CHICAGO--Peter Chernin and Tim Armstrong, top executives in the online video market, reiterated their belief that increasingly valuable branded content will continue to drive the online video market for the foreseeable future. In separate keynote appearances here at the INTX cable industry trade show, the head of The Chernin Group and the chief executive of AOL explained that the market for online video will continue to grow as more people around the globe connect to the Internet and video creators continue to churn out more quality content.
"Every consumer in America is now an aggregator," explained Peter Chernin, CEO of The Chernin Group, which last year formed a $500 million joint venture with AT&T (NYSE: T) called Otter Media to specifically target the online video market. Late last year Otter Media purchased YouTube video network Fullscreen for around $250 million--an indication of the importance of online video content creation and distribution.
Chernin explained that there are now a wide range of companies supplying content into the online video space, including Facebook (NASDAQ: FB), Twitter, AOL, Snapchat and others--a marked difference from several years ago, when YouTube ruled the space largely unopposed. "What you are seeing now is an enormous amount of content," Chernin said, adding that users are now in a position to pick and choose what kinds of content they want to watch, and where they want to watch it.
And that online video competition will likely spread across the globe, Chernin said. He pointed to investments his company is making in markets like India and Indonesia--he said that India will in the next few years surpass China as the world's most populous market, while Indonesia will soon pass the United States in terms of the number of Internet users. Both markets, he said, represent major opportunities for advertisers looking to connect with potential customers online.
Tim Armstrong, a former Google (NASDAQ: GOOG) executive who has served as AOL's CEO since 2009, said that his company spent "tens of millions of dollars" on original video content last year, and plans to continue to do so. He said the company's top three original shows have reached around 15 million viewers--and he said that number could blossom to 150 million as more users around the world get connected to the Internet through smartphones and other devices.
Indeed, AOL just last month announced its 2015 lineup of original video programming as part of online video's NewFronts. AOL's "Content 365" strategy includes content from "A-list talent" including Steve Buscemi, Ryan Duffy, James Franco, Kevin Jonas, Sarah Lane, Jared Leto and others. AOL boasted that it now counts over 1 million premium videos in its library, and that 50 percent of its traffic now comes from mobile devices. Last year, the company said its 2014 slate of 16 original shows garnered a total of roughly 200 million views.
"I refer to this [phone] as a cable box in my pocket," Armstrong said of his iPhone. He predicted that the value of video content will continue to rise, as will the prices advertisers pay to show their ads to online video users.
However, Armstrong pointed out that the online video industry will likely pursue content and viewers in conjunction with the cable and broadcast TV markets. He pointed to the company's deal last week with NBCUniversal to share content and develop programming.
"I think there's going to be a massive fight for content," Armstrong predicted.
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