Saturday, March 27, 2010

Skytide Shares Insight for Online Video Publishers, Identify the “Sweet Spot" and What is "Good Enough"

In part two of my conversation with Roy Peterkofsky, VP of Product Management at Skytide, I asked what can publishers really get from analytics that could really help monetize their businesses. Roy suggested that businesses are waking up to the fact that the online video part of their organization does need to be a real business. He recommended that people should read Warren Buffet, because all businesses make decisions based on resource allocation. Among the core challenges facing online video publishers, is how to define the "sweet spot" and what is "good enough" when it comes to the affect that quality has on viewer engagement. Quality can be defined in terms of both quality of service (QoS) of the content delivery network, and the actual quality of the content that is produced and published online.

Some digital media companies assume that "more is better" and that the road to higher profits lies in maximizing QoS levels, thinking that it will result in higher viewer engagement levels, and in turn, more consumption of their content. Roy suggested that performace-based metrics can help with editorial and content programming decisions, whether a certain genre performs better than another. Or when data shows that viewers stop watching a 5 minute video after 2 minutes, viewer drop off can impact the production of future videos and dictate their total run time. Also, since the shelf life of a video online is pretty short – to get value out of analytics, you need to be able to use the analytics predictively.

Roy said:
"People talk frequently about the need to push higher resolutions, higher bit rates out to their customers – to be as close to HD, whatever that means in the Internet world – as they can be. But the question that remains unanswered is – is it worth it? Do you really get more viewer engagement to the extent that it drives monetization out of doing this?"
According to Skytide's customer data, there is a correlation between engagement and bit rate when it's down in the lower reaches and not good enough, people will abandon the video quickly. But once you get to a level that's good enough things really start to flatten out, and you really don't get that much added value.

So what is good enough?
"Well basically, it's kind of about if you're using the maximum capability of a typical DSL line. That seems to be good enough for most people. Above and that you're spending a lot on encoding, you're spending a lot of money on pushing out bits through your CDN – and you're not getting that much return from it."
Skytide advises that publishers measure and understand the impact of online video investments before spending the money.

See part one of my interview with Roy Peterkofsky here. You can also request a copy of Skytide's white paper Streaming Video Quality: Is more always better?

About Roy Peterkofsky, Vice President of Product Management
Roy is a seasoned software developer and marketer who specializes in turning new technology visions into marketable stories and profitable products. Before joining Skytide, Roy operated a successful product strategy and development consulting practice. Previously, he was Senior Director of Product Management at Enkata, helping transform it from a business intelligence platform company into an applications vendor. Prior to that, Roy served as Product Director at Oracle where he developed a new product that garnered $20 million of revenue in its first year. He was also a co-founder of eWorld Systems and Hawaii Superferry and a Product Manager at i2 Technologies. Roy holds a Master of Engineering degree from UC Berkeley, as well as Bachelor’s degrees in Electrical Engineering and Mathematics from MIT.

Update 3/28/10: Added additional text and links to post