Two years ago, former Googlers Jason Liebman, Daniel Blackman and Sanjay Raman launched Howcast, a site filled with originally-produced how-to videos on everything from “How to Ice Skate” to “How To Deal With a Mean Boss.” Today, Howcast is streaming 25 million videos a month across its network, which includes its own site, popular channels on YouTube and Hulu, and an iPhone app (iTunes link) which has been downloaded more than one million times. A year ago, the startup was streaming about 10 million videos a month.
To put this in perspective, YouTube streams more than 12 billion videos a month and the next nine video properties on the Web all stream north of 200 million videos a month. But Howcast’s growth is still very respectable for a niche video site. The niche Howcast is going after, however is a very broad one. Informational videos can be applied to practically any topic, are always in demand, and are search-engine friendly. Its YouTube channel alone is in the top 100 channels, with close to 100 million cumulative views so far and 111,000 subscribers.
Now that Howcast’s videos are gaining traction, CEO Jason Liebman is focusing more on monetization. “We’re on track to be profitable by the end of the year,” he tells me, although he won’t go into specific numbers on either profits or revenues. He just hired his first head of sales to sell ads directly. Howcast makes money two ways. It places clickable overlay ads on its videos from ad networks such as Google and ScanScout. Selling ads directly should increase its CPMs.
The other way Howcast makes money is from so-called “branded entertainment.” These are how-to videos for hire: advertorials, product demos, customer support videos, social branding. Companies such as AT&T, Kodak, JetBlue, Twitter, and Boxee pay Howcast a fee to create these videos and then pay on top of that for each view. Some examples of these sponsored videos include “How To Get Started With Boxee” (embedded below), “How To Use Twitter,” and “How To Use Your Cell Phone as A Wingman” (AT&T). These aren’t ads per se, they are more instructional videos on how to use a product or attempts at social branding.
Not only does Howcast produce the videos, it also distributes them through its site, and various other channels. Branded entertainment pays well. Although it account for only about 10 percent of the videos Howcast produces each month, it currently makes up a majority of Howcast’s revenues (that could shift back towards more traditional ads as total views and direct ad sales ramp up).
Howcast produces all of its own videos through a network of freelance filmmakers. It provides them with the scripts, voiceovers, and graphics to streamline production. Using this method, Howcat is able to crank out about 1,000 how-to videos a month. It typically pays filmmakers about $50 for a 2 or 3 minute video. Like Demand Media, it uses all sort of data—from search trends to video views to editorial calendars—to figure out what topics to assign. Although Demand Media does it at a much larger scale. AOL, with its recent $36.5 million purchase of StudioNow, is also ramping up its online video efforts.
Howcast still has a ways to go before it proves its model, but two years after launch, with 35 employees, it’s starting to hum. Just looking at Howcast.com alone, comScore Videometrix estimates the site is doing 1 million video stream a month (see table below), compared to 1.7 million for HowStuffWorks and 422,000 for eHow (which is owned by Demand Media, but isn’t primarily a video site). These numbers are not comparable to the 25 million above, which come directly from Howcast. Leibman says traffic to the site is doubling every quarter.
|comScore Video Metrix – Nov-09||Total Unique Viewers (000)||Videos (000)||Videos per Viewer||Minutes per Viewer|
|Total Internet : Total Audience||170,647||30,986,670||181.6||734.5|