Wednesday, June 22, 2005

Major Internet Portals Shaping Up as True Competitors for "Television" Advertisers and Audiences

Competition in television continues to heat up. Not only are the phone companies like Verizon busy implanting fiber optic cable to residences and lining up programming in their assault on the cable and DBS providers, but the Internet is building its video muscle as well. AOL, Microsoft and Yahoo, among others, are becoming serious media players. Although AOL is part of the largest of the traditional media companies, Microsoft and Yahoo are new additions to the media world.

This week AOL (part of Time Warner, as you know) officially announced that it was essentially taking all its content outside its walled garden and making it freely available. Recognizing that well over half of all Internet users access it via broadband, AOL's new strategy places an emphasis on video. As reported at, "Many of the bells and whistles will be based at AOL's Video Hub, which will focus on not only entertainment, but also news." "Visitors will be able to watch music videos, exclusive concerts and a Web-only reality show..."

Indeed, AOL is giving its users two options for a customized home page, one with the usual picture and text links, the other focusing on video highlights. This Video Hub lets users personalize their Internet TV. Initially it will be choices of movie trailers, TV previews, music videos or highlights of news, sports and entertainment. But that is expected to expand over time.

Competition in radio is also getting hotter with AOL's partnership with XM Satellite Radio. This will provide 20 free XM radio stations free at AOL, in addition to the 130 radio channels that AOL had previously made available only for its subscribers.

Yahoo, the most accessed of all Web sites, is moving into video big time. With 75% of its visitors on broadband, Yahoo is actively pursuing ventures with producers and creative talent to provide more video through its portal. Aggregating a worldwide audience of an estimated 300 million visitors, one analyst ventures "Those are numbers that are sufficient to make the likes of Rupert Murdoch salivate and turn green with envy." That is, as Yahoo moves further into content, it is a formidable competitor for both advertising dollars and consumer time to the traditional media companies.

MSN is also video intensive. At the moment it is heavy with news and information clips from NBC's "Today" show, Fox Sports and CNBC for business news. But it is also an outlet for smaller features, such as a video horoscope from However, if MSN wants to differentiate itself and attract a regular audience, they--as well as AOL, Yahoo and Google for that matter -- will inevitably have to deliver more of their own exclusive content – entertainment or information that cannot be found anywhere else on the Internet. All indication is that is exactly where they are heading.

Internet advertising is booming-- a sign that the Internet is indeed becoming an entrenched vehicle for media and commerce. According to Robert Coen, a senior vice president at ad agency Universal McCann, Internet advertising could hit $8.8 billion in 2005, a 25% increase over last year. This would actually be more than 50% as much as the combined ad revenue of the four largest broadcast networks, ABC, CBS, Fox and NBC. Those institutions are forecast to see only a 2% increase in ad revenue this year, to $16.8 billion.

Competition is coming from all directions: the old established players are trying to diversify, even at the risk of cannibalizing their older properties. They are facing entrants who are taking advantage of the growing penetration of always-on high speed Internet connections. The winners are us-- consumers-- who have more variety in what we can access, where we access it and when we can access it.

(Speaking of Internet advertising, you can help support this otherwise pro bono site by clicking through on one or two of the Google-placed text ads to the right. A few cents here, a few cents there.... Thanks).

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