Gibb+D+final+report

Gibb D


 * I switched the title and sub-title and modified the sub-title. There are two points to do some work on. Include in the executive summary that WebTV, however, it turns out, is important because it gives advertiser's flexible options for dynamic ad placement. Then in the section on how Hulu won the first battle - use bullet lists with some more explanation to organize the kinds of embeded ads that clients can put on Hulu. In particular explain more about Ad Selector.**

Proximity Research Report

Hulu and Next Generation Web TV

Gen-Y Will Watch Video Through Many Different Platforms

By Daisy Gibb

Spring 2010


 * __TABLE OF CONTENTS__**

3… Executive Summary

4… Introduction

4… What the broadcast TV ad model is falling apart for targeting Gen-Y

4… How Hulu won the first battle of net TV

5… How Hulu is caught in the chaos of the second net TV revolution

6… What the stakes are in who wins this second battle

7… Recommendations

8… Attachment 1: Focus group results for video

9… Attachment 2: Press release of online video sorted by videos viewed and by unique viewers.

11… Attachment 3: Hulu content providers

13… Attachment 4: Screen shots of Hulu advertising formats

16… References
 * __EXECUTIVE SUMMARY__**

Broadcast TV viewership is declining in part because Gen-Y can now access video content through the web. Hulu, one of the most visited sites by Gen-Y for video content, won the first battle of net TV through its user friendly interface, quality of video, and amount of content. However, as technology advances, there will be new places for Gen-Y to watch their desired video content, and Hulu is now caught in the chaos of the second net TV revolution. It could be years before Proximity clients will know who has won this second battle thereby gains control over inserted video ads.


 * Introduction:**

People are finding new ways to watch their video and television content. Gen-Y has become more demanding in what content they receive and how fast they can receive it. Right now, Gen-Y prefers sites like Hulu because they are simple, easy to use, free, and convenient.


 * Why the broadcast TV ad model is falling apart for targeting Gen-Y**

Television sets have been around since the mid 1900’s, absorbing the attention of billions of Americans. Many homes in the United States have more than 2 television sets and according to the A.C. Nielsen Co., the average American watches more than 4 hours of TV each day. However, as technology has been advancing in the past few years, the amount of time that Gen-Y sits in front of the television set is declining.

More and more people are switching to the Internet for their entertainment, including video entertainment. Because of this, “ networks spend less on creating content, switching to reality television and other cheap to make genres, causing even more people to switch off” (Riley 2008).

Today there are numerous ways in which Gen-Y can acquire video content and as a result broadcast TV audiences are being fragmented. Our video focus group reports show that Gen-Y males and females will still watch broadcast TV for certain things (sports for males, competition shows for females), and will still rent certain videos to watch on their television set, but for the most part they will stream from online video sites like Hulu, Fancast, and Megavideo. (see Attachment 1). According to Sandoval’s article //Hulu’s profitable, but direction still uncertain//, “Hulu nailed the basics” (Sandoval 2010). People can watch their favorite TV shows and movies in their entirety with clear images and in good quality. It’s for reasons such at these that Gen-Y is switching off of broadcast TV and why viewership of online streaming video sites increasing. (see Attachment 2).


 * How Hulu won the first battle of net TV**

Hulu was launched in 2008 by CEO Jason Kilar as a joint venture between NBC and Fox. The following year ABC became a shareholder and content partner (Wikipedia 2010). Hulu has a long list of content providers for it’s TV shows and videos, the major film ones being Sony, MGM, and Time Warner. (see Attachment 3). Although the public thought advertising through Internet TV would be a failure, Hulu's embedded ads shown during second run prime time shows proved to be a success.

Embedded ads are becoming more and more popular as the trend of interactive advertising is increasing. Hulu offers a variety of advertising packages and opportunities for embedded ads and custom advertising solutions. Their “clutter-free site provides an optimal user experience while ensuring [the] brand is center stage” (Hulu.com 2010).

Hulu has several standard ad formats, including the Instream Video Ad that can be accompanied with the Companion Banner or Branded Player Skin, and the Branded Slate, which shows up at the beginning before the content begins. (see Attachment 4). Hulu also offers viewer choice advertising, which consists of Branded Entertainment Selector and Ad Selector. The Ad Selector allows the user to control an entire ad experience by choosing from three options which commercial selection they want to view.

In addition to these advertising formats, Hulu places the embedded ad on shows and videos that correlate with the demographic appeal of the content. For example, the TV show //Glee//, which attracts more females than males, presents commercials for Dove and Nair. The same exact commercial might appear more than once, or two different ones for the same product will appear during the show. Throughout the show other commercials will appear, such as Kodak, which can be for any gender, but for the most part the commercials during Glee are geared for females.


