Blog Post

Google Video, A New Cash Machine?

Cynthia Brumfield, one of the smartest analysts around, and Mitchell Shapiro have just completed a massive report on Google as part of their Television 2.o series. Last night while reading the mammoth report, it finally dawned on me Google, video is not just an experiment, instead it is a virtual cash machine, that could quickly rival its text ads business in terms of size and scope. Cynthia and Mitchell say that unlike the text-ad business, the video business will be CPM based, and the company could get between $5 to $30 per 1000 video ad impressions.

Obviously all that depends on the content. I don’t care (and neither do the advertisers) much about a dumb mutt chasing his own tail. The content means, quality content that millions would want to watch on a daily basis, in a near television like quality. It would mean dealing with partners, and sharing the pie.

So it is no surprise the company has been getting increasingly serious about video. In order to get an entry into the very closed Hollywood universe, the company added Ann Mather, who was executive vice president and chief financial officer for Pixar Animation Studios between 1999 and 2004, to its board of directors. Mather, a former Disney executive is known to have deep SoCal connections.

If Cynthia and Mitchell’s financial assumptions are correct, then expect more action on Google Video.

10 Responses to “Google Video, A New Cash Machine?”

  1. jbelkin: the fact is, flash is installed on all browsers, and provides ONE multimedia format that will work on ALL platforms. In other words, for each piece of video content, Google doesn’t have to create a Quicktime version for us mac-heads, a WMV version for windows-heads (to not force them to install QT + iTunes on windows), and some .mpg variant for everybody else.

    I’ll challenge your % assumption, with another assumption: the vast majority of their audience won’t know or care about what Flash is.

    Your “lazy webmasters” point in this case is unrelated to what Google’s building. Yes there are a lot of truly horrendous, highly annoying, thoroughly non-accessible sites slapped together entirely in Flash, whose contents will never have a chance in hell to get indexed by most search engines, and losing a lot of valuable potential customers. But that’s not what Google Video is. Google Video uses Flash as a decent common denominator, cross-platform, interactive media transport.

    In my ideal world, all forms of digital video would be Quicktime and encoded in H264, because nothing out there, at this time, comes even close to even hoping to touch H264’s image quality at the lowest bitrates, it kicks insane butt, it blows me away.

    Perhaps we’ll get there. But right now, if Google is looking to keep their costs of storage low, flash looks like the way to go.

  2. Until Google Video gets rid of the idiotic Flash requirement, I know a huge % will never access the site. Having a Flash restruition is dumb unless Macromedia is paying you the priviliedge … not sure people let lazy webmasters get away with that crap.

  3. You know how google is going to revolutionize this? INTERACTIVE ADS. How hard would it be to insert interactive flash ads into their flash video stream? not very. The CPMs would be through the roof in comparison to $5 mentioned above. BTW there is a big difference from $5-30CPm ($182Million -> over $1Billion). Not revolutionary idea, but I should get credit :-D so if google does do this, someone send me some stock.

    oh yeah and what about interactive product placement? (click on a coke can in a show, get a new tab open w/

  4. This post and my observation yerterday about TV content in India is getting me to think!

    I have lately been watching TV in the night and the content of movies or documentaries or programs is awesome. And guess what – not much advertising! So, practically most of the channels are not earning revenue from 11pm to 7 am and sometime hours in the afternoon! So, basic content for advertising => 12 hrs where everyone is fighting.

    with video downloads and IPTV – ads can be targeted only at the TIME the user is watching to the proper demographic! Better use of bandwidth for the companies. Proper targetting for the advertisers! and yeah even the customer wins in the bargain – I don’t have to see a Beetle ad!

  5. I am not getting the math. 100M impressions at $5 CPM = $500,000 ((100,000,000/1,000)*5) How can this little bit of revenue increase revenues by 26%? Even if they meant 100M impressions A DAY that would still only deliver them $182.5M annually ($500K*365). And in addition to spliting the revenues with the creators, what would the bandwith cost be?