Video search engines

Why online video search is a threat to TV signal distributors

Large Internet players - such as Google, Yahoo! and AOL - are looking to gain hold of the emerging online video business. While online video in terms of size is incomparable to the traditional video business models, it is definitely gaining traction. Research by comScore Media Metrix indicates that in the U.S. in Jun 2005 already 56% of the Internet population viewed streaming video online. Moreover, in Q2 of 2005, the average consumer viewed 73 minutes of streaming video content per month. These figures of course stand bleak when compared to the 3 to 4 hours that consumers spend watching TV daily, but it does show the potential of online video.

Online video can be monetized in traditional ways, i.e. through:

• Advertising
• Consumer fees (subscription, pay-per-view)

The largest Internet players are making most money of advertising, and in particular paid search. They are now looking to extend this model to online video. This makes sense: they already draw massive traffic and they have established relationships with advertisers. In fact, in 2005, advertisers spent already $225 milion in 2005 on online video ads (not bad for an industry in its infancy) and that figure is expected to grow almost 8-fold to $1.5 billion in 2009, according to eMarketer.

Video search engines will enable web portals to provide their customers access to a plethora of content, subsidized through advertising. It makes no sense to offer an unlimited range of videos, if customers cannot find what they are looking for. That is why AOL has acquired video search start-up Truveo and why Google and Yahoo! are investing in their own video search technology.

There is reason to believe that companies like Google and Yahoo! can, in the future, lure away viewers from traditional TV signal distributors, such as cable and satellite companies - as they:

• Can provide access through their video search engines to an unlimited range of videos
• Know how to monetize search

Still, content owners are reluctant to publish their content online. But, telling from Apple's success in selling videos through its iTunes Store, it won't take long before they give in.

So, should TV signal distributors offer a plethora of content and consider investing in video search and use this technology to enhance its VOD offering?