In the end, Yahoo no longer needed Hollywood executives to make its television play on the Internet.
In a management change that delighted Wall Street last week, Yahoo CEO Terry Semel, the former Warner Bros. co-chairman, stepped down and Yahoo co-founder Jerry Yang took the reins again.
The switch was foretold by Yahoo’s inability to catch up with rival Google, whose share of Web searches and revenue has outstripped Yahoo, a Web search pioneer.
Losing the Semel show business connection doesn’t worry the executive in charge of Yahoo’s TV efforts, which have evolved toward strategic relationships and away from the home-grown efforts the company experimented with earlier.
“We have all the right assets in place to win this space,” said Karin Gilford, VP and general manager for Yahoo Entertainment.
She points to growth at Yahoo TV, whose users played 15.4 million videos in May, up from 1.9 million a year ago, Ms. Gilford said. That surge followed a revamp of the site last year.
Later this summer, Yahoo will start carrying full-length TV shows through the NBC Universal-News Corp. Web video syndication venture, she said.
The Internet company is brewing up plans to introduce some video-ad innovations in the fourth quarter that differ from the 30-second pre-roll spots consumers hate.
In the last year, Yahoo has premiered full-length episodes from NBC and CBS in advance of their debuts on regular TV, streamed episodes of Showtime series and linked up with The CW to create a post-show recap for “America’s Next Top Model.” Earlier this month, Yahoo partnered with “Access Hollywood” to create a celebrity news destination with Web video and stories.
Look for more of these partnerships this fall, as well as additional forays into the user-generated video world, Ms. Gilford said. Earlier this month, Yahoo Movies worked with the MTV Movie Awards to allow users to submit film spoofs on Yahoo Movies.
“You will see more coming from us in that area,” Ms. Gilford said.
Whatever Yahoo does in user-generated video, it will run head-on into YouTube, which dominates video-sharing sites by more than a 4-to-1 margin in visitor traffic. YouTube, owned by Yahoo’s nemesis in Web search, Google, finished May with 48 million unique visitors. Yahoo Video pulled in about 13 million, according to Nielsen//NetRatings.
What Yahoo lacks in traffic, it hopes to make up in its experience working with brand advertisers, an area where YouTube lags.
“If Yahoo doesn’t remain competitive with its video assets, it will be sacrificing an opportunity with brand advertisers,” said Greg Sterling, principal with Sterling Market Intelligence.
Also, YouTube is mired in copyright issues in the courts. Meanwhile, Yahoo is focused on growing video views of legal content via deals with rights holders, Ms. Gilford said.
“It’s not just about throwing up as much video as we can, but focusing on the big brands,” she said.
With video on the Web still new, the race for supremacy is open, Mr. Sterling said. The big question is whether Yahoo can allocate the necessary resources to video when it has so many other business challenges.
In its entirety, the online video business will rake in a mere $775 million this year, compared with $19.5 billion for all forms of Internet advertising, according to eMarketer. Yahoo’s revenue for 2006 was $6.4 billion.
To win in video, Yahoo needs to do more to capitalize on its strong traffic and its relationships with marketers, said Will Richmond, president of broadband video research firm Broadband Directions.
“They still have multiple video players, so they are not optimizing their traffic and their sponsorship opportunities,” he said. “They haven’t yet optimized a lot around targeted ads.”
That makes video another area Yahoo needs to work on. Yahoo, which runs the most-visited group of Web sites, lags in Web search, claiming 21 percent of queries, compared with Google’s 65 percent, according to Hitwise.
A.G. Edwards analyst Denise Garcia likes the changes Yahoo is making.
“We remain positive on the company’s long-term business fundamentals, given the size of its audience, strong relationship with its users and secular shift in advertising from traditional to online media,” she wrote in a report last week.