Wednesday, July 06, 2005
Web Evolving Into New Entertainment Medium
America Online soon will offer what it considers a radical new feature. At its newly designed free Internet site, users will have a choice of two custom-designed start pages: one with picture and text links; the other loaded with video highlights. The "Video Hub" lets users begin their day with personalized TV -- be it movie trailers, TV previews, music videos or highlights of news, sports and entertainment. The idea, says CEO Jonathan Miller, "is to give the consumer control. Now they can watch what they want to watch, when they want to." If he sounds like a TV broadcaster, well, it's intentional.
MSN and rivals Google and Yahoo also are beginning to act, look and feel like networks in everything they do. They want to be programmers -- just like traditional TV networks, only wielding tools that help you navigate the new universe of hundreds upon hundreds of Web sites and channels. Like the big broadcast TV networks, the Internet's Big Four make money through advertising. That's why Google, Yahoo, MSN and AOL are constantly introducing new ways to keep users at their "networks" longer -- with free e-mail, maps, local search and photo-management tools. Like TV networks that hope you'll tune in at 8 p.m. and stay through the evening, the Internet networks know that the more time you spend there, the more money they can generate.
The online advertising market is red hot, as evidenced by Google's on-fire stock price, now hovering at $275 a share from $85 last summer. As more viewers -- especially young ones -- shift from television to the Internet, advertisers are following. Ad revenue is expected to grow to $26 billion in 2010, from $12 billion in 2004, says market tracker Forrester Research. Forrester analyst Charlene Li says that in five years, programming will be programming, whether it comes from the PC, TV set or some other delivery medium.
"More PCs moving into the living room is making this possible," she says. "Who's to say we won't have a Yahoo channel on the TV and an NBC network online? Whether it originates on TV or the Internet won't matter." She believes most homes will have powerful networks that will route programs from room to room and device to device as effortlessly as radio does today and that we'll be using TiVo-like interfaces to access everything we watch.
Pepsi Smash, a low-rated TV music concert series on the WB Network for the past two summers, just moved to Yahoo. Yahoo, the Internet's most-visited Web site with more than 100 million monthly users, is run by Terry Semel, a former co-CEO of the Warner Bros. Studios. Google Video is the name of the search giant's TV experiment. In theory, it would have access to every TV show ever made and make episodes available to users on demand, for a fee. Currently, the service has closed-caption transcripts from several networks, including PBS, CNN and C-Span. But Google Video Director Jennifer Feikin says users are frustrated and want to click on the links and watch the show. "That's where we want to be," she says. "The idea of this project is to show what the future may look like."
Microsoft's MSN co-owns MSNBC and offers a daily highlight package of news, sports and entertainment called MSN Video. The No. 2 Web site isn't as active in video as Google, Yahoo and AOL right now, "But we will be," says Bob Visse, MSN's director of marketing. Convergence: It's Finally Here. AOL received multiple brickbats after its 2000 merger with Time Warner for announcing a brave new world of converging media that never happened. Now, CEO Miller contends that despite the billions of dollars in lost market value and the strife the combined companies went through, the premise "was right. You could argue about the execution or any other aspect of it, but there was nothing wrong with the concept. It was just too early."
AOL has 15 Web shows in development. Yahoo has hired former ABC programmer Lloyd Braun to oversee its growing entertainment ambitions, and it has moved a good chunk of its Silicon Valley staff into the former MGM Studios headquarters in Los Angeles. Google's Feikin was recently in Los Angeles, wooing networks and producers to participate in the Google Video program. John Battelle, who runs the widely read Searchblog Web diary, says the big change in attitude about "convergence" now is that there are so many more millions of people using the Internet daily. "Broadband is much faster than dial-up, and more convenient, and there's a direct correlation between speed and usage," he says.
