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It's Showtime for Online Video

21 February 2014 in Trading Ideas

With the near-universal use of both smartphones and tablets, it’s practically self-evident that the traditional ways of consuming media are undergoing rapid change.

It’s not that we no longer like movies, or television, or music. But advancements in technology have allowed many of us to have our media when we want it, how we want it, and where we want it.

With all the time we’re now spending online, of course, it would follow that advertisers who were living by the traditional media pipeline would need to tweak their strategies to find their audiences.

This move to online by both consumers and advertisers is what forms much of the thesis behind our new Online Video motif, a portfolio of stocks of companies that provide online video products and services.


Growth in online video growth is tough to dispute. Marketing research firm eMarketer estimate last year that 182.5 million US consumers will watch video content online at least monthly in 2013 – that’s 10 million more than a year ago.

On average, people watched online video for 24 minutes a day in 2012-2013, 40% above the prior year.1

And unsurprisingly perhaps, the demographic that advertisers care the most about – 18-to-24-year-olds — are watching the most online video of any age group – about two hours a day.

What’s more, this same group of young adults are also watching the least amount of traditional TV, bur are tuning in to six hours a week of TV on the Internet, and 24 minutes of mobile video.

Other data points from broadcast and cable TV broadcasting also suggest traditional TV viewing is essentially treading water. While revenue grew 11% for traditional wired cable providers from 2007 to 2011, the number of subscriptions fell by the same amount.

Meanwhile, Moffett Research reported that pay TV lost 316,000 subscribers in the one-year period from June 2012 to June 2013.

Is it any wonder that Nielsen predicted that from 2012 to 2013 traditional TV advertising spending would increase by 2.8%, while digital video spending was expected to rise by 42.4%.

For those looking for an investment alternative related to the growth in online video, this new motif may be worth a look.

1Mallory Russell, “Advertisers Aren’t Spending Too Much On Online Video, They’re Investing In Growth,” Visible Measures blog, Sept. 16, 2013, http://www.visiblemeasures.com/2013/09/16/advertisers-arent-spending-too-much-on-online-video-theyre-investing-in-growth/, (accessed Feb. 19, 2014).