And as both broadcast and cable networks ramp up their efforts, they're finding it's important to own that technology in order to give advertisers what they want: better reporting and targeting data.
"We always push the networks to help us understand how much younger the audience is online," said Chris Allen, VP-video innovation at Starcom. "Not all the networks have been as transparent as we'd like in talking about numbers."
CBS will unveil its next-generation video player this week. It uses a content and advertising engine powered by technology acquired through streaming-music site Last.fm. Spike last week unveiled a spiffy player that is the incarnation of a 2005 MTV Networks acquisition, iFilm.
"You need a core tech team in-house that builds this stuff," said Quincy Smith, president of CBS Interactive. Among the bells and whistles CBS's player will include: an HD viewing experience that doesn't require a download and content-sharing features and social-viewing rooms that let friends watch and discuss content together. If CBS can build in enough valuable, community-oriented features to persuade people to register to use them, it will be able to use that data to give advertisers more immediate, granular ways to measure viewers.
Mr. Smith said CBS's distribution strategy, which is to disseminate its online videos across a wide swath of websites big and small, means it has to build community features into the player and wrap a layer of analytics around it if it wants to own the data and experience.
CBS's overhaul makes it arguably the most user-friendly of the networks' video players, ranking a distant second to ABC.com in total viewers. After spending the better part of the last year trailing ABC by 3 million or more unique visitors a month, CBS closed its second-place gap to its smallest margin yet in March 2008, garnering 4.8 million unique users vs. ABC's 6.2 million. It's probably no coincidence that was the month the network aired Britney Spears' appearance on "How I Met Your Mother," CBS's youngest-skewing show. But visitors to both CBS and ABC trail Hulu, the joint online-video venture of NBC and News Corp.
CBS also bets that the kind of technology Last.fm uses to power its music-recommendation service will work just as well for suggesting video content to users and, eventually, serving advertising. Last.fm recommends music to users by comparing their profiles and listening preferences to those of other users. The ad system will eventually bring in more behavioral targeting, but it has a long way to go to get the scale necessary to properly target. "With the number of acquisitions we've made ... we'll get there," said Ken Lagana, senior VP, CBS Interactive. He hopes better research will incite advertisers to get creative with custom executions -- games or other ads that extend beyond 30 seconds.
Although ABC, CBS and NBC have had broadband video players for nearly two years, it's taken cable longer to catch up due to conflicts with their multiservice operator partners. Plus, since cable networks rely on repeats of original programming to build audiences for new episodes, they often run an even greater risk than the broadcast networks of cannibalizing their live ratings.
Spike's player integrates iFilm's 300,000 clips and is a first step toward building out what the network hopes will be a male-targeted video powerhouse, large enough to challenge market leaders such as Heavy. Erik Flannigan, exec VP-digital media at MTV Networks, said a Spike Facebook application is in the works, and the site already has partnerships with other streaming-video sites such as Daily Motion and Veoh.
Hulu's rapid rise to the topIt's been only two months, but Hulu shows signs that consumers have an appetite for watching TV shows and clips on sites other than YouTube -- with ads, to boot. After an official mid-March launch, the video venture from NBC Universal and News Corp. racked up more than 63 million video streams in April alone, according to Nielsen NetRatings. That's enough to rank it among the top 15 video sites. But measuring unique visits so far is trickier, as the site keeps its number of registered users private.
Advertisers are beginning to latch on to Hulu's unique Ad Selector tool, which allows users to select the kinds of ads they'd like to see. Alberto-Culver just signed on as the format's first advertiser and will plug brands such as V05, Tresemmé and Nexus. Hulu also recently introduced day-parting and geo-targeting capabilities to its ad inventory, with recent sponsors such as Bank of America and McDonald's joining a roster that includes Unilever, General Motors and Intel Corp.