Additionally, the rise of search advertising -- those text ads that come up next to search results -- proved "not to hundreds of advertisers, but hundreds of thousands of them that if they spend money, they'll actually see sales in return." Katie Lacey, Pepsi's vice president for marketing of carbonated soft drinks, says it's her job to keep the brand in front of consumers, especially young ones.
"If they're migrating to the Internet, we want to be there," she says. That a TV show -- even a low-rated one such as Pepsi Smash -- could move from the tube to the Web "shows that the Internet has really transformed from an information exchange into an entertainment medium," she adds.
Not everyone agrees. Phil Leigh, an analyst at Inside Digital Media, says the Internet will be the primary place people go for entertainment -- it just hasn't happened yet. "In 20 years, the idea of having a broadcaster decide what we're going to watch will be passe," he says. "Everything will be delivered by the Internet, on demand."
David Edwards, an analyst at equity firm American Technology Research, says the most dramatic example of increased entertainment on the Web is in advertising. Those so-called rich-media ads that appear on Web pages are chock-full of video, animation and sound. "The Web experience used to be a static white page," he says. "Not anymore." Yahoo, which has dabbled in entertainment by showing the pilot episode of Kirstie Alley's "Fat Actress" series online and hiring Web animation studio JibJab to produce originals for the Web site, sees itself as a different kind of network. "We're about connecting the dots," says Geoff Ralston, Yahoo's chief product officer: "Taking services on one part of our network and creating a new value for it by tying it together with another. That creates a better user experience and more fully engages them."
Yahoo's Instant Messenger program lets users listen to online radio, check their address book, stocks and weather, and play games with others all from within the application. The company's new Music Engine lets users see what music their friends and peers who are online are listening to, check out their personal music collections and send instant messages while listening in.
The idea of a "Yahoo Channel" on TV screens doesn't sound that far-fetched to Ralston.
"Users will probably be connected all the time, whether that's in front of a PC, mobile device or TV screen," he says.
Despite all of the entertainment honchos now working at Yahoo, "These guys are not going to turn Yahoo into a TV network," Searchblog's Battelle says. "They're smarter than that. They're spending a lot of time trying to figure out how to be a media player in this new world. I don't know that anyone's figured out yet what that will be." Yahoo, MSN and AOL all average more than 100 million users a month; Google gets about 75 million, according to Internet measurement firm ComScore Media Metrix. The broadcast TV networks, with 43.4 million viewers daily according to Nielsen Media Research, still dwarf the Internet.
But with young people flocking to the Internet, advertisers say that's where they have to be. "Dollars are moving online because that's where audiences are going," says Jeff Lanctot, vice president of media for Avenue A/Razorfish, a Seattle-based ad agency that specializes in new media. "People are spending more time there and less elsewhere."
The dramatic shift in advertising dollars is what persuaded AOL to shift most of its programming -- formerly reserved for subscribers -- to the open Internet. AOL had to. As search became the new way for people to find what they're looking for online, most Internet users were in the dark about AOL's original, exclusive programming, because as part of a closed network, it didn't show up in search-engine findings. "If we can get people to add a second or third page view a day, that will have a huge impact on our advertising," says AOL Executive Vice President Kevin Conroy.
Even with the huge growth in Internet advertising, it's still a fraction of TV's $67 billion, and Lanctot thinks it will be years before there's parity. Still, in looking at how the Big Four Internet sites compare with TV networks, Lanctot says the big difference is in loyalty. "Networks live and die on hit shows," he says. "When the hits become stale, viewers leave. Online, the hits are e-mail, search and instant message. Supplement those with more content and get a user committed, and it's highly unlikely they'll leave."
Changing an e-mail and IM address takes a lot more effort than switching a remote-control channel, he adds. And unlike the TV networks, the Big Four Internet sites learn oodles about you after you register and sign in. Advertisers love that. A Yahoo user who spends time at Yahoo's auto site and researches Toyota Corollas, for instance, won't be shown an ad for an SUV. Yahoo, Forrester's Li says, will know what kind of car the user is interested in, based on behavior, making Toyota's purchase more cost-effective.
