Disney/ABC - Veoh Syndication Deal Provides More Clues About Market's Future

June 23, 2008
By Will Richmond

More evidence this morning of the Syndicated Video Economy playing out, as Disney is announcing it will distribute both ABC and ESPN programming to Veoh, the broadband video aggregator. This follows ESPN's first and recent syndication deal with AOL.

Last week in "Disney/ABC's Cheng is Confident About Broadband Video Advertising," I explained how Disney places a huge emphasis on its video player, so that it can present a consistent user experience and also control advertising. The Veoh deal is aligned with that thinking. Veoh users are exposed to Disney programming, but once they want to view, the Disney video player launches.

In fact it's interesting, if you compare what's been implemented so far at Veoh vs. how ABC shows come up at Hulu (an aggregator that Disney does not have a deal with), there's not that much difference. Recall that Hulu is just taking a feed of Disney's program-related metadata, but again, if you actually want to view, you'll launch the Disney video player.

I'm guessing the major difference here, and why some money changes hands with Veoh, but not Hulu, is that Veoh must be making some kind of commitment to promote Disney programs. Though you never want to judge a deal by how it's implemented on day 1, for now Disney doesn't seem to getting much visibility. I noticed a Jimmy Kimmel thumbnail rotate through the Veoh home page, but when I drilled down through the "TV Shows" and "Channel" tabs, I didn't see any extra promotion of ABC programs. In fact the only ABC program even listed in Veoh's generic alphabetized directory was "Ugly Betty." I found a few full-length episodes when I drilled down through an "ABC" link I found with the Kimmel video, but couldn't find that link anywhere else.

All of this is a reminder that there's a very interesting minuet going on between established networks looking to broaden their online reach and the big video aggregators that have grown dramatically and raised lots of money, but are still unprofitable. The Disney-Veoh deal shows that aggregators may be willing to agree to networks' desires for online control in exchange for the potential to generate high-margin promotion-based revenue (remember they're not hosting or delivering the Disney video, so for Veoh in this case there's very little expense involved) and incremental on-page ad revenue. Of course too many of these kinds of implementations and the aggregator's user experience will look quite inconsistent.

No doubt there will be many more network-aggregator deals yet to be done, demonstrating how this market will eventually shape up.

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