INDUSTRY NEWS

The New Era of Live Video

Recently, I’ve argued that VR has the potential to redefine how we experience the world. The way we communicate, consume entertainment, purchase things, do business, travel, and other daily activities could be radically altered with the VR technologies.

However, media is talking about VR as if it is a sure thing happening right now without realizing that VR is such a radical change of computing form factor that it requires an entirely different user behaviour, distribution platforms, network/data infrastructure and other vital parts of the ecosystem around it. Therefore, it would be naive to expect VR to start having a profound impact on our daily lives soon. The first powerful (and sustainable to our day-to-day activities) VR use cases could emerge in no less than 10 years time.

In the meantime, Live and 360 Video is a trend that is very much alive right now, and it's growing extremely fast. If VR is in 10 years horizon, then the next 5 years will be defined by a rapid growth of Live/360 Video adoption with more and more people streaming their daily experiences and major sports, entertainment brands and personalities providing live content to everyone's pockets.

The idea of live digital video was around since 1968, but only recently it became a dominant trend. For live streaming to become a daily habit, it should be adopted and actively pushed by the major communication and entertainment platforms, which is already happening. YouTube offered Live Broadcasting for years, but it was mostly limited to the desktop usage and embraced only by the professional vloggers. To start using live streaming on YouTube, you have to go through a number setup steps, which is tricky for the regular users who want to make their first stream of the moment happening currently. As media reports, to double down on the live video game, YouTube created dedicated live streaming app YouTube Connect, and it will be interesting to see how YouTube’s live video initiative will evolve after YouTube Connect hits the market.

For live video to become a dominant communication medium among regular users, not only passively consumed content produced by celebrities and brands, live streaming has to be directly integrated with the automated social sharing mechanisms. This is why live streaming idea gained traction so fast since the Meerkat introduced it on Twitter and recently became a significant trend when Facebook launched live video on its core app, and it's no wonder why Zuck is so aggressively pushing live video to the market.

Active live video sharing will create a lot more user generated content which will solve Facebook’s key issue of diminishing personal content sharing. However, as Facebook moves to more and more advanced forms of content (live and 360 videos for now and VR in the future), it is becoming very dependent on the technology development at the macro level. In the history of tech, there has not been a company, which, like Facebook, has a truly worldwide user base scale combined with the need for radically new forms of content sharing to keep this audience engaged (no, not even YouTube). When it started support Live/360 video, Facebook faced with two key challenges: networking infrastructure’s ability to handle massive quantities of real-time data, which also has to be cheap for the end users and the level of consumer technology advancement to capture new forms of content. In other words, Facebook has become a victim of technology.

As I’ve argued before, intensive Facebook/Google competition radically usually radically increases the rate of innovation benefitting both end users and marketers alike. Live Video / 360 is the same case. Right after Facebook released LIVE API, YouTube announced support for live 360 video streaming.

With the need for 360 and live video content on such an enormous scale, Facebook realised that to drive sharing and consumption of new forms of content across the network, it has to push the whole surrounding infrastructure forward, and you can’t make it as a single player. The recent introduction of Facebook’s open-source 360 camera is the first move to influence directly the development of the quality 360 video content, most of which will be shared on the network by default. Before, Facebook was mostly oriented towards the whole backend infrastructure development with the releases of open source projects like Open Compute Project and most recent Telecom Infra Project. Now it’s time to push the consumer electronics market.

Former Google vice president of advanced technology and projects, Regina Dugan, joined Facebook to lead mysterious new division called “Building 8” to develop advanced hardware projects. Having a unique problem - high dependence of consumer tech to create and share content - Facebook will solve it in a unique way, too, by building the division to develop advanced consumer electronics technologies and give it all for free.

Now they have to use the same trick that Apple started and Amazon mastered: building hardware to sell software and content. However, Facebook has "reverse engineered" this idea not for content sales, but for more active content sharing.

- Apple - premium products with exceptionally high margins. App and iTunes bundled in to make additional revenue from content purchases and extend product functionality.

- Amazon - low-priced Kindles with the built-in bookstore. The main function of the product is to create a frictionless distribution channel with most of the revenues and margins coming from content sales.

- Facebook - building tools and technologies and giving away for free hoping this will help to get much more quality content.

It’s no wonder that Facebook and Google see a lot of promise in Live Videos. Live video is a digital content format that looks most similar to the regular TV and, according to eMarketer, in 2016 worldwide TV advertising revenue is projected to reach $205 billion, so even a small slice of this pie would significantly contribute to both Facebook and Google revenue growth.

Facebook made a strong move with the introduction of Live API, making it easy to stream Live video not only from smartphones but professional grade cameras, drones, you name it. A week later, YouTube introduced support for Live 360, which could be a killer content for sports and entertainment.

It's interesting how live videos will be monetized both by publishers and tech companies. Here're some ideas how live video monetization could evolve.

Sponsored stories

It’s possible that soon we will see Snapchat-like promoted stories. When you start a live stream, “public” is a default privacy selection and videos are saved on the newsfeed after the broadcast is over. Seeing a rapid increase of live videos in some place over a period of time (sport and entertainment events, etc), Facebook could offer brands to bundle these videos to live stories.

Sponsored live streams - pre-rolls etc.

This is a no brainer and probably would be the first format to be introduced around live content, however, users are “sacred” and it’s not very likely that Facebook will insert pre-rolls next to the consumer generated content. However, it will be interesting to see how it will be implemented in a technical way. Could marketers buy one stream or book several in advance? Should marketers make a direct deal (via Facebook) for the next stream or will it be an open auction? Could publishers/celebrities ban specific brands from appearing next to their content? Should marketers buy the whole spot or could ads be targeted only to specific audiences?

Extended live events audiences

With the introduction of Live API, Facebook will aim to get more quality content from the backstage of the most covered global events, like Super Bowl, Golden Globes, etc., but what happens when TV content has one sponsor and Facebook live video of the same event the other? It could be a premium, direct deals based, the format for the big TV sponsors to secure their presence on the digital content.

It’s clear that intensifying competition in a digital video space will, again, bring more innovation and introduce new business models. Currently, there are two key leaders (Google/Facebook), but it’s very likely that Snapchat could also join, making life that much harder, especially for Facebook, with Snapchat’s young and highly engaged audience, that is already shifting to Snapchat for a personal video based communication.