By: James Creech, Paladin
What will 2018 bring for the online video industry? I surveyed 20+ experts from 10 countries to offer their predictions for the video ecosystem this year.
After a challenging 2017 marked by missed earnings, layoffs, and consolidation, industry leaders predict more tough times ahead. As a result, media companies must evolve and diversify their revenue streams beyond advertising and SVOD license fees. Successful media companies of the future, our experts believe, will make their money much closer to the consumer, whether from live events, e-commerce, patronage, or (most likely) all of the above.
Brand safety continues to be the watchword, after YouTube was marred last year by Adpocalypse and Elsagate. Major video platforms will increasingly favor high-quality and family-friendly content in a reflection of a broader shift from pure scale (readily afforded by UGC) to premium monetization. As a result, look for competition amidst major video players to heat up, as Facebook invests heavily in a make-or-break year for Watch, Amazon leverages its massive scale and experience in premium entertainment to command consumer attention, and Netflix seeks to outspend its rivals in its quest for global domination.
As for online video creators, many will be forced to earn a living off-platform, relying more on Patreon contributions, Twitch Cheers, or Musical.ly tips than YouTube AdSense or long-anticipated Facebook ad revenues. Branded content will continue to offer the greatest financial rewards, with influencer marketing poised for yet another year of explosive growth and bigger budgets. But expect the pendulum to swing away from microinfluencer campaigns and programmatic marketplaces toward longer-term, more integrated brand activations with top talent, as advertisers focus on quality content and engagement.
But enough of my pontificating. Here’s what the experts from around the world had to say:
Tim Mahlman, President of Advertising and Publisher Strategy, Oath, New York City, USA
“Video will change the measurement status quo. Agencies, vendors and publishers are finally beginning to embrace more advanced measurement techniques to provide advertisers more context around performance. Expect that trend to continue in 2018. Video’s emergence, in particular, has changed the way we measure success. It’s chipping away at traditional, flawed measurement systems. The industry is realizing that it doesn’t make sense to pay attention only to views, for example. Instead, it’s finally beginning to migrate to a performance curve with clearer intelligence on what works and what doesn’t. This fuels more credible insight into ROI and elevates transparency across the board. The shift away from the strict CPM-focused model — even if that shift has been slow — is a good sign for all parties and will engender more accountability from the ground up.”
Andy Taylor, Co-Founder & CEO, Little Dot Studios, London, UK
“I’m excited for the true emergence of quality, premium short and mid-form content. In 2018, advertisers will really start to demand quality and reach, rather than just reach. As premium content attracts stronger eCPMs, so algorithms will change and viewing to premium content will grow too. So premium short and mid-form content will get more views and better monetisation in 2018. In turn, that will lead to more investment.”
Jonathan Skogmo, Founder & CEO, Jukin Media, Los Angeles, USA
“It will be rough times for some folks in 2018. We will see more consolidation of the bigger media companies, meanwhile video publishers and editorial websites will continue to struggle and will be forced to close their doors or have a fire sale.”
Gabe Gordon, Co-Founder & Managing Partner, Reach Agency, Los Angeles, USA
“Last year we witnessed the fall of the publisher model, so media companies realize they must focus on video in 2018. As a result, paid media will play a much larger role in influencer marketing campaigns and gain a bigger share of brand budgets.”
Phil Ranta, COO, Studio71 US, Los Angeles, USA
“For creators, 2018 will be the year of high-end formats and stylized production. The ‘playing the algorithm’ game took a major hit with the Adpocalypse and Elsagate last year, and a lot of clickbait and unbrand-safe channels will continue being devalued. You’ll see a rise in creators making more content that mirrors Casey Neistat or The Fine Bros and less trying to vlog popular challenges or play with fidget spinners (whatever the 2018 equivalent of that will be).”
Brian Tiong, Group CEO, Yeah1 Network, Singapore
“As a result of rising middle-class incomes and larger investments from global brands, Asian digital advertising spend will increase 3-4x from 2018 to 2020.”
