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Internet video market evolves – YouTube and Netflix diversify

by Scott Bicheno on 16 March 2011, 10:29

Tags: YouTube (NASDAQ:GOOG), Netflix

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A couple of recent stories have given an indication of the growing power of the Internet video market. Google has announced that its YouTube division is acquiring Irish video processing company Green Parrot Pictures, while US Internet video on demand giant Netflix is reportedly investing in producing its own video content.

Green Parrot specialises in video optimisation - both the quality and file size. YouTube announced the acquisition in a blog post, but remained pretty vague about what it was going to do with the company and technology, apart from "working with them to make the videos you upload every minute of every day to our site look even better."

Our assumption is that Green Parrot will become a tool built into the video upload interface, which provides instant optimisation to uploaded video. What we sincerely hope is that it will be opt-in, rather than automatic, as in many cases the colours, nuances and flaws of uploaded videos are intrinsic to their nature.

Meanwhile Deadline Hollywood reports that Netflix entered and won a bidding war for the rights to UK political drama House of Cards, beating the likes of HBO in the process. As is so often the case, the WSJ wrote a subsequent report, citing its own sources. The story added little extra substance.

Assume Netflix is moving in this direction, comparisons with HBO are inevitable. HBO started life as a premium video content provider, but it eventually moved into producing its own, such as: The Sopranos, Sex and the City and Six Feet Under. When a distributor invests in original programming, a lot of the risk is taken out of the investment as distribution is guaranteed, so it's easy to see when the likes of HBO and Netflix would want to expand in this direction.

While Internet TV is still in its infancy, with the likes of Apple, Microsoft and Google still struggling to bring the net into the living room, these two developments indicate the stakes are rising in this market. The likes of YouTube and Netflix will be keen to bolster their strong market positions as the market evolves and diversifies.


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