The Future of the Online Video Business

Maybe it’s because it’s the dog days of summer, so online video news is getting more play than otherwise. Or maybe the stars are finally aligning for creative business and programming moves in online video to begin to stick and have traction. Either way, the last few weeks have witnessed a flurry of activity in the online video space that shines a light on where the business may be heading.

Three stories that have grabbed my attention recently are the launch of a new programming partnership between Next New Networks’s animated series “Nite Fite” and Starburst, the unveiling of the $3 million Vogue.TV series about supermodels that will be underwritten in part by the clothing brand Express, and the announcement that Jimmy Fallon’s late-night debut won’t begin live on NBC but live on the Internet.

Alone, any one of these stories would be interesting. Taken together, they highlight the various trends making online a more interesting and sustainable place for compelling video entertainment: highly integrated, branded marketing; large corporate underwriting; and the Web as a farm club (define).

Sponsor Video Shorts

Next New Networks has been doing some of the more innovative programming online and making savvy moves, like acquiring Obama Girl’s creator BarelyPolitical, since its inception. And its first sponsored show is a precursor to seeing similar sponsorships. (Disclosure: I’ve known Next New’s founder Fred Seibert for 10 years. Also my firm is a sister agency of Digitas, which brokered the deal.)

Particularly compelling about the Starburst and Next New Networks deal is the programming will revert back to the content creator, Next New, when the contract is up. This model seems to make more sense. The advertiser gets what it wants — slick brand association to attract its target audience — and the content creator retains ownership so it can build a library of lasting value. Although some people espouse the notion that advertisers and marketers should get into the copyright game, I’m skeptical that owning content is in a marketer’s best interest.

Sponsor Video Series

On the opposite end of the spectrum is Vogue.TV, with a jaw-dropping $3 million budget. The series was created in tandem with sports and model management partner IMG and is currently slated to run 12 episodes of 8 minutes each. That averages out to about $31,000 a minute, which is leaps and bounds beyond what has been spent online to date. With Express coming in for $1 million’s worth of sponsorship and the show being hosted on Bebo, you can see the emergence of a very specific model: programming + underwriting + anchor distribution partner. Bebo has increasingly become the go-to home for innovative Web series, such as “KateModern,” “Sofia’s Diary,” “The All-For-Nots,” and “The Gap Year,” and its highly interactive fan base has shown its receptivity to marketing-driven online video content.

Soft-Launch Online

Finally, you have the dinosaur of television in the form of NBC, recognizing the power of online by trialing Fallon’s new late-night program on the Web first. It makes sense for a multitude of reasons. There are questions about Fallon’s ability to do the show, and the relative amateurish nature of a Web launch compared to a monster TV network start will keep fan and critic expectations appropriately low. Moreover, the soft launch also will, if executed properly, help build an audience before the first show airs, perhaps a different audience than would normally have gravitated to the program. The power of having a Web audience is perhaps more vital than giving Fallon a few dry runs and speaks to the fluidity we now see between the Web and TV, not unlike what has developed with TV stars leaping to movies and back again.

What’s fascinating about having “Nite Fite,” Vogue.TV, and Fallon announced in the same fortnight is that while there’s a gap in content and financing, which suggests there will be more shaking out of the business model before there’s much clarity, dollars are being exchanged, business is being done, and a sustainable marketplace is being created for creator, advertiser, and consumer.

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