The TV networks, Battelle says, can never offer this kind of drilled-down efficiency. "It's the game of intention, trying to serve up the appropriate ad," he says. "The big TV networks can't do that -- but the Internet can."
Brought to you by Guardian eCommerce.
MSN and rivals Google and Yahoo also are beginning to act, look and feel like networks in everything they do. They want to be programmers -- just like traditional TV networks, only wielding tools that help you navigate the new universe of hundreds upon hundreds of Web sites and channels. Like the big broadcast TV networks, the Internet's Big Four make money through advertising. That's why Google, Yahoo, MSN and AOL are constantly introducing new ways to keep users at their "networks" longer -- with free e-mail, maps, local search and photo-management tools. Like TV networks that hope you'll tune in at 8 p.m. and stay through the evening, the Internet networks know that the more time you spend there, the more money they can generate.
The online advertising market is red hot, as evidenced by Google's on-fire stock price, now hovering at $275 a share from $85 last summer. As more viewers -- especially young ones -- shift from television to the Internet, advertisers are following. Ad revenue is expected to grow to $26 billion in 2010, from $12 billion in 2004, says market tracker Forrester Research. Forrester analyst Charlene Li says that in five years, programming will be programming, whether it comes from the PC, TV set or some other delivery medium.
"More PCs moving into the living room is making this possible," she says. "Who's to say we won't have a Yahoo channel on the TV and an NBC network online? Whether it originates on TV or the Internet won't matter." She believes most homes will have powerful networks that will route programs from room to room and device to device as effortlessly as radio does today and that we'll be using TiVo-like interfaces to access everything we watch.
Pepsi Smash, a low-rated TV music concert series on the WB Network for the past two summers, just moved to Yahoo. Yahoo, the Internet's most-visited Web site with more than 100 million monthly users, is run by Terry Semel, a former co-CEO of the Warner Bros. Studios. Google Video is the name of the search giant's TV experiment. In theory, it would have access to every TV show ever made and make episodes available to users on demand, for a fee. Currently, the service has closed-caption transcripts from several networks, including PBS, CNN and C-Span. But Google Video Director Jennifer Feikin says users are frustrated and want to click on the links and watch the show. "That's where we want to be," she says. "The idea of this project is to show what the future may look like."
Microsoft's MSN co-owns MSNBC and offers a daily highlight package of news, sports and entertainment called MSN Video. The No. 2 Web site isn't as active in video as Google, Yahoo and AOL right now, "But we will be," says Bob Visse, MSN's director of marketing. Convergence: It's Finally Here. AOL received multiple brickbats after its 2000 merger with Time Warner for announcing a brave new world of converging media that never happened. Now, CEO Miller contends that despite the billions of dollars in lost market value and the strife the combined companies went through, the premise "was right. You could argue about the execution or any other aspect of it, but there was nothing wrong with the concept. It was just too early."
AOL has 15 Web shows in development. Yahoo has hired former ABC programmer Lloyd Braun to oversee its growing entertainment ambitions, and it has moved a good chunk of its Silicon Valley staff into the former MGM Studios headquarters in Los Angeles. Google's Feikin was recently in Los Angeles, wooing networks and producers to participate in the Google Video program. John Battelle, who runs the widely read Searchblog Web diary, says the big change in attitude about "convergence" now is that there are so many more millions of people using the Internet daily. "Broadband is much faster than dial-up, and more convenient, and there's a direct correlation between speed and usage," he says.
Additionally, the rise of search advertising -- those text ads that come up next to search results -- proved "not to hundreds of advertisers, but hundreds of thousands of them that if they spend money, they'll actually see sales in return." Katie Lacey, Pepsi's vice president for marketing of carbonated soft drinks, says it's her job to keep the brand in front of consumers, especially young ones.
