Online TV Sites Battle for Viewers

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Mixed Results

TV.com and its ilk are borrowing some of the social tools that made YouTube a hit. On TV.com, users can comment and review videos, enter discussion forums with topics like "How/When did you start watching M*A*S*H*," create their own personal blog, make friends with other users, join groups, and edit Wikipedia-style reference pages on shows, episodes, and actors.

Yet the site has had mixed results since its acquisition by CBS, announced in May. Anthony Soohoo, senior vice-president and general manager for entertainment and lifestyle at CBS Interactive, says the site counted some 125 million votes for its Best of 2008 Awards promotion in December, and that "activity on the site is significantly up from last year" in areas such as the forums and wikis. But CBS won't share its internal metrics on these hard-to-track activities. According to comScore (SCOR) Video Metrix, TV.com's unique viewers dropped 55%, to 160,000, in November 2008, from last May when it had 355,000. The analytics firm also tracked big declines in videos per viewer, minutes per viewer, and minutes per video for the site in the same period.

Many of those viewers are flocking to Hulu. Since its May launch, Hulu has become one of the top online destinations for videos, drawing more than 22 million unique viewers in November, who spent an average of two hours on the site over the course of the month. Experts say Hulu owes most of its success to the elegance of its design and the strength of its content, including hit shows from Fox and NBC (GE) that air exclusively on Hulu.

Outsourcing Community to Facebook Connect

But Hulu also relies on elements that help engage viewers. Registered users have the ability to rate clips, shows, and films, and to engage directly with one another in discussion forums. According to data compiled for BusinessWeek.com by Compete, a Web analytics firm, some 25% of Hulu's overall visitors engage in video-rating—a huge lead over YouTube's similar feature, where only 0.5% of users pitch in. Hulu users also can vote on whether comments were helpful, similar to a feature on collaborative news sharing site Digg.

Hulu says it's careful not to inundate the site with social features. "We thought about creating an entire social network around our video player," says Hulu Chief Technology Officer Eric Feng. "But our users already have homes online on social networks, and to ask them to recreate that on Hulu would have been a lot of work."

Instead, Hulu will tap into the networks that already exist on Facebook. In coming months, the site will roll out Facebook Connect, a tool that would let Hulu users interact with friends from the popular social-networking site. After watching a video they particularly enjoy, users of Facebook Connect can embed it on their social-network profile and direct any comments they make about it to their Facebook activity feed. TV.com told BusinessWeek it also plans to launch Facebook Connect on its site in coming weeks.

The recently relaunched video site Joost has already plugged its users into the Facebook tool. More than 27,000 Joost users have set up Facebook Connect, the highest number of any of Facebook's 1,000-plus Connect partners. According to Compete, over 18% of Joost referrals come from Facebook. "Part of the challenge of making video social on the Internet is not just hooking it up to a Twitter feed or a social graph, but making features that recreate the Golden Era of television, of watching a program on the couch," says Joost Chief Executive Mike Volpi.

The Bottom Line: Targeted Ads

Volpi says the social interactions on video sites like Joost will eventually prove invaluable to content creators and advertisers. Currently, he's tapping user data to help content partner CBS determine the average age of its Joost viewers on a particular program; by checking the age of viewers of the show against their profiles on Facebook, he says he can offer them a more accurate idea of the demographic than the numbers Nielsen might give them for a TV audience.

Eventually, video socializing might also benefit advertisers. "As the prevalence of quality on these sites becomes broader, advertisers will be looking to drill down and target individual users," says Mark Trefgarne, chief executive of LiveRail, a San Francisco-based startup that develops platforms for monetizing online videos. "If you put one commercial across the entire site, you might see an average click-through rate of 1%. If you're targeting it down to those particular users on the site, you can very easily double that performance," Trefgarne says.

For the time being, these sites don't have the critical mass for targeting by demographic to make sense, according to Tod Sacerdoti, chief executive of Brightroll, a large online video ad network. Adds eMarketer's Hallerman, for now, "the advertiser is mainly just seeking an audience who's going to spend more time on the site."

Douglas MacMillan is a staff writer for BusinessWeek.com in New York.