Wible's Weekly - YouTube Reinvestment, New TV Windows, and MVPD Debate - Janney/MediaEntertainment

Digital Content Resale amp8211 According to a WorldPay survey over half of US and UK consumers want options to resell their digital content and about 15 believe it is legal to do so The survey suggests there could be demand for disruptive digital resale markets The study notes that the current legal boundaries are blurry and need to be clarified and possibly modified in order to give consumers the control they are accustomed to with physical products When it comes to video games an NPD study still shows that physical games are still preferred by 62 of consumers although this is down from 65 in 2012YouTube Transition and Competition amp8211 GOOG39s YouTube is investing an incremental 100 million in premium content channels which it will promote with a 200 million advertising campaign YouTube draws more than one billion unique visitors that are watching more than six billion hours of videos a month up from about four billion hours a month last year However according to some adagency executives rising competition from YHOO MSFT AOL and Hulu may be driving ad prices lower This could be a contributing factor to reports of YouTube launching a subscription based model for some content Meanwhile ZNGA which is facing pressure in its core business is seeking to leverage its position in mobile to drive mobile video advertising These offerings will all compete for 45 million US monthly viewers estimated by IAB that watch original professional online videoMVPD Debate amp8211 Despite persistent discussion of cordcutting it is likely to grow at a slow pace according to a report by Digital TV Research However the report notes that penetration will remain flat and that most of the recent losses were analog subs that were less willing to pay more for digital packages The report foresees satellite taking share overtaking cable to become the largest pay TV platform by 2017 They believe ARPU is likely to decline as operators try to take share from each other in an otherwise saturated marketplace but MSOs and telcos are expected to offset this move through bundling more services If true these moves would imply significant margin compression for video as we expect programming costs will continue to rise However we generally disagree with this forecast as we see Cable benefiting from potential exclusive access to high demand smart TV servicesboxesDigital Syndication Windows amp8211 Cable and Broadcast networks are jumping into the fray with ondemand streaming platforms Earlier this year FX announced an app FX Now that will have exclusive access to content in a window This could become the new normal as networks demand exclusivity when they pick up new shows and movies Separately over half of TV broadcasters believe that revenue from OTT services will grow by 50 according to a survey by MPP Global Solutions While we agree that more content will be monetized using OTT distribution it may also increase the cannibalization of ratings and advertising which currently represent the vast majority of broadcaster revenuesSocial Media Advertising amp8211 LNKD is moving to broaden its ad revenue to continue to drive more predictable recurring revenues An important part of this is Sponsored Updates ad units akin to Twitter39s Promoted Tweets where companies pay to market their posts in users39 feeds Twitter is also targeting more ad revenue and is now opening up its selfservice ad platform to all users Twitter has been improving its targeting abilities adding keyword new interest device and gender targeting to its selfservice ad platform FB also gives marketers the ability to refine targeting These improvements should increase ad buyer ROI and pricing for the publishing sitesTony Wible joined Janney Montgomery Scott in 2008 and is a Managing Director covering the Media and Entertainment sector after spending the previous 10 years at Citigroup Investment Researchamp8212most recently covering the Broadcasting and Entertainment Services industries Tony can be reached at twiblejanneycom Janney Montgomery Scott LLC is a US brokerdealer registered with the US Securities and Exchange Commission and a member of the New York Stock Exchange the Financial Industry Regulatory Authority and the Securities Investor Protection Corp Disclosures may be reviewed at Wible39s WeeklyRead all Tony39s MediaBizBloggers commentaries at Wible39s Weekly JanneyMediaEntertainment Check us out on Facebook at MediaBizBloggerscomFollow our Twitter updates MediaBizBloggerThe opinions and points of view expressed in this commentary are exclusively the views of the author and do not necessarily represent the views of MediaBizBloggerscom management or associated bloggers MediaBizBloggers is an open thought leadership platform and readers may share their comments and opinions in response to all commentaries

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Wible's Weekly - YouTube Reinvestment, New TV Windows, and MVPD Debate - Janney/MediaEntertainment

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