Media Convergence: Online Video and Local Ads

We’ve been sold the digital living room dream for years now. Efforts to converge media in the center of the home have come from two directions: On one hand, cable companies are promoting interactive TV and fancy set-top boxes that would tie together the Internet and TV, offering interactive programming, video on demand, and Internet content (such as what TiVo’s doing now with vlogs (define)). On the other hand, companies such as Microsoft are pushing “media center” PCs that allow consumers to control all their digital entertainment through a central computer server.

Neither effort has achieved dominance, and, for the most part, marketers have been sitting on the sidelines wondering how it will all pan out. The answer may have more to do with how people use their computers than the technology they use to entertain themselves.

First, both sides miss the point in thinking digital entertainment must come through the TV. Though all-in-one home entertainment devices jockey for position, the one all-in-one home entertainment device we all own, the humble PC, may be the place where convergence will really pop.

Apple led the charge with the opening of its iTunes video store. Other companies are quickly following suit and spending big bucks to bring video content to the Web. On the Internet side, AOL recently acquired video search engine Truveo; Google launched its video store; and is now offering video downloads. On the offline side, Bravo will launch its own broadband channels, E! has jumped into the game, and Sky TV announced its own broadband film download service.

All this is just the beginning. Demand for online video keeps growing, and the catalog of portable devices that play video (e.g., Apple’s new iPod, Sony’s PSP, and nifty new toys like Archos’ AV 500) keeps expanding. It’s tough to drive down a highway on a holiday weekend without seeing every minivan or SUV you pass loaded with kids glowing with some sort of portable video (even if most of that glow comes from low-tech DVD video). Apple sold over 1 million videos in its first 20 days of operating the iTunes video store. People want the video they want, when they want it, and where they want it.

That fact may be the key to the marketing opportunity represented by online video. Online video doesn’t replace TV, it supplements it. Look at the kind of video people download (or stream) online: most of it is missed TV show episodes and news clips, and highlights of their favorite shows. Local TV station Web sites are enjoying growing revenues, implying people are returning to see content they may have previously missed or supplements to stories they saw on the local news. Of course, this is right on trend with the fact local online ad revenues are rising all over and are cutting into revenues of newspapers and other traditional sources of local content and classified ads.

The rise in local online ads and the rise in online video are really part of the same trend: consumers taking control of their lives and using their computer to achieve that control. Whether they want to catch a back episode of “Desperate Housewives” (a mere $1.99 on iTunes!), find a plumber through Google Local, learn more from their local TV station about that traffic snarl they suffered through on their way to work, or just locate an apartment via craigslist, their PCs allow them to do it. The big trend isn’t video or local ads or online classifieds (though certainly they’re all trends) but control itself.

If you’re on the fence about convergence or trying to figure out how to work these changes into your marketing strategies, don’t get too hung up on the tech or the hype. Instead, look to what kinds of things give consumers more control over their lives and head that direction. It’s never about the tech; it’s about what it allows us to do.

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