Life, Liberty & the Pursuit of Live Video
It's gold rush time.
A string of news announcements in the past week has seriously upped the quotient of live broadcast content available online. There's Fox Broadcasting Co. , which has launched a simulcast of its primetime line-up on Fox.com and the Fox Now app. Then there's CNBC International, which has said it will begin testing a live stream on Facebook Live in the wake of Brexit and growing online audience interest.
And there's Twitter Inc. , which last week offered a live stream of Wimbledon online in advance of plans to stream National Football League games live this fall. (See Twitter Wins NFL TNF Streaming Rights.)
Twitter and CBS Corp. (NYSE: CBS) also reported that they will partner to live-stream the upcoming Democratic and Republican National Conventions, and the social networking company is reportedly talking to the National Basketball Association, Major League Soccer and Turner networks about future streaming deals.
So what gives? Why the sudden rush to live video?
The answer is advertising -- or at least the assumption of a future advertising payout for live video streams. For the most part, broadcasters and other media companies are trying to stake out their territory with live streaming today even if it doesn't generate new revenue quite yet. Facebook , for example, is reportedly considering testing ads within Facebook Live, a platform that it's using to try to draw in more content producers. But the company hasn't settled on a monetization strategy yet.
Twitter is also still laying the groundwork for new ad revenues. Licensing live content is a first step, but the company says that, in addition, it has at least one Fortune 50 company already committed to advertising during NFL live streams later this year. (See Twitter Fire Hose Now a Video Tsunami.)
There are other indications too that the economics for live video streaming are starting to improve. Not only is mobile video on the rise, but money is starting to follow viewers to new online platforms. According to Strategy Analytics, global revenue from mobile video will hit $25 billion in the next five years, driven largely by growth in mobile ad spending.
The money from advertising in live streaming isn't guaranteed, however, and there are two reasons why.
First, the shift in advertising economics from broadcast TV to online video hasn't played out yet. As an example, NBCUniversal LLC is investing huge sums in multi-platform coverage of the Summer Olympic Games in Rio next month, and the company says it has already hit its sales targets three weeks before the Games even begin. But those sales are primarily for advertising slots in traditional video broadcasts, and NBCU's audience guarantees to advertisers are for live and same-day broadcast viewing, not video streaming.
Second, and probably more importantly, just because media companies decide to stream video doesn't mean audiences will choose their specific platforms for video consumption. NBCU has a huge advantage with the exclusive rights to events like the Olympics. But a company like Twitter still has to convince viewers that its site and apps are the best place to watch live events; particularly live events that can just as easily be viewed elsewhere.
There might be billions of dollars in live video ad revenue up for grabs, but not everyone's going to get a bankable share. And some companies may find that investing large amounts of money doesn't bring in the payout they're hoping for.
— Mari Silbey, Senior Editor, Cable/Video, Light Reading