 * How Hulu is now caught in the chaos of the second net TV revolution**

The number of videos Hulu shows each month has quadrupled in the last year, jumping from 240.6 million videos viewed in December 2008, to one billion in December 2009 (Graham 2009). Hulu plans to continue offering their current services while hoping to maintain their increase in views. While it may seem that Hulu is holding its own in the Internet TV market place, there is much competition on the horizon.

Three primary gateways, which will shape the online streaming video marketplace:

· Comcast; NBC ownership

· Google; Google TV

· Apple; iPad

Comcast owns Fancast, a site that gives fans instant access to a video collection of TV shows, movies, and more. Members of Comcast also have the option to watch their on-demand movies through their comptuer instead of through their television set. Xfinity TV offers subscribers 27 channels, including HBO and Cinemax. Currently, one has to subscribe to both Comcast TV and broadband to use the service (Hardawar 2009). Comcast is still trying to seal the deal with General Electric to own 51% of NBC and then they will be considered a content provider.

Google owns YouTube, which is the top U.S. online video property. It does not offer premium content, however, but that might soon change. Also, Google announced that it would “acquire Episodic, an online platform for delivering video and making money from it” (Sherman 2010). Google is also in the process of materializing Google TV, a Google Android based television platform to be implemented in both set-top boxes and televisions (Joshi 2010). Hardware partner Sony “already announced plans to release products on the Google TV platform” (Dybwad 2010). Sony would sell a TV with a special chip in it, which interfaces with Google Android. People would be able to watch premium content on the big screen instead of on their smaller PC screen.

Apple TV has had limited success, but so far, the Apple iPad has had success as a video device. However, the iPad does not have adobe flash, which limits the user to what videos they can view on the web through the iPad. Steve Jobs, co-founder and CEO of Apple Inc, thinks that those with premium content will want an app on the iPad, and he is probably right. Many companies are already gearing up for the iPad (Cheng 2010).

With the chaos of the second net TV revolution, it all depends on where the content providers choose to show their content. Gen-Y will go to whichever platform best suits their entertainment needs, and advertisers will advertise where Gen-Y watches.


 * What the stakes are in who wins this second battle**

If Comcast wins this second battle through owning NBC, they will be able to control the ads on NBC broadcast TV. Sites like Hulu have done well to stabilize themselves in the Internet TV market, but it doesn’t pay the bills. Content providers still need to show content on broadcast TV in order to get paid, and advertisers will continue to go to where the new content is and to reach that national audience.

If Google TV takes off, Google will be able to collect demographic information about the viewer while they are watching their video content. This is very good news for advertisers because they would know that their ads are being seen by their target audience.

If Apple wins this second battle through the iPad, Steve Jobs will have signed contracts from premium content providers and will get a cut of what they get. He will be the gatekeeper of which ads are shown and on what programs. As of right now the iPad is selling well, but only time can tell how long will this continue and whether or not people will adopt it.

Advertising used to be so simple when it was just through broadcast TV with the major networks all located in the same area. It is so complicated today because there is no one right way to advertise. People have many options of where to view their video content, and advertisers have those same options of where to place their ads. Some people will register with Comcast and go back and forth between their TV set and their computer to watch videos, some people will buy an iPad, and some people will use Google TV if it gets going. Advertisers will have to negotiate with a bunch of different platforms.


 * __RECOMMENDATIONS__**

Gen-Y wants instant video content, for free, without advertisements, and on the big screen. Advertising on broadcast TV reaches a national audience, but viewership is declining, people get impatient with the lengthy and obnoxious commercials, and it’s only a matter of time before something else takes its place.

Advertising on the iPad is instant and mobile, which is good for those who are on the go, but it is a small screen so Gen-Y would probably chose another method of watching video when they were at home relaxing.

Google TV is the best option and would meet most of the needs of what Gen-Y is seeking in their entertainment viewing. Gen-Y would still have to sit through some ads, but it would be instant content, for free, and on their television screen. Although Google TV sounds like it would be the perfect platform for people to watch their video content, it is not yet on the market and it could be years before it takes off.

Because everything is still up in the air about where Internet TV is headed, Proximity clients should wait to see how things play out and advertise on successful and effective online streaming sites like Hulu until other options have stabilized.


 * __Attachment 1__**

Focus Group results for video. These sessions were conducted in April of 2010.

