The transformation of TV is an exciting development for consumers and the industry alike, but for media companies, these new requirements pose considerable challenges. As the media landscape grows in diversity, so does the opportunities for media companies to monetise their content beyond advertising – but only if their revenue models and technologies can keep pace with the fast-evolving marketplace.
So how can broadcasters maximise their content monetisation strategies beyond advertising?
Paid Content
Paid content is a popular model for licensed content like feature films and TV shows, and is also increasingly used for original content such as the House of Cards series produced by Netflix and the Live at the Beacon show self-released by comic Louis C.K. The basic premise is that content is paid for directly by viewers, rather than by advertisers. Paid content takes two main forms:
- Transactional Video-on-Demand (TVOD): In old media terms, transactional VOD is analogous to renting or buying a DVD from a video store. Viewers pay for access to a specific online video title, either for a set period of time, as with a 30-day iTunes rental, or in perpetuity, as with an iTunes purchase. This is the most popular approach for feature films and TV series.
- Subscription Video-on-Demand (SVOD): The old media analogy for subscription VOD is a newspaper or magazine subscription: you pay a flat monthly fee to gain access to a continually refreshed set of content, as on Hulu Plus, Netflix, and the New York Times. In practice, because of the complex rights agreements between producers and distributors, the content available through SVOD services tends to be less current and extensive than on TVOD services.
While any publisher would love to sell their content directly to viewers – a more efficient and profitable economic model than advertising – it is not an easy business to break into. With so much ad-funded video available to watch for free, it takes truly compelling content to convince people to open their wallets. In the absence of available star power, another strategy is to offer highly targeted content that a specific audience will find especially appealing.
As with ad-funded video, the economics of paid content revolve largely around the size of your audience. If you charge $10/ month for your content, 100 subscribers will bring in $1,000 each month. If you sell an individual title for $1, you’ll need to sell 1,000 videos each month to reach that level.
The requirements for success differ somewhat between TVOD and SVOD.
For SVOD, the question is not whether people will buy your content once, but whether you can win them over as regular customers. Is your library deep enough that people will want to feast on it over the course of several months; with new content added often enough that they will want to maintain. While the Netflix library is a broad mix in terms of both quality and appeal, the company adds new titles regularly, and enough people find enough to like that it can sustain a highly profitable SVOD business.
New York’s Metropolitan Opera only publishes a few new productions each year through its Met Opera on Demand SVOD app, but its library contains hundreds of video and audio selections with immense appeal for its highly active and dedicated subscriber base.
You have to work actively to stay on the customer’s radar as a prime source for online video, and offer something they can’t get for a lower price (or free) somewhere else. For iTunes, the availability of recent releases, a wider selection of HD video, and a deep, high-quality library are all crucial for competing against lower-cost and free alternatives like Netflix and YouTube.
For both SVOD and TVOD, it is essential to understand who your audiences are and what they like to watch, and make recommendations based on their past behaviour to entice them back to your site.
A recent trend, seen particularly in the premium video market, is for video to be paid for by both consumers and advertisers. While new to video, this has been a model in other forms of media for most of the past century. Newspapers and magazines are sold directly to consumers, whether by the issue or by subscription, and also contain ads. The same is true for cable and satellite TV — and even premium movie services like HBO and Showtime show interstitial ads, albeit for their own properties. Even cinemas now commonly show ads before the main attraction. Only on the Internet has content been offered entirely free to consumers – which is why so many media companies are now struggling to make money online.
Now, online publishers are finding ways to generate revenue through both sources at the same time.
Sceptics initially criticised the New York Times for its paywall strategy, but over time people have proven willing to pay for access to its online content, which continues to be accompanied by ads. ESPN has placed some of its online content behind a subscriber-only ESPN Insider paywall, including videos which appear alongside display ads. Even Hulu Plus, which delivers comparatively low-cost subscription access to current-season TV shows, includes advertising during those shows. TV Everywhere (TVE) Consumers increasingly expect a more seamless customer experience as they move from computer to mobile device to connected TV. User authentication makes it possible to recognise customers no matter what device they use to access your content and apply the terms of your pay relationship consistently across channels. Pay-TV providers like cable and satellite companies, as well as premium services like HBO, increasingly use this approach to offer
TV Everywhere (TVE)
services that let paid subscribers watch their programming on non-TV devices. For example, subscribers who already have access to popular networks such as IFC or AMC through their cable company can also login to watch the television content on their PC, tablet, or smartphone without the need for a separate account or transaction. The key enabling technology for this model is multichannel video programming distributor (MVPD) authentication, which provides a way for the viewer to verify his or her identity, and for the cable company to authorise that the individual has paid for the content in question.
The Future of TV Monetisation
While media companies work to implement their monetisation strategy, they must also keep in mind a lesson learned painfully by the music industry: when it comes to content, many consumers will follow the path of least resistance – legal or otherwise. Viewers want to be able to watch what they want to watch, when and where they want, on the device of their choice, with the least friction possible. To provide the most convenient and appealing possible experience, you need to make security and access simple and painless for paying customers to navigate.
A Last Word on Advertising – The New Tech
Server-side ad-insertion technology allows advertisers to deliver video content and the ad in a single stream to a device. Advertisers love this cloud-based technology because it reaches any device with TV-like quality ads with the ability to bypass ad blockers.
