Vessel Launches ‘Web’s First Window’ into Consumer Beta

/ Jan 21, 2015


It’s a big day for Vessel – the new video startup from former Hulu CEO Jason Kilar and Richard Tom, and, well, basically the entire Hulu, Amazon, and Netflix development teams.

Amidst various rumors and speculation about the Vessel product, as well as the value it will offer to creators and the likelihood that it can conquer YouTube, today invited users can finally experience what Kilar and team have spent over a year building – a video destination Kilar believes will advance the economics for short form, premium video content by giving higher priced early access ($2.99 on Vessel) to a creator’s super-fans.

Vessel curates premium video content and grants early access to viewers for $2.99 subscription fee.

Vessel curates premium video content and grants early access to viewers for $2.99 subscription fee. Available on iOS devices to start.

It’s simple really – Vessel is not actually competing with YouTube, or any open video platform. It’s not looking to cannibalize a creator’s current programming strategy. Vessel is not looking to get in the Netflix (or Hulu) syndication, licensing, and long-form SVOD game, either, according to Kilar.

Vessel, as the product stands today, has engineered the start of what could become a very lucrative tiered revenue equation for content creators, with hopes of replicating an Old Hollywood structure that has made the Peter Gubers, Peter Chernins, Stuart Fords, and Cathy Schulmans of traditional entertainment the kings of the Hollywood Hills.

Minimum 72 hours early access. First-run distribution, at a higher premium. Subscription and advertising revenues split favorably with the creators. A page torn from the Old Hollywood playbook.

“We think Vessel can play a leading role in dramatically raising the bar for digital content. There’s lots of great storytellers but what’s a challenge is the economics for storytellers,” said Kilar about the drive behind building Vessel, adding that “early access is truly valuable.”

Kilar and team have locked in a stable of talent to window their content on Vessel including Ingrid Nilsen, Brittani Louise Taylor, Connor Franta, Nerdist Industries, Jimmy Tatro, Tanya Burr, Roman Atwood, Arden Rose, and Jack Vale, among others. MCN’s Above Average, Machinima, and Tastemade, as well as traditional media like Sports Illustrated, are also included.

Vessel feels confident it can guarantee these content creators over $50 CPMs as opposed to what Kilar calls the “free web” (an advertising support web), where creators on average make $2-3 against their video views post-split. Vessel will also provide a generous rev-share against the subscription dollars generated as well.

“At $2.99 we project that we’ll be able to pay 20 times what a creator is able to make on the ‘free web’ alone on a per view basis,” Kilar said. Vessel is offering video publishers 70% of the ad revenue and 60% of the subscription revenues, predicting that roughly 5% of a creators audience will opt in for early access to start.

To do so, Vessel has created two non-intrusive custom ad units — a 5 second pre-roll and a living magazine-ad-like that populates in-feed while a user is scrolling videos, which Vessel has coined “brand motion posters.” The company is currently using FreeWheel to power its delivery as well as a custom-built product.

Users can discover content by category as well as by artist and creator.

Users can discover content by category as well as by artist and creator.

From a product functionality standpoint, Vessel provides everything one would expect – a beautiful viewing experience within its own player, creator-specific video pages that enable advanced syndication, cataloging by categories and creators, and the basic features of any other video platform. Creators will also have enough time to gather learnings from their early access viewers and make quick edits if necessary before uploading to other platforms.

But what one must call into question is whether Vessel can truly move the needle in enabling a meaningful business around short-lead windowing, both for itself and for the creator using the platform. I’d venture to say yes, but foresee an uphill battle to capture audience as it competes with some of the other video syndicators like Facebook, Samsung’s MilkVideo, Amazon, and Verizon Wireless, who have been throwing big dollars at creators to build a diverse library of licensed content and aren’t necessarily “pay-walling” content.

Most importantly, though, Vessel, Facebook, Milk Video, and the other syndicators entering the market, whether successful this year or not, are factoring into an important evolution for video economics – driving forward the value of made-for-internet IP and extending the distribution tail.

Until now, brands or content creators have assigned value to a piece of content as a one-hit opportunity, buy or sponsor the content for “x” price, push it on YouTube, make little (or no) money back. Hollywood, on the other hand, has effectively orchestrated seven different channels of distribution revenue — theatrical release across domestic and international, paid VOD, subscription VOD, DVD, basic cable, etc. YouTube in this equation would ultimately be the last stop in the syndication run.

If the goal is to legitimize this business, the value of IP needs to climb and companies like Vessel can help drive that market forward.

“More mature aspects of the media business benefit from a mix of business models,” Brent Weinstein, head of digital at United Talent Agency, said to VideoInk. “Introducing windowing and subscriptions, in addition to some of the recent and successful direct to consumer sales efforts, is an important step in diversifying and maturing the digital content business, and giving consumers the same types of choices that they have grown accustomed to in more traditional aspects of the business.”

Vessel certainly has the makings of a company that can help the economics of the digital video business mature and could help drive the value of digital-first IP north of where it’s been. And that’s good for everyone’s video business, especially the creatives.

Tags: , , , , , , ,

  • Coxy

    No complaints here. Bring it on.

  • David S. Samuels

    Anxiously awaiting the verdict from entertainment consumers.

  • Adam Smith

    Love the idea.

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