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Broader Implications: Yahoo Acquires Rights to S.N.L. Archive

Broader Implications: Yahoo Acquires Rights to S.N.L. Archive

In today's print edition of the New York Times, media reporter Brian Stelter reports on Yahoo's recent announcement that it has acquired the exclusive rights to the "Saturday Night Live" archive (clips from 1975-2012) from Broadway Video, S.N.L creator Lorne Michaels' production and management company. Stelter's article implies that this deal is a "given" of sorts in today's consumption climate; more and more frequently, online video content is being seen as an exciting revenue opportunity.

In our view, Yahoo's deal is indicative of an even broader sea change in perceptions of online television and its place in digital media business strategy. For instance, through content distribution deals such as this, content creators (owners) have an opportunity to drive quick revenues through strategic business deals centering on highly sought-after content. Additionally, online media companies that do not currently boast TV or creative entertainment as a core competency are purchasing material to boost their content portfolio to take advantage of the surge in online and mobile video advertising. Consider the fact that U.S. online advertising reached an industry record of $36.6 billion in 2012 according to the IAB, while video advertising revenues were $2.3 billion--not an insignificant percentage of the total. And, eMarketer predicts that mobile video will account for 12.6 percent of all digital video ad spending this year, or $520 million. It's clear why digital media behemoths, a la Yahoo, are ready to "follow the money" in video.

It is also interesting to consider content valuation. For instance, it appears that Broadway Video found it more lucrative to enter into an exclusive arrangement with Yahoo instead of maintaining a multi-party deal with NBC and Hulu. For content owners, rather than trying to spread their content all over the Internet, it may make more sense to focus on distribution through just a few (or one) highly valued partners.

In turn, the potential for success for digital media companies in these content acquisition and distribution deals is actually twofold: taking advantage of video advertising is great, but for digital media companies, driving a new audience to their online property who wouldn't be there otherwise is only ever a good thing. The key is drawing them in with the other content available, driving overall traffic and thus boosting general online ad dollars.

In the case of Yahoo (even Netflix), online programming could--or already has--breathe deeply needed new life into the business; these online TV offerings are only an option, though, due to rapid enhancements in online video delivery over the last several years. It is only because high-quality streaming is accessible on any platform and device that the audience for this material exists. In essence, it could be argued that online video technology advancements have influenced consumer behavior and expectations to such a degree that they have created substantial new revenue opportunities for existing digital media brands.