Premium video content is increasingly being delivered through the Internet, giving Gen-Y many different was to access TV shows and movies. As a result broadcast TV audiences are being fragmented.

__Group 1__

Rationale: Through our focus group session we hope to determine how Gen-Y currently watches premium video and which broadband technologies they prefer.

Findings: __Group 2__ Rationale: The goal of our focus group was to determine where Gen-Y gets premium video content, whether it be through the computer, home theater or the movie theater. Findings: __Group 3__ Rationale: The purpose for our focus group sessions is to determine how Gen-Y currently watches premium video and which broadband technologies they prefer. Findings:
 * Most females watch competition shows live. Overall they do not know how to stream video online.
 * Most males watch sports live. Overall they stream a lot, but as a second option.
 * Only few Gen-Y used consoles like Xbox.
 * Gen-Y is not willing to pay high prices for premium content.
 * Gen-Y primarily find movies/TV reruns online, TV, prime time, and ondemand
 * Gen-Y watch movies at home often and rarely at the theater (which is viewed as a social activity rather than means to see a movie
 * Most prefer to rent for first time viewing and only buy if they really like movie.
 * Gen-Y will only spend money to buy certain "highly enjoyable" DVDs.
 * High Definition programming is a preference but not priority, and preferred for action and sports videos.
 * Gen-Y does take various actions to avoid watching commercials.
 * Gen-Y uses a variety of sources to watch broadcast televisions.

Press release of online video sorted by videos viewed and by unique viewers. It includes tables to easily see where Hulu was ranked in March 2009. //Average U.S. Viewer Watched 5.5 Hours of Online Video During the Month, According to comScore Video Metrix// RESTON, VA, April 28, 2009 – comScore (NASDAQ: SCOR), a leader in measuring the digital world, today released March 2009 data from the comScore Video Metrix service, showing that U.S. Internet users viewed 14.5 billion online videos during the month, representing an increase of 11 percent versus February. __Google Sites Accounts for 41 Percent of U.S. Online Video Market__ In March, Google Sites once again ranked as the top U.S. video property with 5.9 billion videos viewed (40.9 percent online video market share), with YouTube.com accounting for more than 99 percent of all videos viewed at the property. Fox Interactive Media ranked second with 437 million videos (3.0 percent), followed by Hulu with 380 million (2.6 percent) and Yahoo! Sites with 335 million (2.3 percent). March represented the first time Hulu has cracked the top three in the ranking of videos viewed.
 * __Attachment 2__**
 * Hulu Continues Ascent in U.S. Online Video Market, Breaking Into Top 3 Properties by Videos Viewed for First Time in March**
 * **Top U.S. Online Video Properties* by Videos Viewed** **March 2009**
 * Total U.S. – Home/Work/University Locations**
 * Source: comScore Video Metrix** ||
 * **Property** || **Videos (000)** || **Share (%) of Videos** ||
 * //Total Internet// || //14,468,345// || //100.0// ||
 * Google Sites || 5,919,530 || 40.9 ||
 * Fox Interactive Media || 437,098 || 3.0 ||
 * Hulu || 380,102 || 2.6 ||
 * Yahoo! Sites || 334,724 || 2.3 ||
 * Microsoft Sites || 288,239 || 2.0 ||
 * Viacom Digital || 277,753 || 1.9 ||
 * CBS Interactive || 191,686 || 1.3 ||
 * Turner Network || 167,323 || 1.2 ||
 * Disney Online || 125,248 || 0.9 ||
 * AOL LLC || 105,237 || 0.7 ||

__Google Sites Eclipses 100 Million Viewer Threshold Once Again__ Nearly 150 million U.S. Internet users watched an average of 97 videos per viewer in March. Google Sites eclipsed the 100 million online video viewer threshold once again, after first achieving the milestone in December 2008. Fox Interactive ranked second with 55.2 million viewers, followed by Yahoo! Sites (42.5 million) and Hulu (41.6 million).
 * **Top U.S. Online Video Properties* by Unique Viewers** **March 2009**
 * Total U.S. – Home/Work/University Locations**
 * Source: comScore Video Metrix** ||
 * **Property** || **Unique Viewers (000)** || **Average Videos per Viewer** ||
 * //Total Internet// || //149,410// || //96.8// ||
 * Google Sites || 100,382 || 59.0 ||
 * Fox Interactive Media || 55,156 || 7.9 ||
 * Yahoo! Sites || 42,524 || 7.9 ||
 * Hulu || 41,564 || 9.1 ||
 * CBS Interactive || 35,400 || 5.4 ||
 * Microsoft Sites || 32,194 || 9.0 ||
 * Viacom Digital || 27,168 || 10.2 ||
 * AOL LLC || 22,349 || 4.7 ||
 * Turner Network || 19,644 || 8.5 ||
 * Disney Online || 12,965 || 9.7 ||

