With the online video industry growing at an impressive rate, it's becoming more and more important for video streaming services to differentiate themselves from one another. They are doing so by finding new ways to get their content in front of consumers, seeking out the newest, hottest offerings and creating innovative new business models that cater to viewers' individual profiles.
This is generally good news for consumers, who have a greater number of offerings to pick and choose from for their specific needs, from Netflix (Nasdaq: NFLX) to Hulu to Amazon Prime (Nasdaq: AMZN). In this special report, FierceOnlineVideo profiles three entrants to the online video industry that have either recently launched or started getting more mainstream attention.
Viewers are famously advertising averse. But would they be willing to watch a certain number of targeted commercials in exchange for "cash" which they could then spend on TV shows and movies in a service's catalog? HitBliss is banking on it.
When HitBliss co-founders Sharon Peyer and Andrew Prihodko decided to launch their second start-up together, they wanted to create an online video service that would satisfy consumers, content providers and advertisers alike. To do that, they came up with a novel approach: They would facilitate a way to let those three parties interact directly with one another.
"Consumers don't mind advertising, but they don't like ads that are irrelevant and they don't like ads that are intrusive or interrupt their experience," Peyer says. "We decided that there needed to be a way for consumers and advertisers to talk to each other independently without any relationship to the content."
As a concept, this sounds challenging to say the least. Advertisers are by nature aggressive because they have to be in order to get their products in front of consumers, and consumers are just as adamant about trying to avoid such commercials. But Peyer and Prihodko believed they could create a system beneficial to both as well as to content owners, who, as Peyer points out, also need to get paid.
HitBliss offers consumers cash to pay for TV series and movies in exchange for watching targeted ads.
To that end, they created an app called HitBliss Earn, which allows consumers to "opt in to receive targeted ads" by choosing how much information about themselves they want to share with advertisers--such as their age, gender, geographic location. The information, Peyer says, stays on the user's app and is therefore not directly accessible to the advertiser, alleviating privacy concerns.
HitBliss is free to download and available on Windows and Mac computers as well as Android devices, and Peyer says the company has submitted an application to Apple (Nasdaq: AAPL) and hopes to be approved for iOS devices within the month.
"Advertisers come into the HitBliss marketplace, and they set up a campaign and say, 'I want to reach users who are, for example, between the ages of 18 and 24, and live on the East Coast of the United States and are female. We take the advertisers' criteria and we send them to every users' app, where the users' app looks at the advertiser's criteria--not the other way around, so the advertiser never gets the user's data--and if the user's profile matches what the advertiser is looking for, then the user's app accepts the ad."
This is where it gets interesting. After the ad is vetted by the users' app, it is transferred into a queue which the user can scroll through, organize and watch at their own convenience.
"As they start to watch the ad, [the viewers] begin to earn HitBliss cash, which is actually real dollars in their HitBliss account, in exchange for the time and attention that they devote to the ad," Peyer explains.
Once they have accrued enough HitBliss cash--the ad companies decide how much to pay per campaign--customers can purchase TV episodes for $1.99 and rent movies for 24 hours for $3.99. Subscribers can also buy Pandora 1 music subscriptions for $3.99 per month.
But if consumers think they can play an ad in the background while doing something else and still get away with earning HitBliss cash, Peyer says they are mistaken.
"We monitor their attention through gamified checks," she says. "Every couple of seconds we will prompt the user and say, 'Hey, are you there?' Depending on how long it takes the user to respond, we will reward the user with trust points, which means that we will in the future prompt him or her less frequently. If they don't respond in a certain period of time… we will make them re-watch the ads that they previously watched since we last heard from them."
It only takes a few minutes for an engaged viewer to earn enough cash to buy a TV episode, rent a movie or subscribe to Pandora 1. Peyer says the company has seen a 25 to 1 ratio of positive feedback for the HitBliss model.
"It's kind of a win-win for the advertiser, the content owner, and the consumer," Peyer concludes. "The way we do that is really by separating the advertiser from the content owner completely and putting the consumer of both the ads he or she watches and the content he or she chooses, but making the consumer aware that content needs to be paid for."
Target Ticket is the most recently launched of the services profiled. Kristy Welker, Target spokesperson, says Target Ticket is the company's way of "responding to guests' movie viewing preferences for more digital options. We know that guests increasingly want to watch their favorite movies and television shows from their digital devices, and are looking for solutions that make this simple."
