, Axe and Surf Excel.

So, why brands are allocating budget for pure play online video content? In fact, brands spend money where they find consumers