Hulu Content Providers [|__19 Entertainment__] [|__4Kids Entertainment__] [|__A&E__] [|__Aardman__] [|__ABC__] [|__ABC Family__] [|__ABC News__] [|__ABC Studios__] [|__Action Television__] [|__Alli__] [|__American Pop Classics__] [|__Anchor Bay Entertainment__] [|__Artists Den Entertainment__] [|__AST__] [|__Atlantic Records__] [|__AttentionSpan.TV__] [|__Austin City Limits Music Festival__] [|__Australian Food TV__] [|__B-Side__] [|__BBC America__] [|__Beliefnet__] [|__Big Ten Network__] [|__BIGFlix__] [|__bio.__] [|__BNET__] [|__Bravo__] [|__Candor TV__] [|__Charlie Rose__] [|__Cheflive__] [|__CHIC.TV__] [|__Chiller__] [|__CINELAN__] [|__Classic Media__] [|__ClubWPT__] [|__Clyde Comedy__] [|__CNBC__] [|__CNET__] [|__CNET.com__] [|__Codeblack TV__] [|__CollegeHumor__] [|__Collegiate Images__] [|__Comedy Time__] || [|__Conde Nast Digital__] [|__Crackle Movies__] [|__Crackle Originals__] [|__Crackle Television__] [|__Crackle TV Minisodes__] [|__Crime & Investigation Network__] [|__Criterion Collection__] [|__Current TV__] [|__Dave Matthews Band__] [|__Davis Panzer__] [|__Debutante Inc.__] [|__Digital Rights Group__] [|__Diva__] [|__DIY Network__] [|__DramaFever__] [|__E! Entertainment__] [|__E1 Entertainment__] [|__Echo Bridge Entertainment__] [|__Echo Pictures__] [|__Edmunds__] [|__ELLE__] [|__EMI__] [|__Endemol__] [|__Entertainment Studios__] [|__Epicurious.com__] [|__Eqal__] [|__Everyday Edisons__] [|__ExerciseTV__] [|__explore__] [|__Fabulous Films__] [|__FEARnet__] [|__Film Chest__] [|__Film Movement__] [|__FilmBuff__] [|__Fine Living__] [|__Fireworks International__] [|__First Look Studios__] [|__Food Network__] [|__Food2__] [|__FORA.tv__] [|__Ford Models__] [|__FOX__] [|__Fox Business__] || [|__Fox Classics__] [|__Fox College Sports__] [|__Fox Movie Channel__] [|__Fox News__] [|__Fox Reality__] [|__Fox Soccer Channel__] [|__Fox Sports__] [|__Fox Sports Net__] [|__Fox Television Classics__] [|__Fox Television Studios__] [|__Fremantle Media__] [|__FUEL TV__] [|__FUNimation__] [|__FX__] [|__G4__] [|__GameSpot__] [|__Generate__] [|__GetBack__] [|__Glamour Films__] [|__Golf TV__] [|__Gong__] [|__Handmade TV__] [|__HGTV__] [|__Historic Films__] [|__History__] [|__Hollywood Pictures__] [|__Howcast__] [|__Howdini__] [|__Hype__] [|__iCue.com__] [|__IGN__] [|__Image Entertainment__] [|__Independent Comedy Network__] [|__Independent International Pictures Corp.__] [|__IndieFlix__] [|__Isaac Mizrahi__] [|__itsallinyourhands.tv__] [|__Janson Media__] [|__K2__] [|__Koan__] [|__L Studio__] [|__Lifetime__] Lionsgate ||
 * __Attachment 3__**
 * [|__15 Gigs__]

