March 5, 2012
By Jake Ward Business Development Director
Featured Articles
For the rest of the Spring 2012 (Sourcebook) issue of Streaming Media magazine please click here

The State of Enterprise Video 2012

This article appears in the February/March 2012 issue of Streaming Media magazine, the annual Streaming Media Industry Sourcebook.

The enterprise video landscape has been dominated by massive growth in the online video audience and the increasing breadth and depth of social campaigns within corporate communications. The social video explosion looks set to continue into this year as experiences are refined and the category breaks out as a stand-alone budget item on many corporates’ communications budgets.

Audience engagement with online video in Europe continued to show healthy growth with a comScore, Inc. report ranking Germany as the leader in viewing engagement, with 45 million unique viewers watching an average of 187 videos for 19.6 hours. Turkey surprisingly came in second with a much smaller audience; 20.7 million viewers viewing an average of 169 videos viewed for an average 18.7 hours per viewer. And the U.K. remained strong in third with 166 videos watched for 17 hours on average by each of the 35 million viewers.

Despite being only the third-highest audience engagement in Europe, the big streaming and social media event for the year was clearly the U.K.’s royal wedding. The event generated more than 100 million streams, according to some estimates, of which 72 million were viewed on YouTube Live. How the birth of the live YouTube service, which launched just ahead of the wedding, will affect the services use in the corporate space is still unclear; currently, the ability to stream live over YouTube is restricted to a number of specific partners who are mainly distributing entertainment content. Even when this service is opened up to the corporate market, there will still be a need for streaming and encoding expertise to publish content and mitigate risk. When this does happen, it will be interesting to see if it encourages corporates to bring some of these skills in-house.

The key trend in social video was how much content moved from being broadcast through corporate sites to being tightly integrated into social experiences. Of course, Facebook and Twitter continued to become more significant when it comes to video, but search engines still dominate referrals—Google alone accounted for about 66% of referrals. Perhaps the reason for the switch was the fact that content viewed through both Facebook and Twitter continued to have significantly longer viewing times than those discovered through search, according to a report by Brightcove, Inc. and TubeMogul, Inc. The continual growth in user-engagement levels when referred from social media for both live and on-demand is likely to be an ongoing attraction, as more and more brands look to leverage their events and content to develop engaged communities.

OVPs in Overdrive

As integration with social media became more and more important, a key component for the distribution and management of content became the online video platform (OVP). This year the OVP market started to mature, but it is still relatively small worldwide, with some estimates putting the total value at only $417 million (about £265 million) by 2015.

Brightcove; Kaltura, Inc.; and Ooyala, Inc. all seemed to make significant progress, but as is the nature of privately owned companies, actual revenues and profitability figures were hard to come by. In July Kaltura secured an additional $20 million (about £12.7 million) in a round of financing led by new investors, and it claimed that its open source video management platform had become the most widely adopted solution in the market. Kaltura now has a total of more than 150,000 sites using the platform—more than all of the other proprietary online video platforms put together. It also cited revenue growth of 300% in 2011; however, there was no guidance on profit.

August saw Brightcove file with the U.S. Securities and Exchange Commission to raise up to $50 million (about £31.7 million) in an initial public offering (IPO), and the filing gave us some more insight into the economics of the company. The company declared a 50% increase in revenue year-on-year but said profitability looks unlikely until 2013; given the current market conditions, of course, the actual IPO is unlikely to happen in the short term.

In September, Ooyala gained a new investor in the form of Motorola Mobility, which invested an undisclosed amount and has now grown to having 125 employees and eight international offices. Again, no revenue figures were made available.

Ooyala also became the first of the big three to officially announce a deal that tightly integrated social media with video. Its new social TV offering for Facebook, dubbed Ooyala Social, offered content owners the ability to monetise their video on Facebook via rentals, subscriptions, advertising, or purchases. It also offered Facebook users the ability to share videos, chat live while viewing, and watch video across multiple screens and devices.

Miramax was the first organisation to be announced as using the technology. The obvious advantage that this kind of product brings is the integration of video directly into a social network, enabling the content provider to directly access the existing audience of the network, which in the case of Facebook is 750 million monthly users. The other two providers don’t have such an offering and tend to build social into existing audience spaces.

Ooyala wasn’t the only video platform to launch a video player for Facebook, as Denmark’s Xstream quietly entered the fray with Nordisk Film in autumn of 2011. In January, the company publicly announced availability of its Facebook Video-on-Demand application as part of its MediaMaker OVP.

The future for social video is, of course, using the social networks as an enabler for content owners to distribute and monetise their content. In the case of the entertainment space, this means rental and purchase revenue. But how does that translate in the corporate world? Many corporations have now reached a point where they realise that the video content they have accumulated is not being effectively utilised and is built on technology that is difficult or expensive to adapt to the growing ranks of viewing platforms. This is where the OVPs offer the perfect solution of being able to associate data with video that is easily configurable and, therefore, optimised for search and discovery.