Although the service has been available to users nationwide since Oct. 1, it is still in beta as the company continues to test it. Once users sign up via an UltraViolet account, they receive 10 free titles, after which they can purchase or rent movies and purchase TV shows. Prices range from 99 cents for a movie rental to $37 for a TV series purchase.
The service is free to sign up for and the site easy to navigate, incorporating some of the frugality that makes the company's physical stores appealing to consumers. For example, Target Ticket is currently offering up to 40 percent off entire seasons of TV shows including popular drama "The Newsroom," hit comedy "The Big Bang Theory" and musical sensation "Glee." Welker says REDcard [Target debit or credit card] holders also get a 5 percent discount on their purchases.
Target Ticket is the company's newest way of giving its customers access to movies and TV shows.
One of Target Ticket's more interesting features is a blurb for each program courtesy of Common Sense Media, a company that provides reviews of TV and movies. The blurb offers information on "What parents need to know" and "What families can talk about," affirming the online video service's origins as the digital branch of a family-friendly company.
"Our partnership with Common Sense Media allows parents to customize profiles for each member of the family, so children are only viewing content that parents have deemed appropriate," Welker says. The addition of this information on Target Ticket offerings could help the service compete with Netflix, which this summer introduced a "Families" page with content specifically targeted to children and parents.
Welker says another plus of Target Ticket is that, unlike Hulu, Netflix or Amazon Prime, the service is not subscription-based but rather allows customers to purchase movies or TV shows individually just as they would in physical Target stores.
"With a pay-as-you-view model with no subscription fee, guests will enjoy their favorite content--including Target-exclusive content like behind-the-scenes features and cast interviews--at competitive prices," she adds. "We know that guests love purchasing their favorite DVDs and Blu-rays from our stores, and now they can enjoy the Target entertainment experience from the comfort of home or on their mobile devices while on-the-go."
The service is currently offered on PC and Mac computers, Xbox 360, Android and iOS devices, Roku, Samsung televisions and Blu-ray players and the company plans to expand that list of platforms in 2014.
Although VEVO has been around since 2009, it has recently begun gaining more mainstream recognition. The free music sharing platform's website is fairly plain to the point of almost seeming bare, but the simple interface belies the wealth of content it houses. The service is probably most well-known for the official music videos artists distribute on its YouTube channel, but vevo.com also has interviews with up-and-coming artists like Lorde, recorded highlights of shows such as the Grammys and news from the music industry.
Michael Cerda, VEVO'S SVP of product and technology, credits VEVO's reputation as a premier distributor to the strong relationships it has formed with insiders in the music industry.
VEVO works with musicians and record labels to bring users the newest music videos and behind-the-scenes interviews.
"We have an ongoing partnership with the artist community, certainly through… all the labels that they're on," he adds. "We have a very clear timeframe for when the next big Miley Cyrus video is going to come out, for example, so we can plan around that and plan to boost that as an opportunity and feature that."
Originally distributed on YouTube, "VEVO originally launched thinking, 'Let's put up a website of our own as well. Maybe people will watch videos here in addition to [on] YouTube," Cerda explains. "That's how the first VEVO owned-and-operated property developed. Over time we saw more growth in that area, so we added mobile apps… and a lot more on our Web and in the living room."
"I think people see VEVO as the official video, the high-quality video," says Cerda. "It's where videos premier, so they're going to see the latest... we've always been big on bringing out the imagery and the specialty around music in artists because that captures the imagination and offers this larger-than-life perception… into the content itself."
Unlike the other two services profiled, VEVO has an international presence in 12 countries besides the United States: Australia, Brazil, Canada, France, Germany, Ireland, Italy, Netherlands, New Zealand, Poland, Spain and the United Kingdom.
"We've distributed onto more platforms and we've gone wider, so there's much more awareness, much more discovery of VEVO," Cerda says.
Jennifer Press, senior director of marketing and publicity at VEVO, adds, "VEVO distributes music video programming on our Web, mobile, tablet and connected TV apps. These apps include iOS, Android, Windows Phone, Windows 8, Kindle Fire, Apple TV, Samsung Smart TV, Xbox and Roku. Additionally, we distribute our programming to many Web syndication partners."
"For us, it's been a great bit about distribution and discovery and dialing in to social channels," concludes Cerda. "Those things combined have helped us grow and become more prominent."