SNL and Palin Take Online Video to the Next Level

Election-related comedy bits have made people more comfortable with watching online. But will Big Media seize the moment?

By Ronald Grover

It's all over but the inauguration. Barack Obama has swept to victory, and Sarah Palin can go back to moose hunting in Alaska. It was an election that broke all kinds of barriers, and few of us will soon forget it. Here's one barrier smashed you may not have noticed: Online video finally went mainstream, thanks to Tina Fey, Saturday Night Live, and, of course, Sarah Palin.

You had to be living in a cave somewhere south of where Osama Bin Laden is hiding not to know that one of the high points of Election 2008 was the weekly spoof-fest served up by SNL that featured zingers so dead-on that they became watercooler fodder from coast to coast. Ratings for the 33-year-old show jumped by 76% this year, to 9.8 million late-night comedy watchers. But folks who didn't (or couldn't) stay up that late could watch the bits on NBC.com (GE), Hulu, or any number of places where videos can be ogled online.

That audience could finally turn online video into a big business. Until now, the 146 million or so online video viewers recorded by comScore Media Metrix each month have been mostly the under-30 crowd drawn to consumer-generated dreck, shorter professional stuff, and the odd sitcom or two. That will change now, I am willing to wager, with old fogies like me developing a taste for TV shows at the click of a mouse. For me, the light bulb went on when NBC.com put a promo for the Christian Slater show My Own Worst Enemy on the same page as SNL highlights from the week before.

What online video has needed from its beginning is a major cultural event that would focus attention on the abundance of TV shows—and all kinds of other material—available online. The last election produced a similar event: a 30-second comedic send-up of the two candidates to the tune of This Land is My Land that was e-mailed more than 80 million times. That ushered in an era in which folks began e-mailing all manner of whacko things to their friends. This time the watercooler chatter will direct folks to online video sites with much richer content.

SNL Synergies

While exact figures are hard to come by, Comscore's numbers show that NBC.com's video traffic jumped in September—when the SNL bits first started showing up—by 56.7% over August. The hefty traffic helped Tiny Fey's Thursday night prime-time sitcom, 30 Rock, open its new season on Oct. 30 with its best ratings every, says Vivi Zigler, NBC's digital executive vice-president. You have to figure that if folks are searching around the NBC.com page and finding Tina's show, they're no doubt finding other stuff to watch as well.

The attention Tina and the SNL gang are getting coincides nicely with the ramping up of the video viewing infrastructure, according to analyst James McQuivey of Forrester Research, who calls the SNL clips a "threshold for online video." He says they come at a crucial time for online video. Hulu.com, a joint venture between NBC and Fox (NWS), is starting to take hold. Last month it closed in on 150 million video streams, an 18% rise from the month before but still a far cry from the more than 5 billion a month that Google's (GOOG) YouTube does, according to Comscore. Although the companies keep their numbers private, neither is as yet believed to be profitable.

So now, like an expectant candidate on election night, we await the outcome. Will media folks, who have counted on new revenue from online viewing, be able to take advantage of whatever burst of watching that SNL might have started? SNL producer Lorne Michaels is sure angling to capitalize. Together with NBC, he has a new SNL Web site. And a bunch of consumer electronics companies are rushing to make it easier to stream online video from the Internet to the TV. On Oct. 30, for instance, video recording pioneer Tivo (TIVO) said it would begin in December to offer more than 12,000 choices of movies and TV shows to its subscribers from the movie mail service Netflix (NFLX). Forrester's McQuivey says other consumer-electronics companies will almost certainly do the same.

Of course, there's more that the media moguls might consider. For starters, a lot that you might like to watch on, say, Hulu.com or NBC.com isn't there. That's because, to keep from eating into potential DVD or rerun revenues, studios typically offer up only a small selection of recent shows they have made for networks to air. Try to find The Simpsons on Hulu. There are five episodes. Then again, try to find anything on the site, which is organized only slightly better than my overflowing desk. Yes, there's huge potential here, but if media companies want to take advantage of the opening Sarah Palin and SNL gave them, they have to embrace change? Wasn't that one of the things this election taught us?

Grover is Los Angeles bureau chief for BusinessWeek.