Matt Gielen, Founder & President, Little Monster Media Co., Los Angeles, USA
“The biggest trend this year will be a reduction of the bubble around media companies, video platforms, VR, and subscription models. The bubble began popping in late 2015 and it isn’t done quite yet. But while other media companies are belt tightening, pivoting, or running for the hills, I think it’s a great time to launch something new and bold.”
Brendan Gahan, Founder, Epic Signal, New York City, USA
“We saw a lot of media companies suffer the consequences of a single-minded focus on scale last year. In 2018, we’ll see them try to evolve and focus on cultivating niche communities.”
Todd Krizelman, CEO & Co-Founder, MediaRadar, New York City, USA
“Sharp increase in vertical video. While Snapchat’s stock price is declining, at MediaRadar we observe that the number of brands buying on their platform is rising sharply. One of the unexpected byproducts of Snapchat’s impact on the market is that those advertisers are now more actively running vertical video – everywhere. Simultaneously, we see more internet use of mobile phones than ever. As a result, we predict a continued, steady increase of vertical video as the vertical format becomes more common.”
Guga Mafra, CEO, Amazing Pixel, Miami, USA
“There are several efforts in AI towards media. On one side, publishers and advertisers are getting better technologies dedicated to track users, which means better segmentation. On the other side, agencies are getting better AI-generated ads and marketplace management, which means better customization. I think we are going to see a lot of ads like: ‘we know you have your eye on this…’ or ‘if you liked this, you’re probably gonna like that.’
Matt Levin, Co-Founder & CEO, Donut Media, Los Angeles, USA
“2018 will (finally) be the year of quality. 2017 was a year of explosive growth for low quality video creators, fake news peddlers, and tired formats (I’m looking at you, text-on-screen over stock footage), but the correction is coming. The YouTube Adpocalypse was only the harbinger – 2018 will be the year that advertisers (and audiences!) start being more discerning between high-quality and low-quality content — and that distinction will open a massive revenue gap between the two groups.”
Kostas Chamalidis, Founder & CEO, Digital Minds, Athens, Greece
“As influencer marketing grows, the focus on ROI will increase. Brands will look beyond awareness for more ways to associate influencer marketing with sales and e-commerce. We will see influencer content have more specific calls to action, and brands will become more vigilant in measuring influencer campaigns.”
Phil Starkovich, Co-Founder & CEO, TubeBuddy, San Diego, USA
“I’m most excited to see even more power being put in the hands of creators in 2018. Today more than ever, creators are become business savvy and taking control of their own destiny. Building individual brands through direct and personalized communication with their audience. Taking control of their earnings through services like fan funding, influencer marketing, and social commerce. Everything put together means more creators making a living doing what they love.”
Bastian Manintveld, Co-Founder & Executive Chairman, 2btube, Madrid, Spain
“Digital companies’ business models will increasingly resemble traditional media, but with better data behind them. In 2018, sensible businesses will thrive by focusing on talent. Those who do a reliably good job have a better future than those who have the biggest numbers.”
John Holdridge, SVP Social Video Strategy, Fullscreen Media, Los Angeles, USA
“The biggest trend will be monetization, monetization, monetization! We will see Facebook step up in a big way and start to entice not only creators (they are already doing this) but brands with more compelling ways to join. Possibly a Facebook-funded initiative just like YouTube did back in 2011?”
Ivar Steen-Johnsen, Co-Founder & COO, Nordic Screens, Oslo, Norway
“In a 3-5 year perspective, it is likely that price levels on YouTube must increase, as Google AI takes away not-so-nice content and as larger budgets come in.”
Gergo Szabo, Co-Founder & CEO, Special Effects Media, Budapest, Hungary
“I expect some pressure on big advertiser-supported platforms due to a number of their issues, mainly around controlling where their ads go. I can imagine such limitations will eventually affect media companies’ business models and push them towards other revenue sources.”
