The future of the Internet

Commentary: Big media is not king, but video will be
LAS VEGAS -- Walt Disney CEO Bob Iger's keynote at the Consumer Electronic Show had a distinctly star-studded, theatrical quality, somewhat akin to the Oscars extravaganzas.
Like the awards ceremony, Iger's one-hour presentation, err should I say performance, was all about entertainment: promotion of the stars and the sensational productions that wow audiences around the world. He even put on a good show as host as he interviewed on stage both Evangeline Lilly and Matthew Fox, stars of ABC's "Lost." I guess it's not surprising to see this presentation from Disney.
After all, the media powerhouse does have an amazing collection of assets from movie franchises like "Pirates of the Caribbean," to television hits, such as "Lost," to sports franchise "ESPN," to its popular animated characters, like Tinker Bell. Add to that list its impressive new interactive, personalized Disney.com portal, which Iger unveiled.
Besides debuting Disney's portal strategy, Iger wanted to remind the audience at CES that content is king, because without content, what are all the electronic gadgets worth? Importantly, Iger wanted to invoke this sentiment that only deep-pocketed, qualified professionals can create such masterpieces. He even implied that audiences "trust" big media to create our entertainment.
Yet, I couldn't help but think that with hundreds of millions of people watching Google's.
YouTube these days, the audience of consumers is beginning to trust themselves more to deliver entertainment. To that end, it seems the big-budget production of today is at best, a crapshoot that could become a hit, or a big waste of money. At least with amateur content, it's not like there's much financial risk even if the stuff does flop.
Indeed, just because something looks well produced, doesn't necessarily mean it'll be a hit, or make money. The movie "Crash" was produced on $7.5 million and generated $50 million in the U.S. box-office. Compare that to the 1995 big-budget movie "Waterworld," which had a $175 million budget, but grossed just $88 million in the U.S. box office.
Clearly, it's not just big media that can produce the content people want to watch. And, with the Internet, it's even more so the case. In fact, News Corp's.
MySpace has partnered with the National Academy of Television Arts & Sciences to let amateur video makers submit their creations to a MySpace Emmy page, where it can be entered for a "Broadband Emmy." Who knows what kinds of entertaining content will come from that.
That brings me to an observation about Disney.com. The features are pretty darn cool. For instance, anyone can create his or her own Disney-themed personalized pages with modules -- instant messaging, video, multiplayer games -- that can be moved around on the page and running simultaneously. When I was a teenager, if I were a Disney fan, my option would have been to make a scrapbook of Disney characters and share it with my friends when I saw them. It's a heck of a lot more fun online. To be sure, even if I were a Disney fan, I would have had many other interests. In like vein, kids today have multiple interests and I can't imagine they'd want a closed-garden personal page with just Disney characters or shows, regardless of how fabulous they are.
So, how do my observations of Disney fit in with my view of the future of the Internet? Here are two predictions: On the Internet, a walled-garden approach, like Disney.com, will be a tough sell, and big media content won't be king (maybe queen or jack).
Open platforms and video are king on the Internet.
So, as promised in one of my columns, there are at least two of my Internet predictions for this year, and, for good measure, here are some others.
Video is king, plus other predictions
1) Video will drive online advertising. It's estimated that about 37% of all marketing dollars go toward commercials. On the Internet, about 2.6% of all advertising is spent on video advertisements. That number is expected to rise to 4% this year, according to eMarketer. Clearly, the gap will close.
2) The video business will be bigger than print online. In the offline world, the business of video is far larger than the business of print. The market -- advertising, cable subscriptions, VOD, pay-per-view, fees, etc. -- for television networks/cable and television distribution is roughly $168 billion, according to PricewaterhouseCoopers. The market -- subscriptions and advertising -- for newspapers and magazines is roughly $100 billion.
3) Wikis will be embraced. As I mentioned in my previous column, "Why media will embrace wikis," wikis take blogs and social networks one step further. Blogs helped individuals publish and express themselves. Social networks allowed those disparate bloggers to be found and connected. Wikis will let those who found one another collaborate. Ultimately, wikis are another form of expression and communication, and importantly, they provide another forum where people can hang out if they choose, driving pageviews that today's media companies cannot ignore.
4) Poor content will increasingly be consumed. It's no coincidence that YouTube is widely watched. The increased audience to YouTube underscores the declining quality of content that's being produced these days, as much as it underscores the increased access to anyone's creation -- whether it's a photo or video. Scarily, the two parallel trends create a viscous cycle of deteriorating content. As platforms to view content explode, and content is made available by anyone, the fragmented audience base will continue to force companies to lower their production costs. This, in turn, will compel the typical 1% to 2% of prolific content producers to venture out on their own, fragmenting the creators of content and causing them to speedily produce content that may or may not have been their best.
5) A new MySpace, YouTube or Google will emerge. In 1999, venture investors poured $788 million into 70 search startups. Yet at that time, we already had our winners, like Yahoo, Inktomi, and Alta Vista, right? Why did venture investors bother? Well, they bothered so that companies like Google could innovate on the search experience. Between 2002 and the third quarter of 2006, 182 Web 2.0 companies received more than $1 billion in venture funding. More than 170 search startups received more than $1 billion in venture financing. And, venture investors poured $1.4 billion into 195 video companies. MySpace started in 2003 and YouTube in 2005. So, perhaps we've already seen the stars of the class of '03 and '05. Or, maybe not. There's still a lot of innovating left to do. And, I'm not convinced the companies we know and love will be the ones to do it.