Metrics & Measurement

Hyperconnectivity.  If you’re a back-to-nature type purist, it’s a bad thing, but if you’re a networking equipment maker like Nortel or Cisco, it’s not merely a good thing, but the type of thing so great it forms the very basis of your business strategy.  In the always on, always sharing, always moving world of hyperconnectivity, the network, of course, provides the landscape on which this grand human drama takes place.  And according to Cisco’s Visual Networking Index Forecast for 2009, there’s gold to be found in them there hills, especially video.

First, let’s check the traffic report.  Cisco predicts that four years from now, annual global IP traffic will exceed two-thirds of a zettabyte, or 667 exabytes.  To put that number into perspective, consider this:  according to IDC, in 2006, just three short years ago, the total amount of digital data in existence was 161 exabytes.  If Cisco’s predictions hold true, in just seven short years, therefore—the time it takes to get to middle school—not only will the amount of digitized data in existence increase by a factor of four, it’ll move around comfortably enough on a network large enough not only to hold it all, but move it efficiently.  In fact, it’ll exist on an internet that Cisco predicts will be four times as big as it is today, with the equivalent of 10 billion DVDs crossing it each month.

The prime mover beyond this explosive growth in data and networking infrastructure is, and will continue to be, video.  According to Cisco, currently internet video constitutes one third of all consumer internet traffic, not including video shared on P2P networks.  By 2013, however, the sum of all forms of video, which include TV, video on demand, internet, and P2P video, will account for over 91% of all consumer internet traffic.  Approximately 8% of consumer internet traffic in 2013, predicts Cisco, will be ambient video, which is to video what trip-hop is to music:  easy to ignore as it is to notice.

In the mobile space, Cisco’s predictions for video-driven hyperconnectivity are even more rosy.  Cisco predicts mobile data traffic will double every year through 2013, with traffic growing at a CAGR of 131% between now and 2013, reaching over 2 exabytes per month by 2013.  In 2013, Cisco thinks 64% of the world’s mobile data traffic will be video, driven by smart phones, laptops, net books, and other mobile computing devices.  According to Cisco, a single high-end smart phone generates more data than 30 basic-feature cell phones, and a laptop aircard generates more data traffic than 450 basic-feature cell phones.

What does all this data mean?  For Cisco, it means that their best days might be still ahead of them, although to be honest, their data may be a bit skewed by overly-optimistic predictions and wishful thinking.  Nevertheless, if Cisco’s figures are over-stated but generally accurate, it means that boom times lay ahead for purveyors of all video images made digital.  Clearly, it doesn’t take a soothsayer to predict that mobile computing in the form of smaller, more ubiquitous devices, like smart phones, net books, and better laptops, will fundamentally change the nature by which we share digital information—we’ll be able to do it wherever there exists a network, which with today’s wireless technologies, seems just about everywhere.  And it doesn’t take a RAND analyst to guess that with more robust networks, we’ll be sharing with each other larger and larger chunks of data.  Tie those predictions together, add in the notion that the mobile devices themselves are getting better and better—technologically speaking—and there you have it:  digital video, shared at the speed of light on a network that knows, more or less, no physical boundaries, will play a major role, if not the major role, in the way we communicate in the not-too-distant future.

Yet with all that data flowing back and forth, who stands to gain financially?  Hardware purveyors like Cisco, of course, but what about content producers, content hosts, or content sellers?  This part gets a bit tricky, for according to Ad Age, despite all the buzz over big-time studio content from pro producers finding a home on the web, long-form content is not finding itself very popular on YouTube, the web’s number one destination for digital video content.  On YouTube, it’s all about “midtail content,” a niche somewhere between studio-produced and user-generated content.  According to Ad Age, midtail content will play a big part in YouTube’s future for three reasons: it supplies the biggest pool of brand-safe ad impressions, it provides fertile ground for YouTube’s advertising overlays and banners, and it gives malleable content for brand integrations that YouTube can peddle to advertisers.

According to Ad Age, citing numbers from TubeMogul, in the past six months, the top hundred midtail producers collectively have generated more than 2 billion views on YouTube.  You Tube’s biggest TV partner to date, CBS, has only 6.9 million views this year.  Why?  According to TubeMogul CEO Brett Wilson, as quoted by Ad Age, YouTube’s midtail content is more “snack-size . . . you’re watching at work when you have less time.  As audiences grow, this will be more profitable for YouTube than selling ESPN’s content.”

Thus, the future of digital information exchange seems to point in the direction of short, semi-professionally produced bits of video which capture an audience’s attention and provide a neat little platform for advertising dollars.  As always, the ones who stand to gain from this arrangement the most are the producers who can put bodies in the seats—or in modern terms, eyeballs on the screen.  Seems that Moe Horwitz, Larry Feinberg, Samuel Horwitz, and Jerome Horwitz were all born at least three generations too early.

By Robert Pothier