[|__Local Food Sustainable Network__] [|__Manga Entertainment__] [|__Marvel__] [|__Maverick Entertainment__] [|__Media Blasters__] [|__MGM__] [|__Military History__] [|__Miramax Films__] [|__Mojo__] [|__Movieola__] [|__MRC Studios__] [|__MSNBC__] [|__MyNetworkTV__] [|__Nat Geo Wild__] [|__National Geographic Channel__] [|__NBC__] [|__NBC News__] [|__NBC Sports__] [|__NBC Universal__] [|__NBC Universal Television Distribution__] [|__NBCU TV__] [|__New Line Cinema__] [|__New Video Group__] [|__Next New Networks__] [|__NFL Network__] [|__NHL__] [|__On Networks__] [|__Oxygen__] [|__Paley Media__] [|__Paramount__] [|__Paranormal TV__] [|__PBS__] [|__Players Network__] [|__Plum TV__] [|__PRO__] [|__Program Partners__] [|__Rajshri Media__] [|__RDF__] [|__Red Bull__] [|__ReelzChannel__] [|__Revision3__] [|__Rick Steves' Network__] [|__RooftopComedy__] || [|__Saavn__] [|__Salient Media__] [|__Scott Entertainment__] [|__Screen Media__] [|__Sesame Street__] [|__Shochiku__] [|__Shout! Factory__] [|__SiTV__] [|__Sleuth__] [|__SnagFilms__] [|__SOAPnet__] [|__SOFA__] [|__SOMA__] [|__Source Interlink Media__] [|__SpaceRip__] [|__SPEED__] [|__Speed Racer Enterprises__] [|__Sportnet__] [|__Stage 9__] [|__Starz__] [|__Strand Releasing__] [|__Strike.TV__] [|__Style Network__] [|__Sundance Channel__] [|__Syfy__] [|__Tantao Entertainment__] [|__TasteTV__] [|__Telenext Media__] [|__TenduTV__] [|__Tennis Channel__] [|__The Kitchen Diva__] [|__The Onion__] [|__The Orchard__] [|__The White House__] [|__The Wine Library__] [|__The World of Sid and Marty Krofft__] [|__The Zalman King Company__] [|__Toei Animation__] [|__Troma__] [|__TVG Interactive Horseracing__] [|__TVGuide__] [|__Twentieth Century Fox__] [|__UMS__] [|__Universal Pictures__] [|__unwrapped.tv__] || [|__USA__] [|__Versus__] [|__Vivendi Entertainment__] [|__VIZ Media__] [|__Vogue.TV__] [|__Vuguru__] [|__Warner Bros.__] [|__Warner Bros. Records__] [|__WatchMojo.com__] [|__WCG__] [|__WEP__] [|__WWE__] [|__Yan Can Cook__] [|__Young Hollywood__] [|__YourTango__] ||
 * [|__Litton Entertainment__]

Screen shots of Hulu’s common advertising formats. 1. Instream Video Ad: 15 to 60 second advertisements/commercials that show up periodically throughout the show or video being watched. They can be accompanied with the Companion Banner, which is in the upper right hand corner of the screen and allows the viewer to click through to the company’s site.
 * __Attachment 4__**



2. Branded Player Skin: Enhances the Instream Ad by putting a theme to the player area to maximize the brand impact.



3. Branded Slate: shows up at the beginning before the content begins, allowing the logo to be front and center with no distractions.




 * __REFERENCES__**


 * Cheng, Jacquie. Netflix, Hulu, ABC, Ted, Flickr, more readying for iPad. (2010, April 1). **//Ars Technica//** . Retrieved on April 8, 2010 from **
 * <[]>. **

Dybwad, Barb. Google TV to be Unvield Next Month. (2010, April 29). Mashable: The Social Media Guide. Retrieved on May 7, 2010 from <[]>.


 * Graham, Jefferson. Hulu cues up for next step; free site hits milestone: 1 billion videos viewed. (2009). **//LexisNexis Academic//** . Retrieved on February 24, 2010 from < [] >. **

Hardawar, Devindra. Comcast’s Web TV Streaming Service, Xfinity TV, Launches Nationwide. (2009, Dec 15). Slashfilm. Retrieved on May 7, 2010 from **<**[]>.

Herr, Norman. Television and Health. (2007). CSUN. Retrieved on May 7, 2010 from <[]>. Hulu.com. Advertising. (2010). Retrieved on May 12, 2010 from <[]>. Joshi, Ashu. Future of TV: Google TV. (2010, April 25). Tech Bites. Retrieved on May 7, 2010 from <[]>.

Riley, Duncan. Television will be the first traditional medium to fall. (2008, July 24). //The inquisitor//. Retrieved on May 4, 2010 from <[]>.


 * Sherman, Erik. Google’s Acquisition Could Turn YouTube Into a Hulu killer. (2010, April 2). **//BNET//** . Retrieved on April 8, 2010 from **
 * <[]>. **

Sandoval, Greg. Hulu’s profitable, but direction still uncertain. (2010, April 1). //Cnet news//. Retrieved on April 8, 2010 from <[]>.

Wikipedia. (2010, March 1). Hulu. Retrieved on February 24, 2010 from < [] >.