Chris Landa, Founder, Transparent Influence, Austin, USA
“Maybe I’m just hopeful, but I think 2018 will be the year of accountability in influencer marketing. We’ll see a shift toward standardization when it comes to pricing and process, with more common knowledge shared that ushers out “false prophets” and those with little experience hustling for dollars that should go more experienced players.”
Rajeshree Naik, Co-Founder & Director, PING Network, Mumbai, India
“We see an increased value in niche audiences – today everyone recognises that it’s not the total number of views but who is it you are talking to and how engaged they remain.”
Rian Bosak, Founder & CEO, Superbam, Los Angeles, USA
“Facebook, Facebook, Facebook. When it comes to investing time and resources into building your audience, creators and media companies alike should look to Facebook first.”
Rene Paulesich, Global Alliance Team Lead, UUUM, Tokyo, Japan
“One of the big movements we feel here in Japan is that a lot of the business will scale strongly offline. Live events, merchandise and other fan-direct monetization opportunities are now big and continuing to grow year over year. This is particularly true in the Chinese video market, where the influencer business is extremely sophisticated. With companies like Bytedance buying Musical.ly and Flipagram, there is no doubt that tapping into China will be a key factor for growth in 2018.”
Mike Pusateri, Founder & CEO, Bent Pixels, Los Angeles, USA
“Financial and operational discipline will need to be a core value for media companies that want to succeed long term. Poorly run, loosely focused players will struggle to keep their businesses alive this year.”
Jonatan de Boer, Managing Director, OnLane, Amsterdam, Netherlands
“Live streaming apps like Live.ly and Live.me that are already popular in the US will expand globally in 2018, posing a threat to Instagram’s current dominance of live streaming in Europe. Snapchat’s return to social messaging will help it maintain a dominant position, especially among teens. And Facebook will make a resurgence with a focus on building communities.”
Not to be outdone, here are a few predictions of my own that seem to be missing from the mix:
Esports Is a Juggernaut: Esports revenues reached $700M last year and are on course to exceed $1.5B by 2020. Spurred on by massively growing fan communities, new game titles like PubG, and a franchise system for League of Legends and Overwatch, advertisers are taking notice and putting big budgets behind esports teams and athletes. Broadcast globally on Twitch, YouTube Gaming, and Microsoft’s Beam, esports is the single largest growth area for online video this year.
Emerging Markets Will Be Key to International Growth: Asia and the Middle East are the primary regions to watch in terms of overall viewership growth and potential for increased monetization. In APAC, existing video powerhouses like Vietnam, Thailand, Japan, and South Korea will benefit from increased advertiser spending and larger branded content budgets. At the same time, rising middle-class incomes will lead to higher fan-direct revenues through tipping, patronage, and live events. But the real growth story in 2018 will come from emerging markets like Indonesia and Philippines, as better infrastructure comes online, offering consumers more media choices. We can expect a similar story in the Middle East, where Israel, Saudi Arabia, and UAE will continue to lead the way in terms of monetization, but Turkey, Egypt, and Iran will deliver a majority of views.
Video Publishers Are Emerging in Droves: While traditional print publishers Hearst and Conde Nast and web 1.0 pubs like Refinery29 and UPROXX struggle to reinvent themselves, a new generation of video-first publishers have taken audiences by storm. Whether it’s TYT’s hard-hitting political commentary, Super Deluxe’s outlandish live streams, or Cheddar’s financial news, these media outlets pose an enormous threat to incumbents given their quick production cycles, low costs, and innate understanding of how to create content for the Internet Generation. Expect more video-first publishers popping up this year to serve groups of passionate superfans in every imaginable niche.
Any predictions we left out? Leave a comment below with your expectations for online video in 2018.
James Creech is the Co-Founder & CEO of Paladin, the essential creator management platform for digital media companies. Follow James on LinkedIn and check out his podcast All Things Video for more insights into the online video industry.