Why bite-sized video revenue will trail TV in 2015

The string of Xiaomi and Samsung phone launches announced last week are consistent with the trend towards increasing adoption of mobile devices and higher volumes of smartphone purchases predicted by Deloitte’s Technology, Media & Telecommunications (TMT) Predictions report for 2015.

According to the report, one billion smartphones will be purchased as upgrades this year, predicted to generate US$300 billion in sales revenue.

This could exacerbate the dilemma faced by marketers about whether to place ads on TV, which broadcasts long-form video content, or mobile-friendly digital video platforms where short-form videos are the staple.

In 2015, the total time spent watching short-form videos under 20 minutes will make up less than 3% of all videos watched on all screens.

However, short-form video can garner a high number of views compared to long-form videos.

For example, the latest season of Big Bang Theory attracted an average of 17.5 million viewers per 30-minute episode.   Meanwhile, the most-watched video on YouTube, Gangnam Style by PSY, garnered over two billion views since it was released in 2012.

One reason may be that long-form requires a longer term commitment such as a month, whereas for short-form viewers, the marginal cost of viewing a video is a click.

Ad and subscription revenue seems to depend more on the number of viewers, a measurement typically used for TV, compared to the number of views, the measurement for short-form videos.

The report predicts that short-form video revenues will amount to around US$5 billion, mostly coming from ads, whereas long-form TV will generate over US$400 billion, out of which US$210 billion will come from ads and almost US$200 billion from paid subscriptions.

Users watching short-form video may be less tolerant of ads because of the short duration of the video content itself.

“The brief length of a short-form view is a factor in the challenge in monetizing directly the format: a viewer may only tolerate watching a single, brief video ad prior to watching a 2-minute clip,” the report said.

In contrast, TV is currently scheduled and left on for hours and people tend to be more tolerant of watching multiple ads after 15 to 20 minutes of programming.

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