Market Insight

Yahoo drops Yahoo Screen

January 08, 2016  | Subscribers Only

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Yahoo has shut down its video hub Yahoo Screen after just over two years in service. Its video platform was launched in 2013 with 1,000 hours of content, and later added original content in 2014. It hosted Emmy-nominated Burning Love, Saturday Night Live, and former NBC comedy Community. Video content from Yahoo and their partners is now moved to their Digital Magazine properties.  

Our analysis

Yahoo Screen could not compete with other online players: The recent closure of Yahoo Screen is the latest sign of troubles from the Marrisa Mayer-led Yahoo. For the last two years the company has tried to convince Wall Street that a solid video strategy holds the key to Yahoo’s turnaround and long-term growth. The video portal was redesigned to make it more accessible to mobile users in an attempt to compete with YouTube, Netflix, and Amazon Prime. However, the video hub was unable to attract viewers and failed to effectively monetise its video content at scale. Its viewers dropped from 20 million to 15 million between March 2015 and November 2015 and this number is dwarfed by YouTube’s billion monthly unique visitors and Netflix’s 70 million subscribers.

Yahoo’s digital magazines properties will not be able to provide the same user experience that video streaming networks provide: Following the shutdown of Yahoo Screen, viewers will still be able to access Yahoo’s video content, but they will be redirected to its Digital Magazines properties, where videos will scatter all over the website according to its themed topics. For instance Community will now be sitting in the TV section and streaming music concerts will be housed in the music section. While a Yahoo representative said the move would allow viewers to ‘discover complementary content in one place’, the process of finding a video will be far more difficult. If viewers decide to search for videos on the Yahoo search engine, it will generate results that bring viewers to other streaming sites other than its own. IHS expects this to further diminish consumption of videos on Yahoo sites as online video streaming networks are much more popular than digital magazines.  

Shrinking video and refocusing strategy: Yahoo has been gearing up its video efforts and making it as a major part of its turnaround strategy. Apart from centralising all of its video content on one platform, Yahoo has hired Katie Couric as Yahoo global news anchor to conduct interviews with newsmakers and appointed Chief Marketing Officer Kathy Savitt to lead the media team. But the personnel arrangements have not been able to generate substantial revenue. Yahoo reported a $42 million loss from its video division in Q3 2015. Video consumption has been on a massive rise in the US, but Yahoo has not been able to benefit from the video boom. Thus, Yahoo is playing down its video commitment and restructuring its video service in order to focus on more profitable areas, such as its digital properties, Yahoo Sports, Finances, and Mail. In terms of content, Yahoo will move towards producing shorter and cheaper video clips.

This goes against grain of the rest of the industry. IHS predicts that video advertising will boom in 2016 account for a quarter of all display advertising. The growth will come from three industry players:

  1. Tech companies are hoping to attract TV brand dollars by investing in video properties and expanding their video ad offering (Facebook, YouTube, Twitter).
  2. Broadcasters are acquiring (e.g. RTL acquiring SpotX and Clypd, ProSieben acquiring Virtual Minds), investing in (Sky with Sky AdSmart) and partnering (MTG with Krux, Channel4 with Freewheel) with advertising technology companies to improve and expand their video advertising revenue.
  3. Legacy print publishers hope video will be their salvation in a competitive online advertising landscape by launching original video series (e.g. The Guardian, The Telegraph, Axel Springer, Le Figaro).


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