Blog Post

Digital Downloads Worth Half a Billion in Q1

It’s hard to get a read on how the economy is affecting online video. Experimental ad budgets are being slashed. Viewers are flocking to free in a downturn. Advertisers want more accountability. Everybody still watches TV. All these things are true.

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So we give props to the people who try to push forward measurement of the online video economy, among them today Digital Entertainment Group, Nielsen and BrightRoll.

The Hollywood and consumer electronics trade association Digital Entertainment Group reported last night a dip in home entertainment spending, including a 14 percent yearly drop in DVD sales. However, it also noted growth for categories like Blu-ray and digital revenue. Digital downloads brought in $487 million in the first quarter, up 19 percent.

Nielsen said this week it will begin measuring Internet usage in 375 of its TV ratings sample audience. While the move is apparently “controversial,” according to MediaPost, because it may possibly interfere with Nielsen’s TV research, that seems bound to fade with time. We’d all like to know more about how media platforms coexist, and are particularly interested in the emergence of “two-screen” media usage. The new research initiative, which could be expanded this fall if it goes well, will measure TV usage simultaneously with web video and other Internet usage.

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Video ad network BrightRoll saw in its internal data that pre-roll prices are falling (though pre-rolls themselves are accounting for even more of the vast majority of its revenue). The average pre-roll CPM was down 9 percent in the first quarter from the last quarter of 2008 and 12 percent from a year ago. The fourth quarter had already been down 12.5 percent from the third and 25 percent from a year before. BrightRoll doesn’t break out a specific number, but AccuStream iMedia Research recently said the average U.S. CPM for premium pre-rolls was $35.

Those numbers aren’t expected to swing back up. BrightRoll also surveyed 150 U.S. advertising executives, 53 percent of whom said they expect in-stream ad prices to be marginally lower in a year. Twenty percent said they expect CPMs to cost half their current price.

As for how the video ad landscape is shaping up, 51 percent of those surveyed said they were most likely to buy video advertising from a publisher, 41 percent from an ad network, and 8 percent from a portal.

Disclosure: BrightRoll is backed by True Ventures, a venture capital firm that is an investor in the parent company of this blog, Giga Omni Media. Om Malik, founder of Giga Omni Media, is also a venture partner at True.

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