The Tablet Revolution

OVPs also address the increasing concern from corporates about being able to get their content onto the diverse range of platforms now available. Of course, an OVP in constant development should automatically have new devices built into its development road map as they come to market, which for corporates potentially reduces cost and implementation time when keeping up with user demands.

For example, it is only 2 years since tablets came from nowhere to become a viable platform for video content. iPads dominated the tablet market, accounting for 97% of total hours of video viewed. But there are still obviously other types of tablets to which content needs to be served. Why should corporate worry about what is still a niche market? Well, tablet viewers watch considerably more video than PC users—on average, 28% longer.

Obviously, a lot of the material being viewed on tablets is entertainment material. But even so, the levels of engagement are noticeable higher, even on nonentertainment content. Viewers exhibited a strong preference to watch long-form videos on tablets and mobiles. On average, 20% of mobile viewers completed three-quarters of a video compared to 18% for desktop viewers, making the additional platform a worthwhile consideration for most corporate communications.

The final feature of OVPs that has made them increasingly attractive to corporates is the availability of social media tools embedded into their players. This means that corporates can benefit from user sharing and recommendation with their content, with very little additional cost required for implementation. Internally, this has also led to an explosion in organisations using OVPs or even bespoke internal mechanisms to encourage employees to generate content.

Behind the Firewall

This type of content generation has largely been in an experimental phase, with corporates running internal competitions to get employees to generate video content to showcase best practice, case studies, or other material. Certainly a number of major European corporates have had some strong success with pilots. However, this is not going to become a piece of the regular internal communication just yet, as most corporates viewed them as individual projects or simply one-offs around particular campaigns or subsets of employees. However, their use in internal webcasting where groups of peers get together to review and rate other people’s efforts as part of a large team meeting has been a recurring feature of the year.

Economic conditions over the past 12 months brought the question of ROI into even sharper focus, and this aided the market, as there was significant growth in the amount of video and webcasting used to further replace face-to-face meetings. Traditionally, actual meetings have been replaced by video conferencing, but there is now a growing trend for larger meetings to be completely virtualised by webcast and by the leveraging of private Facebook pages or Twitter feeds to bring the discussion to life.

The scalability of these kinds of communications has always been a major obstacle, with many organisations sighting their poor network infrastructures or the danger to business-critical apps being a reason for them not to be viable. This year there were major breakthroughs in removing some of these obstacles.

Technology companies such as Octoshape ApS continued to expand the use of peer-to-peer style technology to reduce the network capacity needed to effectively broadcast within an organisation. Octoshape announced a deal with ON24, which offers both webcasting and virtual events to corporates, to integrate its technology into the ON24 platform, increasing the ease of access to this kind of technology.

On the hardware front, there was welcome news in the U.K. from BT Group, PLC, as it announced that in 2012 it would change the bulk of its broadband network to use multicast routers. This will mean that full multicast services can be offered. This means the use of external CDNs to deliver live programming internally will be significantly more scalable, even without specialist technology such as that of Octoshape, as long as those internal networks are multicast-enabled.

Video Ad Market Still Nascent

In the video advertising sector, spend grew significantly over the year, reaching a half-year high of £2.26 billion (about $3.56 billion), according to the latest PwC/Interactive Advertising Bureau report. It was driven upwards by the move of many FMCG (fast-moving consumer goods) brands into video and social media. But the capability for this market to grow remains strong, particularly as 80% of this spend goes to the traditional broadcaster’s online offerings, according to some estimates.

The amount of time spent watching online ads by the average viewer remained at a very low level, according to comScore research from September 2011. The average percentage of total viewing time in the U.K. taken up by online video advertising online was only 0.4%, compared to television, where that level is about 20%. Despite this being a different type of experience, this should be a percentage that only grows over the coming year.

Across Europe, the total of TV-only viewers made up two-thirds of the total audience, with 26% of viewers viewing across platforms and the remaining 7% only consuming content online. As the percentage of nontraditional TV viewers increases, there is obviously massive opportunity for growth on video platforms for both traditional broadcasters and other publishers.

Looking Ahead

Despite a mixed year with difficult economic conditions and 2012 looking likely to be no better, there still looks to be continued steady growth in the use of video in corporates. Marketing budgets look likely to be more heavily weighted towards social video initiatives, and the ongoing costs of video serving and video production will continue to trend down, putting the cost of content development and delivery at an all-time low.

When the economy is poor, ROI is essential, and with the vastly expanded range of platforms, video content looks more and more compelling, as long as corporates can guarantee their content can be seen anytime, anywhere. This may prove a boon for OVPs, driving their growth significantly, as more video management is effectively “outsourced”.

A leaner year in 2012 will put some players in the market under pressure, but given the market is likely to still show at least some growth, it may be that those strong enough to survive can look forward to a prosperous 2013. By that time, even YouTube and Brightcove may be profitable.