Yahoo, still struggling to find its way, is ramping up its investment in video.
Plunging into a marketplace filled with competitors like Netflix, Amazon and Hulu, Yahoo in April announced ambitious plans to offer original episodic comedies. The Web giant in June said it snapped up the rights to a sixth season of "Community" after NBC canceled the sitcom. Yahoo landed a deal with Live Nation to stream one of its concerts each day starting in July with prominent artists like the Dave Matthews Band. And Katie Couric joined the effort this year as Yahoo News’ global anchor.
The push is an effort to grow revenue at an otherwise stagnant company. Sales declined 4 percent in the second quarter to $1.08 billion, compared to a year ago. Meanwhile, Yahoo’s display ad revenue, which includes digital video, dropped 8 percent in the second quarter, to $436 million, compared to the same period last year.
Investing more into original digital movies and TV shows could be a lucrative strategy. This year, companies are expected to spend nearly $6 billion on online video ads and that’s expected to grow to $12.71 billion in 2018, according to research firm eMarketer.
"Fundamentally, premium content draws premium advertisers and we have had early success bringing these opportunities to market," Yahoo’s CEO Marissa Mayer said in a conference call with investors in July.
That means Yahoo sees greater value in higher-quality videos – think Netflix, not YouTube.
This fall, Yahoo will have exclusive rights to indie film "One Chance," about "Britain’s Got Talent" winner Paul Potts, before it reaches theaters.
Yahoo’s move to video comes at a time when TV and movie fans are increasingly choosing to watch online. About 25 percent of consumers watch online video every day on their PC, tablet or mobile phone, according to a survey of more than 55,000 consumers in 50 countries by advisory firm TNS. By putting content online for free – rather than in theaters or on a channel that requires a cable subscription – producers and distributors of content can reach new audiences.
Plus, online companies can provide even more detailed metrics to filmmakers about who is watching their movie: their location, gender and age – "everything you wouldn’t get when you buy a movie ticket," said Larry Laboe, executive director of NewFilmmakers Los Angeles, a nonprofit that recognizes the work of independent filmmakers.
"There’s actually a greater opportunity for filmmakers," he said.
Yahoo puts its high-quality content on Yahoo Screen – a video site available on desktop, mobile and Web-connected TVs. The Sunnyvale company wouldn’t say exactly how many people use Yahoo Screen, though daily active users increased 22 percent in the second quarter compared to the previous quarter.
Andrew Snyder, Yahoo’s vice president of video sales, said viewers are most interested in comedy and live music.
"That insight has fed into some of the investments that we made and announced recently," he said.
Yahoo’s history as a Web portal – a site that offers a little bit of everything – can lead to helpful cross-promotion.
Former "Smallville" executive producer Mike Tollin hopes his upcoming Yahoo Screen show "Sin City Saints" – a comedy about a Silicon Valley tycoon who owns a Las Vegas basketball team – will find a home on many Yahoo platforms.
Tollin said he would like to create a digital mythology surrounding the show, perhaps with the still-powerful Yahoo home page and its popular Yahoo Sports helping deliver viewers.
"I just feel like the promotion and profile that Yahoo can give it is kind of perfect," Tollin said.
There’s also greater reach for advertisers and companies willing to spend more money for ads in longer videos, said David Hallerman, a principal analyst with eMarketer.
"There’s more opportunity for those ads to reach an audience rather than when they are just attached to short clips," Hallerman said.
For example, video ads displayed in a banner that consumers can click on, would cost $5 to $15 per thousand ad views, Hallerman said. That’s compared to "in-stream" video ads, which play before, during or after an online TV show or movie, which could cost more than $25 per thousand ad views, if it is premium content, Hallerman said.
Snyder, Yahoo’s vice president of video sales, declined to comment on how much Yahoo charges for its video ads.
"Advertisers have been very interested in learning more about how they can be involved," Snyder said.
Perhaps Yahoo’s biggest video coup was its rescue of "Community." Before its network cancellation, it drew an average of 3.7 million viewers, according to research firm Nielsen.
"That show has been talked about a lot. It has gotten a lot of critical attention," said Robert Thompson, director of the Bleier Center for Television and Popular Culture at Syracuse University. "This time a cult favorite has been picked up not by Netflix, but by Yahoo. Yahoo Screen is really now a potential player in this game."
But Thompson said the challenge will be whether Yahoo will be able to get enticing enough content, as it competes against other online entertainment companies like Netflix and Hulu. Yahoo should look for a show that can draw in people, like "Queer Eye for the Straight Guy" did for Bravo or "South Park" did for Comedy Central, he said.
"In the end, it’s whether or not Yahoo can come up with enough things that are going to drive lots of people there," Thompson said.concert, director, film, movie, music, producer, television, tv