Yahoo!'s New Video Strategy Sounds Muddled

New day, new video strategy for an old, new media company. According to Mike Folgner, Yahoo’s (YHOO) general manager for video, the world’s largest portal wants to essentially create a big video portal by aggregating, under one roof, “music videos, movie trailers, television shows and sports highlights”.

A few comments and observations:

- On the surface, Yahoo! is set to embark on the very same strategy that made Google (GOOG) Video ultimately fail (compared to its sheer dominance in search, a Top 10 video property is hardly a failure, of course), forcing Mountain View to buy YouTube in an unprecedented $1.65B acquisition. I’m not the only person to point this out, by the way, Om Malik does too.

- But, I disagree with Om on two points. #1 is when he says that destinations don’t work, hmm… Yahoo! is the world’s largest destination, funnelling some traffic to videos is pretty simple for them. #2 is Google was a technology company who could not really editorialize content, Yahoo! is masters of taking content, aggregating it and making it into a nice package, or allowing its users to do it. I’ve been on MyYahoo every day since getting online. If Yahoo! allowed a MyYahooVideo it would be pretty solid. In fact, WatchMojo.com’s new CMS will allow just that… for people to use their own channels with our proprietary content. But enough shameless promo for now.

- One more point on the myth of destinations: sure, grabbing video codes and embedding them or sharing them on file sharing works for some, but for Yahoo!, a destination with good video programming is overdue.

The problem is, once people get there, then what?

- A few years ago, movie trailers could pass off as premium content, heck, iFilm built its business on it. But today, users are more savvy and there’s enough pirated “good stuff” on sites like YouTube et al. that users see movie trailers for what they are: ads.

- Moreover, they can see those trailers without pre-roll ads on sites like YouTube, so seeing them with ads on Yahoo! will fail.

- Google is public enemy to content holders in old media, so if I were Yahoo!, I’d borrow from their text content strategy of the late 1990s and license all pieces of old media content. That is, of course, what Joost has done (disclaimer: another distribution partner of WatchMojo.com).

This has become harder and harder though. Quincy Smith has led CBS (CBS) to "open-source” selected CBS video content on selective sites… so it’s not like Yahoo! could get much content exclusive. And, of course, let’s not forget News Corp. (NWS) and NBC (GE) who have declared jihad on YouTube with NewSite/NewCo. But, old media’s bravado aside, they’re not crazy: You will never see the lion’s share of old media’s libraries online.

That’s why, my gut says that before long, old media companies like Viacom (VIA), CBS, NBC, ABC (DIS), FOX will start buying up companies that create made-for-web, professional, ad-friendly, evergreen content. That allows them to keep the good stuff offline but have an online video strategy, too, that involves more than mere “movie trailers and outtakes” which before long get, well, too commercial-ish. Of course, the optimal thing to do is to invest and not acquire companies, see the math here">here.

Since old media’s content is going to be hard to unlock and move online, then Yahoo! needs to get the best stuff from made-for-web producers, yes, like WatchMojo.com. Frankly, while Yahoo! is part of WatchMojo.com’s Original Video Syndication Network, they have been slow to act, react and it’s their loss… because more of our content is on Yahoo!’s competitor sites and ultimately, users care about content, not platform, and not the URL.

- Another thing that is odd about this news: a couple of years after buying Flickr and failing to tweak it to allow video sharing and include Del.icio.us tagging (which, had they done, would have been YouTube, by the way), Yahoo’s Flickr photo-sharing site will also be adding video, he said. That’s just odd, I think, because it creates two distinct video sites, something that I thought they wanted to avoid with Flickr, after they shut down Yahoo! Photos, no?

With all due respect to Yahoo!, you do get a sense that it’s unclear what they’ll do. Immediately after that they want to bundle content under one roof, they add: “One of our strategies is to put video everywhere you are on the Internet”.

The obligatory stat from comScore:

Yahoo wants to attract more visitors to its site at a time when more than 130 million Americans are viewing online video, based on ComScore Inc.’s May figures. Of the 8.36 billion streams viewed that month, Google, which acquired YouTube last year, accounted for 22 percent, Reston, Virginia-based ComScore said. Yahoo was third at 4.6 percent, behind News Corp.’s Fox pages, which includes social-networking site MySpace.

Disclaimer: I own shares of Yahoo!, which by the way, I kinda regret not dumping after the last round of MSFT/YHOO rumors spiked them 18% in one day, only to pummel them back into the low $20s, but that, trust me, in another post, coming soon.