"If they're migrating to the Internet, we want to be there," she says. That a TV show -- even a low-rated one such as Pepsi Smash -- could move from the tube to the Web "shows that the Internet has really transformed from an information exchange into an entertainment medium," she adds.
Not everyone agrees. Phil Leigh, an analyst at Inside Digital Media, says the Internet will be the primary place people go for entertainment -- it just hasn't happened yet. "In 20 years, the idea of having a broadcaster decide what we're going to watch will be passe," he says. "Everything will be delivered by the Internet, on demand."
David Edwards, an analyst at equity firm American Technology Research, says the most dramatic example of increased entertainment on the Web is in advertising. Those so-called rich-media ads that appear on Web pages are chock-full of video, animation and sound. "The Web experience used to be a static white page," he says. "Not anymore." Yahoo, which has dabbled in entertainment by showing the pilot episode of Kirstie Alley's "Fat Actress" series online and hiring Web animation studio JibJab to produce originals for the Web site, sees itself as a different kind of network. "We're about connecting the dots," says Geoff Ralston, Yahoo's chief product officer: "Taking services on one part of our network and creating a new value for it by tying it together with another. That creates a better user experience and more fully engages them."
Yahoo's Instant Messenger program lets users listen to online radio, check their address book, stocks and weather, and play games with others all from within the application. The company's new Music Engine lets users see what music their friends and peers who are online are listening to, check out their personal music collections and send instant messages while listening in.
The idea of a "Yahoo Channel" on TV screens doesn't sound that far-fetched to Ralston.
"Users will probably be connected all the time, whether that's in front of a PC, mobile device or TV screen," he says.
Despite all of the entertainment honchos now working at Yahoo, "These guys are not going to turn Yahoo into a TV network," Searchblog's Battelle says. "They're smarter than that. They're spending a lot of time trying to figure out how to be a media player in this new world. I don't know that anyone's figured out yet what that will be." Yahoo, MSN and AOL all average more than 100 million users a month; Google gets about 75 million, according to Internet measurement firm ComScore Media Metrix. The broadcast TV networks, with 43.4 million viewers daily according to Nielsen Media Research, still dwarf the Internet.
But with young people flocking to the Internet, advertisers say that's where they have to be. "Dollars are moving online because that's where audiences are going," says Jeff Lanctot, vice president of media for Avenue A/Razorfish, a Seattle-based ad agency that specializes in new media. "People are spending more time there and less elsewhere."
The dramatic shift in advertising dollars is what persuaded AOL to shift most of its programming -- formerly reserved for subscribers -- to the open Internet. AOL had to. As search became the new way for people to find what they're looking for online, most Internet users were in the dark about AOL's original, exclusive programming, because as part of a closed network, it didn't show up in search-engine findings. "If we can get people to add a second or third page view a day, that will have a huge impact on our advertising," says AOL Executive Vice President Kevin Conroy.
Even with the huge growth in Internet advertising, it's still a fraction of TV's $67 billion, and Lanctot thinks it will be years before there's parity. Still, in looking at how the Big Four Internet sites compare with TV networks, Lanctot says the big difference is in loyalty. "Networks live and die on hit shows," he says. "When the hits become stale, viewers leave. Online, the hits are e-mail, search and instant message. Supplement those with more content and get a user committed, and it's highly unlikely they'll leave."
Changing an e-mail and IM address takes a lot more effort than switching a remote-control channel, he adds. And unlike the TV networks, the Big Four Internet sites learn oodles about you after you register and sign in. Advertisers love that. A Yahoo user who spends time at Yahoo's auto site and researches Toyota Corollas, for instance, won't be shown an ad for an SUV. Yahoo, Forrester's Li says, will know what kind of car the user is interested in, based on behavior, making Toyota's purchase more cost-effective.
The TV networks, Battelle says, can never offer this kind of drilled-down efficiency. "It's the game of intention, trying to serve up the appropriate ad," he says. "The big TV networks can't do that -- but the Internet can."
Brought to you by Guardian eCommerce.
