Video’s turning out to be something of a bully.
Having pushed aside the radio star years ago, video — now streaming online and everywhere — is trying to pummel all other forms of communication too.
If that’s an overstatement, it’s only a modest one. Video is playing an increasingly important role in shaping how people get their information and how advertisers pitch their products. It is a form that’s starting to play a central role in reshaping not just the media, but the business landscape.
On Tuesday, mobile phone giant Verizon cited the importance of “building digital and video platforms to drive future growth” in its move to buy AOL Inc. in a $4.4 billion deal.
Video also was the word on everyone’s lips at the recent round of Newfronts, where media companies pitched their upcoming digital content to brands planning to buy ads to reach customer segments of every stripe.
Yahoo, for instance, unveiled a slew of aggressive video plans for the coming year, saying it would add 18 new video series to its programming lineup, including live events, segments tied to its digital magazines and long-form shows. That will give the Web portal a total of 55 streaming video series.
The traditional print stalwarts of Time Inc., News Corp. and The New York Times are among the other media players devoting more time and attention to videos.
The Verizon-AOL deal is a move of another magnitude, though, marrying video content with a distribution network in a new way. It’s a deal that also puts Verizon in a better footing to compete with ad giants Google and Facebook.
AOL is expected to help drive more traffic over Verizon network, bringing a portfolio of media brands to the table, including TechCrunch, Engadget and Makers, which dubs itself as “The largest video collection of women’s stories.” (The company also owns The Huffington Post, but is said to have been looking to spin that business off.)
It’s a move for a bigger piece of the global advertising market, which eMarketer puts at nearly $600 billion. Particularly important in such ambitions is that AOL has a programmatic advertising platform, which helps brands target their marketing dollars to particular customers.
“For us, the principal interest was around the ad tech platform,” said John Stratton, Verizon’s executive vice president and president of operations, speaking at the Jefferies 2015 Technology, Media and Telecom Conference in Miami. “We really like the technology a lot. And we think of it as a key enabler for us as we begin to generate and value above the network layer. So, we’ve talked a lot about our over-the-top video ambitions, and this is, for us, a very important cornerstone enabler as part of that broader strategy.”
Over-the-top TV, or video viewed outside the traditional context of a broadcast network, also brings in a younger customer more comfortable with Netflix, for instance.
“The primary target for us is a Millennial generation that has very different ideas about what they want to consume, how, where, when,” Stratton said.
Verizon wants to be more than just the digital highway; it wants to play a bigger part in the commerce that happens there.
“One of the critical levers, of course, is data consumption by our customers as they are increasingly hungry to do more and more in the mobile environment,” Stratton said. “The key for us is to make sure that we create value in the process of delivering that.”
Forrester analyst James McQuivey said that, “With this move, Verizon will become a global media player, extending its reach to hundreds of millions more people than it could in its current business, at a much lower cost than trying to acquire a different network provider… After Verizon sells off the bits it doesn’t want or need, like the Huffington Post, it will actually have acquired a decent customer list at relatively low cost per head.”
McQuivey said the big question was how the deal would impact Yahoo, which has long been rumored to want AOL.
“The interesting thing for Yahoo is to figure out if the company will continue being the acquirer, as it has been of late, or whether it will finally fall prey to a Comcast or other communications giant looking for a global footprint and a way to transition into a platform role in the digital economy,” he said.
Clearly, a new breed of animal, that’s both building content and connected to consumers, is about to start stalking the media landscape.