Yahoo! reported first-quarter earnings yesterday that beat Wall Street expectations, earning 38 cents a share on $1.087 billion in revenue, which excluded traffic acquisition costs (TAC).
Video is one of the Sunnyvale, Calif.-based company's four key areas of business, which also includes mobile, social, and native (advertising). Mayer said on Tuesdays' earnings conference call that the company experienced "30% sequential growth in video streams that led to additional monetizable video inventory" last quarter.
"We are really encouraged by the progress we saw in Q1," Mayer said. "Our constraint on video has always been inventory and our investment in building our library in the Yahoo! screen brand is helping us to address this. We have continued to grow users and monthly streams and that's beginning to translate into revenue growth. While we are only getting started, we're very focused on this growth business in 2014.
"For example, in the past, Yahoo! has produced more than 70 original web shows. Moving forward, we will continue to bring our users great original content. We will do so with much more focus and quality. Smart, more strategic investments in video can really help us grow our user offerings, traffic and ultimately revenue," Mayer continued.
Mayer also noted Yahoo! Screen launched on Apple (AAPL) TV in the fourth quarter, and in the first-quarter, the app was launched on Roku's streaming device. "With this launch, users have more ways to enjoy clips from Saturday Night Live, The Daily Show with Jon Stewart, live news, events, music and Yahoo! Originals," she said.
A report earlier this month by The Wall Street Journal suggested Yahoo! was actively looking for its own original series, akin to Netflix's (NFLX) House of Cards. The Journal article said that Yahoo! is looking to acquire four Web series that would rival episodic shows developed by Netflix and premium cable channels. Unlike Yahoo!'s foray into original content in the past, the shows would be "10-episode, half hour comedies with per-episode budgets ranging from $700,000 to a few million dollars," the Journal reported. The shows would be from writers or directors with experience in television, the article said.
The Journal said that Yahoo! CEO Marissa Mayer has reviewed more than 100 projects over the past few months, but nothing has been finalized as of yet. Mayer was hoping to have a deal in place in time for Yahoo!'s "NewFront" -- a TV ad sales presentation for marketers taking place later this month, the article stated.
While Yahoo! has dipped its toe into shorter-form Web content, producing a longer-form online hit series would be new territory for the company. If the Journal report pans out, Yahoo! would already be competing with established players.
Mayer and team of course did not provide any information specific to the Journal report last night, but during the call Nomura Securities analyst Anthony DiClemente asked whether investors should expect Yahoo! to "accelerate the investment in ad supported professionally produced content" as well as whether the marketplace can support another player in the original ad supported professional content space.
"In terms of the content what we have really been looking at is a really broad range, different types of content," Mayer said. "Some originals, some through partners, some curated by our editors and some UGC and while we want to make fewer, more focused investments in the content space in terms of Yahoo! Originals moving forward, we imagine that the spend will be in line with that you have seen in prior years."
Piper Jaffray analyst Gene Munster, who rates Yahoo! "neutral" with a $37 price target, believes the company has "opportunity in premium video and mobile, but note that they still have work to do to create a platform as relevant as a YouTube or Hulu in terms of advertisers' minds."
--Written by Laurie Kulikowski in New York.