Wednesday, November 14, 2007

Ooyala Backlot: Video Monetization Truman Show Style

In the hit movie The Truman Show, the 24-hour, commercial-free television show that chronicled the lead character's life (Jim Carrey, unknown to him) was monetized in a clever way: everything you saw in the show was available for purchase via a companion catalog. Or in other words, product placement.

Yesterday, our friend Ryan Stewart posted about the soft launch of San Francisco-based Ooyala's new video management, delivery, and advertising system, Backlot.

Founded by a pair of ex-Googlers, Ooyala Backlot is a sophisticated content delivery tool built on the Adobe Flex platform. It allows content creators to publish HD quality video, control syndication by specifying which domains can embed the video, and gather detailed analytics on who is playing videos. The reports give some very useful information for content producers, such as how often videos were viewed, at what point people stopped watching, how many people watched more than once, etc.

Image from ZDNet.

Ooyala uses something they called "connection sensing" that allows them to scale the bitrate of the video up or down depending on what a user's connection can handle. Their Flash player is very slick, and has some nice features, such as the ability to flip through chapters in videos with an iTunes CoverFlow-like effect.

But perhaps the most compelling piece of Ooyala is the piece that hasn't yet launched: their video advertising network. According to Stewart, the network will be based around some sort of product placement. "The basic premise is to give people HD-quality interactive video with advertising hooks," he wrote. "Watching a show about fashion and want to buy something you see? Ooyala allows you to grab that item and purchase it from an advertiser. Watching something about Tahiti and decide you want to go? With Ooyala, advertisers could give you subtle touch points that get you started creating your dream vacation."

To me, that sounds a lot like what was presented in The Truman Show and is a very creative way to monetize web videos without causing the advertising to get in the way of the content. Product placement has long been a major revenue stream for Hollywood (there's a reason they drink Coke in some movies and Pepsi in others), and as I understand it, Ooyala will allow web content producers to sell product placement to advertisers that takes the concept to a new level by letting viewers interact with those products while they're still watching the video.

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