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Week In Review: Facebook Does Midroll; Hulu Shows Off The Interface Of The Future

1. Facebook Does Midroll

Given the degree of backtracking in Washington these past few months, the gang at Facebook must have figured that it’d be as good a time as any to go back on their plan not to have any actual advertising in their videos. They are testing out midroll video ads, with the promise that the ads won’t start up until the viewer has been watching for at least 20 seconds.

We’re not faulting Facebook for their decision—they’ve been getting much pushback from the people who make the videos over the fact that they’re not making any money on them, and Facebook is finally acknowledging that they’re not making the videos for fun.

The question is whether people will stick around for the commercials or click away.

Why It Matters

Because Midroll Is Tricky. 

With preroll, viewers will stick around because they want to see the video and it’s just another internet annoyance that makes them think “gosh, I really should use an ad blocker.”

Endroll is for people who are too lazy to click away or who are watching multiple episodes.

But with midroll, the viewer needs to decide whether the video they’ve just watched the first twenty seconds of is worth continuing. And the truth is that, for a whole lot of internet video, the answer is “no.” The medium puts them at a huge disadvantage versus longer form video too, which has a couple of minutes to reel the viewer in before the commercial break. That also allows long-from (e.g. TV) producers to lean on the various tricks they have to keep people hanging around after the commercial break. (e.g cliffhangers.) Video producers are either going to have to learn similar tricks to keep people around and it’s not clear many of them are up to the task.

On a macro level, the addition of advertising means that Facebook’s video play is real, and that it’s game on for YouTube. Both companies are keeping a hefty 45% of revenue for themselves, so the real differentiators will be the number of views, the amount of repeat traffic and the amount of buzz each platform is able to generate.

What You Need To Do About It

If you’re a network or MVPD, not too much to do other than sit back and see how it all plays out, with a particular eye to how midroll is working for them and how much consumer pushback there is.

If you’re an advertiser, we’d advise letting other companies try out midroll first. Stick to branded videos in dark posts for now—there’s a decent enough chance there will be significant short term blowback on the midroll ads, and you don’t want to get caught in the crossfire.


2. Hulu Shows Off The Interface Of The Future

A couple of teaser shots of Hulu’s new pay-TV interface have been making their way around the interwebs and they’re looking pretty revolutionary. The new interface seems to reflect the recommendation-based UI we’ve been predicting/advocating for some time now.

Why It Matters

There are numerous ramifications from that switch: VOD content and live are put on an equal footing, which means that smaller networks can switch to producing 15-30 hours of original programming a week, available on VOD, rather than trying to maintain a 24 hour presence.

It also opens up a potential second revenue stream for pay-TV providers, as networks pony up to have their shows featured in the recommendations of targeted audiences.

Finally, it greatly improves the user experience as a recommendation-based UI reflects the way we watch TV today, when “what’s on now?” is no longer the typical starting point.

What You Need To Do About It

If you’re an MVPD, you need to start developing your own recommendation based interface. Make sure it’s pretty too—part of why people feel their current pay-TV subscriptions aren’t worth it are because the interfaces look so ratchet.

If you’re a network, think about shifting some promotional budget to paid recommendations, where you can target the types of users you want.

And if you’re an advertiser, put some more money into VOD. It’s going to become way more popular and you’ve got a decent shot at being able to buy it on an addressable basis using DAI (Dynamic Ad Insertion.)