Outlook for Internet Video and the Likely Strategies of the Key Players

The rise of e-commerce with the increasing use of the internet in social activities has transformed the way entities do business to attract customers. One of the rising avenues for entities to do business online has been internet video. Various players offering internet-video enhancements have arisen as documented in the case study by Cool, Seitz and Mestrits. However, designing an effective strategy for revenue generation has proved challenging especially with customer preference for free, user-generated videos (Cool, Seitz and Mestrits 10). This section elucidates the outlook for internet video and strategies that various players were likely to use with respect to challenges identified in the case study.

The antecedent of Internet Video was occasioned by the development of technologies that allowed entities such as Google, Yahoo, Microsoft (MSN) and MySpace to offer video-access capabilities to the users of their website. However, the rise of the industry into prominence was occasioned by the development web 2.0 technologies that provided users the capabilities to interact with the contents of the web sites. With such technologies, the concept of User Generated Content (UGC) took root. With websites being designed to allow for UGC, users could upload content such as photos, short videos and documents, to share with other online users. Such UGC was one of the core reasons that propelled You Tube into prominence in the internet video market, leading to its acquisition by Google in 2006 (Cool, Seitz and Mestrits 5).

The outlook for the internet video market following such Web 2.0 enhancements was bright. Entities competing in the industry began focusing on how they would capitalize on the consumer trend towards increased access of videos via the Internet. Internet video offered opportunities such as targeted advertisement, subscription based model for premium content and syndication of content across multiple websites. However, user preference for free video content, possible increase of litigation for sharing of copyright-protected material by individuals other than the copyright owners (Newkirk and Forker 2-4), and customer disfavor for ads that blocked content of the video (Cool, Seitz and Mestrits 11), challenged the extent to which industry players could monetize the opportunities offered by internet video. Nevertheless, internet video continues to offer opportunities for market players to enhance their revenue with companies evaluating various strategies for monetization.

Various strategies exist that would help players in the industry to monetize the opportunity presented by internet video. One of these is to serve targeted advertisements that, for instance, are strategically located to avoid interfering with user experience (Cool, Seitz and Mestrits 11). Secondly, with increasing preference for high definition videos (IDC 2), entities can develop paid-for models, where users pay to access such content. Success of such strategies is based on the player’s ability to reduce liability for copyrighted material uploaded to their sites either by making revenue-sharing agreements with the copyright owners or filtering out copyrighted material that attract such legal liability (Cool, Seitz and Mestrits 7).

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