Web Video in Play in Yahoo Shakeup

Dec 11, 2006  •  Post A Comment

The implosion in Yahoo’s executive suite last week highlighted the peril of May-December romances between new and old media.

And as in any divorce, the children-in this case, Yahoo’s Web video efforts-are left to wonder what will become of them.

Yahoo, whose huge audience made a foray into producing new-media content tempting, stumbled early in its efforts to generate its own material. Last week, Lloyd Braun, the old-media whiz brought in by Yahoo’s old-media CEO to spearhead the effort, left the company.

The background of Mr. Braun’s replacement in new media ventures, Jeff Weiner, signals Yahoo intends to return to its strength as a technology company that links users to content and communities. Mr. Weiner has led Yahoo’s effort to remain competitive in Internet search with Google, which is extending its lead in that arena.

When Mr. Braun came aboard Yahoo in 2004, he had just helped launch two shows that helped resurrect ABC: “Lost” and “Desperate Housewives.” With those bona fides, Yahoo executives felt confident about their efforts to spawn a new generation of hits for the Web. But since then, the emergence of viral video, Apple Computer’s iTunes store and television network Web sites with professionally made content changed the equation. Yahoo, and Mr. Braun, were left behind.

“Yahoo had some very ambitious original content plans, most of which they didn’t act on, and those became dramatically reduced over time,” said Greg Sterling, principal with Sterling Market Intelligence. “A number of factors got in the way, one of which was cost. The costs of producing quality original programming outweighed the perceived immediate monetization opportunities,” he said. “Yahoo may have been a year or two ahead of its time with its original content strategy.”

The changes at Yahoo, which put former CFO Susan Decker in charge of the advertiser and publisher group, reflect both the specific missteps the company made in Web video and larger struggles. Google, the No. 1 search engine, has built a better technological mousetrap to capture advertising dollars. Google commands about 50 percent of all online searches and Yahoo about 24 percent, according to Nielsen//NetRatings.

Yahoo declined to comment for this report. In a statement released last week, Mr. Braun said, “The Yahoo Media Group has developed and launched a ground-breaking template for the next generation of media experiences on the Internet.”

The company’s video content strategy has evolved, and now Yahoo produces some original content and aggregates from some partners, Mr. Sterling pointed out.

Along the way, Yahoo’s video content effort generated notable successes, including the news feature “Kevin Sites in the Hot Zone.” The company also was at the forefront in streaming full episodes of television shows more than a year ago.

In March 2005 Yahoo streamed the first episode of Showtime’s “Fat Actress.” This season it premiered episodes of CBS’ “Jericho” and NBC’s “Heroes,” among others. Since then, TV networks have established their own sites as destinations for watching current shows. Visitors to ABC.com have watched episodes of shows 24.5 million times from September through mid-November, the network said.

There’s still room for video aggregators, however, and the strategy provides a faster way to grow audiences and offer fare that advertisers want to be associated with, as Google has demonstrated, said David Hallerman, senior analyst with market research firm eMarketer.

Yahoo’s user-generated video pursuits have lagged behind industry leader YouTube, which last month was swallowed up by Google; and MySpace, which News Corp. purchased last year. Still, Yahoo ranked fifth place in visitors among video sites last month, pulling in 5.8 million Web surfers.

Yahoo is looking for someone to run the division, formed last week, that contains its media assets. In the meantime, Mr. Weiner is tasked with keeping the company on pace as it pursues ad dollars that are pouring into the online video market.

Internet video ad spending should grow 82 percent over last year to $410 million in 2006, according to eMarketer. That growth makes video content a market in which Yahoo can’t afford to lose more ground, especially as Google outstrips it in the search business.

“One of the real glaring weaknesses for Yahoo right now is this sort of second-class citizen rating to Google on search,” said Damian Riordan, director of media and entertainment for investment bank HT Capital Advisors. “The real challenge for Yahoo is search and developing that capacity. That will have an impact on people’s willingness to go to Yahoo to search for video.”

Yahoo still draws a massive audience, said Michael Hayes, senior VP and managing director for Initiative interactive in North America. “Our interest in advertising on Yahoo has not dwindled or shifted in any way, shape or form.”

In fact, Initiative has placed call-to-action ads for clients on Yahoo and other portals that have generated a 13 percent to 20 percent lift in transactions, he said.