Is the short-form bubble bursting?

When Vivendi launched Studio+ in April 2016, the prospects looked good. With a brief to produce 5 to 10 minute-long content for mobile devices which would be viewed using a dedicated app, a raft of 25 original series, and bullish plans to launch in 20 European and Latin American territories in six languages in the first year alone, it was an operation that was making all the right noises and seemed to be catching the zeitgeist.

However, two years on it is being closed down after reportedly only managing to garner 2567 subscribers in its native France and losing Vivendi an impressive €48m.

That figure, of course, pales into insignificance compared to the money that Verizon lost on its own mobile video bet, Go90, which also announced its closure in the past few weeks. At the conservative end of the scale, it’s rumoured that $300m followed it down the tubes, with wilder speculation that up to $1bn could have been wagered on the platform in its short life.

“In terms of short-form content buyers, almost everyone we saw two years ago is gone from the market,” said Eric Korsh, President of Mashable Studios in a DigiDay piece rather tellingly titled ‘Pivot to nowhere’. “Red Bull, Comcast, Verizon and others are either going back to their roots or reimagining their role in short-form video — which currently amounts to the same thing.”

The problem for all these services — and the list of failed enterprises in the SVOD and/or short form space includes Seeso, Fullscreen, Watchable and is growing all the time — lies in effective monetisation.

Having identified a change in viewing habits among Millennials that has seen an explosion in the audience for short-form video on free platforms such as YouTube, the hope was that the audiences would follow when asked to pay. Studio+ set its monthly subscription initially at €4.99, and subsequently dropped it to €2.99, but even this seems to have been deemed too expensive by the market.

“The problem for all these short form services lies in effective monetisation.”

Even YouTube itself has struggled with monetisation via subscriber numbers alone. Figures for YouTube Premium (nee YouTube Red) aren’t habitually made public knowledge, but last time anyone looked, at the back end of 2016, the $10 a month service had 1.5 million subscribers with a further one million on a free trial: substantially better than Studio+ but weak when looked at in the context of the general background level of social media viewing and the company’s 1.5bn + monthly active users.

YouTube is, of course, its own worst competition. Survey data suggests that 8% of YouTubers in the US at least would be willing to pay $10 a month for the service, rising to 15% at the $5 pricepoint, and a massive 73% at $5 and under. Few are as inclined to do that when the majority of its content remains free.

There are other problems for the monetisation of short form too, namely the weakness of established brands in the market and the role of Influencers.

Tubular Labs’ recent The State of Online Video report suggests that in Q1 2018 YouTube creators with over 10m views amassed 1.7bn video views.

What is interesting is how those are subdivided, with influencers accounting for 84% of them and media companies trailing a long way behind with 13%. And while YouTube put a lot of effort in deploying a range of key influencers behind its YouTube Premium paywall, the jury has to still be out on how successful that has been so far.

Which leads us to a further complication for the short-form SVOD services too: paywalls. In many ways this is a rehash of the same arguments that have dogged the broadcast industry since the advent of pay-TV.

One of the attractions of short-form content to date has been the ability to share and comment on it via the usual social media channels.

In an era of increasingly siloed content, short-form video retained that essential universality aspect of ‘water cooler’ viewing, even if that water cooler was in a virtual space. It is looking increasingly like this shared experience has been an integral aspect of its appeal and a key way of driving user numbers in particular, especially amongst the younger section of its demographic with lower purchasing power

Facebook, given its stated intent to take viewers away from YouTube and ambitions to become a media platform in itself, remains a big consumer of short-form video.

Here, the Influencers are less dominant, taking only 56% of video views while media companies account for 40%, but the social media giant’s at times quixotic nature has made dealing with it difficult.

“At the conservative end of the scale, it’s rumoured that $300m followed Studio+ down the tubes.”

Its deals with the publishing industry led publishers first to welcome it and then curse it when it has changed the focus of its news feed to deprioritise brands and publisher content, and a similar fate seems to be befalling its Watch service. While still limited to the US, this is reportedly looking to pivot towards longer form content that can better support more mid-roll, and even the still-experimental pre-roll, advertising.

There is hope that this a short term correction in an over-heated market. One of Hollywood’s leading players, Jeffrey Katzenberg, has reputedly raised more than $800 million from the likes of Warner Bros. and 21st Century Fox for his new short-form start-up NewTV. And Amazon, Netflix and Hulu are all experimenting with show formats and shrinking lengths, with the approximately $10,000 - $20,000 per minute costs of high-end short-form video a tempting proposition when your war chests is measured up in the billions.

10 minute episodes are typically sold in blocks of 10, and, as the Hollywood Reporter points out, while $1 - $2 million for just over an hour and a half of programming might be a lot for the digital ad market to support, for the FAANG grouping it is well within reach.

Elsewhere, however, the picture remains less rosy. Buzzfeed has missed earnings targets and laid off staff, Mashable sold at the end of 2017 for 20% of its value in 2016, and Digiday has just published a survey saying that only 24% of publishers remain optimistic about the market for short-term video. If there is a correction underway, it might be a harsh one.