• by Joe Mandese  @mp_joemandese, September 27, 2007

Several important new insights into the way people are using video online, revealed publicly for the first time Tuesday during a session of the Carat Digital Exchange in New York, suggest that some fundamental changes are taking place in the way people watch television. One of the insights also portends significant implications for the way people search and find recommendations for things online that may go well beyond video content.

The findings, which were the results of separate studies conducted by NBC Universal's Digital Insights and Innovations team, and by online video service Veoh, show that online video access has already had a profound impact on the way people watch television.

The NBCU research focused on the past three quarters of usage of "NBC Rewind," which is the ability to watch regular NBC TV shows online via NBC.com. When the NBCU team began tracking usage in the fourth quarter of 2006, "NBC Rewind" was attracting an average of 5 million unique users. By May 2007, it had grown to 10 million uniques, and 35 million individual streams of NBC TV show segments. NBC typically divides each prime-time episode into six individual programming segments with one commercial per stream.

The presentation focused on how people are watching "Heroes" online, a show that has become something of a poster child for nonlinear, multiplatform viewing.

"It's our biggest show online," confirmed NBCU Associate Director-Digital Insights Stephanie Fried.

She said that 48% of users who went online to view a stream of an NBC Rewind watched at least one segment of "Heroes." The next most popular series was "Black Donnellys," which was viewed online by 25% of the users.

Importantly, Fried said NBCU's research showed that 35% of the users went online to "sample" "Heroes" for the first time, and that 96% of them continued watching the series both online and over conventional TV.

"This is all incremental for us," she declared.

The data reinforces NBCU's "360 degree" pitch to Madison Avenue, which markets TV shows like "Heroes" across multiple platforms in order to accumulate broader reach and different levels of engagement with television viewers. To that end, Fried showed research indicating high levels of ad recall and favorable brand metrics among NBC Rewind's online users, who also tend to engage with other content offered online, such as graphic novels and message boards related to "Heroes."

"For an advertiser to buy 'Heroes' 360 degrees gives them more value than just buying the show," she said.

Among the other interesting patterns revealed by the NBCU team was a "slight bump" in online viewing of NBC Rewind shows during lunchtime on workdays, suggesting that online might be generating a new form of midday prime-time. However, Fried noted that the heaviest usage continues to take place at nighttime, alongside conventional TV prime-time viewing.

Veoh Vice President-Strategy and Business Development Francis Costello also presented the results of a unique study that was jointly conceived by the Carat Digital team. The study examined the impact of recommendation engines that utilize computer technology to make personalized recommendations on video programming to users based on their past behavior.

The experiment replaced 10% of users' personalized recommendations with "generic editorial" recommendations, and found they did not produce nearly as high yields in click-through rates.

During the test of 2 million users, Veoh found a click-through rate of only 2.4% for personalized recommendations versus 0.3% for the generic editorial features.

In a second revelation that has implications for the overall search marketplace, Veoh looked at how people use personalized recommendation engines versus utilizing keyword search to find programming.

The recommendation engines generated a response of 29.6% versus 22.3% for keyword search.

"We found this interesting and maybe a little bit surprising," Costello said of the recommendation engine's 30% bump over keyword search.

"What's the impact on presenting advertising? This probably raises more questions than it answers," he said, suggesting it could have huge implications for serving ads and selecting creative messages.