YouTube (YT) held its first Brandcast in the UK in October, as well as in France and Germany, after staging similar events in the US. Google’s ambition is to compete more directly for brand and TV advertising in these core markets

At this year’s Brandcasts, YT highlighted its position as a complement to TV content and advertising, emphasising unique advertising opportunities for brands to engage with viewers through sponsored YT native and dedicated brand channels, in line with its new ‘brand partner programme’

In direct comparison to TV, online video advertising and viewing remains small. We project UK online video advertising to reach £305 million for FY2013f, representing 8% of TV ad revenue. As the dominant players, Google/YT are well positioned to grow display revenue by securing a large share of brand advertising moving online

Multichannel Networks (MCNs) operating on YouTube (YT) have seen a surge of interest from financial and strategic investors over the last year, mirroring their rapid growth on the platform and popularity among YT’s core demographic of 13-35 year olds.

As an extension of YT’s partner programme, MCNs provide production, traffic, monetisation and rights management services to content creators and brands, thus closing a gap in YT’s ecosystem by offering trusted environments with higher quality and monetisation standards.

MCNs are a key element in the professionalisation of YT and hence attractive vehicles for third parties to gain exposure to YT’s reach and potential. Looking ahead, for YT to continue its evolution and reach new levels of monetisation and content quality, structural and control issues need to be addressed that currently cap the upside.

Enders Analysis co-hosted its annual conference, in conjunction with BNP Paribas and Deloitte, in London on 15 January 2013. The event featured talks by 14 of the most influential figures in media and telecoms, and was chaired by Sir Peter Bazalgette. This report provides edited transcripts of the talks given by nine of those speakers: Sir Martin Sorrell, CEO, WPP Tim Davie, Acting Director General, BBC Dan Cobley, Managing Director, Google UK & Ireland Michael Tobin, CEO, Telecity Group Liv Garfield, CEO, Openreach Dido Harding, CEO, TalkTalk Group Victor Zhang, CEO, Huawei UK & Ireland Cindy Rose, Executive Director of Digital Entertainment, Virgin Media Q&A: Dido Harding, Victor Zhang and Cindy Rose Ed Richards, CEO, Ofcom

YouTube continues to evolve away from user-generated content with the expansion of its native Original Channels initiative in the US, Europe and Japan

Professional and semi-professional content is key to increasing YouTube’s sellable video inventory, raising advertising yield and attracting brand advertisers

Whilst YouTube is the leading global distribution platform for professional short-form video, it poses little immediate threat to TV viewing or revenues

Nearly a year after rolling out Google TV in the US, Google has confirmed plans to launch its ‘smart TV’ operating platform in Europe and the UK by early 2012

To date, Google TV in the US has been a disappointment, with little broadcaster support and, until recently, expensive devices, resulting in low adoption

The content issue is likely to dog Google TV, both here and in other European markets; access to key broadcaster TV and video programming will be a major challenge

Google has confirmed the first content partners for the US version of Google TV – including Turner, HBO and Netflix – which is expected to launch within the next 2 weeks

No new distribution partners have been announced and rumoured pricing for enabled Sony TV sets suggests that Google TV will initially be a premium product

At present, Google TV’s main selling point appears to be providing a decent web surfing experience to the TV set – in our view, better content is needed if it is to compete with Apple TV and other internet TV devices

Launching in the US this autumn, with international rollout due in 2011, Google TV uses enhanced versions of the Android mobile OS and Chrome browser to deliver full access to the internet via ‘Smart TV’ sets and devices

Google TV extends the company’s vision of the open internet to the living room, beyond the PC and mobile, where internet-enabled TV sets will take increasing share, raising search revenues, with potential to take a piece of the $150 billion global TV ad market

Pay TV platform operators’ are unlikely to embrace Google TV to avoid cannibalising their own business models, limiting adoption to free-to-air TV homes, at least initially, and direct revenues are likely to be slow to develop

Hulu’s postponed UK launch, and the inability of SeeSaw and MSN to get carriage deals with the BBC and ITV, underscore the difficulty for internet TV aggregators of acquiring mainstream content

In-stream video advertising is nascent – we estimate it was worth just over 1% of UK TV ad spend last year – giving major channel operators/rights holders little incentive to syndicate their programming to online services

The future for ad-funded internet aggregators continues to look highly challenging, aside from YouTube, due to its audience scale and Google’s deep pockets

Investment in YouTube multi-channel networks (MCNs) has accelerated this year and now exceeds $1.65 billion, triple the aggregate value invested to 2013. This step-up is being driven primarily by traditional media companies

Due to the growth of the overall online video sector, we expect to see continued demand for MCNs, as further opportunities for vertical, geographical and functional consolidation exist

While acquisition prices of close to $1 billion (incl. earn-outs) are high, valuation comparables seem relatively consistent and modest in comparison to other media/tech deals. Further, we see MCN investments as part of a wider shift as media companies extend their core business to digital

YouTube remains the dominant online video site globally, although competition for the viewer is growing from OTT video and other popular apps. Reach and consumption appear to be slowing in the US and the UK, but YouTube reports strong growth in global watch time as smartphone adoption proceeds

The number and variety of MCNs on YouTube continues to grow. Music video MCN Vevo has so far been the largest single presence on YouTube, but it is being overtaken by the combined Disney/Maker Studios MCN

In contrast to the aggregator MCNs with tens of thousands of channels, studio MCNs have much smaller network sizes and a higher share of owned channels. Their focus on content curation and creation has allowed some to build global audiences of repeat viewers, a unique strength and of significant appeal for advertisers