There’s no software required on the device – as long as the device can play back video in the cloud. Publishers can combine advertisement and content to reach every device. When combined with client-side software, which can block “skip” bars, or allow users to click on the video to go through to a promotional website, video content delivery is driving huge benefits for brands and publishers seeking to reach new and engaged audiences, while at the same time providing a terrific video experience for user.
Five years ago it would have been a daunting task to deliver a monetised television-like experience across all devices, but now, it is easily achievable via server-side and client side technologies. Deliver the right – content and advertising – experience to the right user on every device in a cost-effective way. The technology is available today to make this experience possible.
The transformation of TV is an exciting development for consumers and the industry alike, but for media companies, these new requirements pose considerable challenges. As the media landscape grows in diversity, so does the opportunities for media companies to monetise their content beyond advertising – but only if their revenue models and technologies can keep pace with the fast-evolving marketplace.
So how can broadcasters maximise their content monetisation strategies beyond advertising?
Paid Content
Paid content is a popular model for licensed content like feature films and TV shows, and is also increasingly used for original content such as the House of Cards series produced by Netflix and the Live at the Beacon show self-released by comic Louis C.K. The basic premise is that content is paid for directly by viewers, rather than by advertisers. Paid content takes two main forms:
Transactional Video-on-Demand (TVOD): In old media terms, transactional VOD is analogous to renting or buying a DVD from a video store. Viewers pay for access to a specific online video title, either for a set period of time, as with a 30-day iTunes rental, or in perpetuity, as with an iTunes purchase. This is the most popular approach for feature films and TV series.
Subscription Video-on-Demand (SVOD): The old media analogy for subscription VOD is a newspaper or magazine subscription: you pay a flat monthly fee to gain access to a continually refreshed set of content, as on Hulu Plus, Netflix, and the New York Times. In practice, because of the complex rights agreements between producers and distributors, the content available through SVOD services tends to be less current and extensive than on TVOD services.
While any publisher would love to sell their content directly to viewers – a more efficient and profitable economic model than advertising – it is not an easy business to break into. With so much ad-funded video available to watch for free, it takes truly compelling content to convince people to open their wallets. In the absence of available star power, another strategy is to offer highly targeted content that a specific audience will find especially appealing.
As with ad-funded video, the economics of paid content revolve largely around the size of your audience. If you charge $10/ month for your content, 100 subscribers will bring in $1,000 each month. If you sell an individual title for $1, you’ll need to sell 1,000 videos each month to reach that level.
The requirements for success differ somewhat between TVOD and SVOD.
For SVOD, the question is not whether people will buy your content once, but whether you can win them over as regular customers. Is your library deep enough that people will want to feast on it over the course of several months; with new content added often enough that they will want to maintain. While the Netflix library is a broad mix in terms of both quality and appeal, the company adds new titles regularly, and enough people find enough to like that it can sustain a highly profitable SVOD business.
New York’s Metropolitan Opera only publishes a few new productions each year through its Met Opera on Demand SVOD app, but its library contains hundreds of video and audio selections with immense appeal for its highly active and dedicated subscriber base.
You have to work actively to stay on the customer’s radar as a prime source for online video, and offer something they can’t get for a lower price (or free) somewhere else. For iTunes, the availability of recent releases, a wider selection of HD video, and a deep, high-quality library are all crucial for competing against lower-cost and free alternatives like Netflix and YouTube.
For both SVOD and TVOD, it is essential to understand who your audiences are and what they like to watch, and make recommendations based on their past behaviour to entice them back to your site.
A recent trend, seen particularly in the premium video market, is for video to be paid for by both consumers and advertisers. While new to video, this has been a model in other forms of media for most of the past century. Newspapers and magazines are sold directly to consumers, whether by the issue or by subscription, and also contain ads. The same is true for cable and satellite TV — and even premium movie services like HBO and Showtime show interstitial ads, albeit for their own properties. Even cinemas now commonly show ads before the main attraction. Only on the Internet has content been offered entirely free to consumers – which is why so many media companies are now struggling to make money online.
Now, online publishers are finding ways to generate revenue through both sources at the same time.
Sceptics initially criticised the New York Times for its paywall strategy, but over time people have proven willing to pay for access to its online content, which continues to be accompanied by ads. ESPN has placed some of its online content behind a subscriber-only ESPN Insider paywall, including videos which appear alongside display ads. Even Hulu Plus, which delivers comparatively low-cost subscription access to current-season TV shows, includes advertising during those shows. TV Everywhere (TVE) Consumers increasingly expect a more seamless customer experience as they move from computer to mobile device to connected TV. User authentication makes it possible to recognise customers no matter what device they use to access your content and apply the terms of your pay relationship consistently across channels. Pay-TV providers like cable and satellite companies, as well as premium services like HBO, increasingly use this approach to offer
TV Everywhere (TVE)
services that let paid subscribers watch their programming on non-TV devices. For example, subscribers who already have access to popular networks such as IFC or AMC through their cable company can also login to watch the television content on their PC, tablet, or smartphone without the need for a separate account or transaction. The key enabling technology for this model is multichannel video programming distributor (MVPD) authentication, which provides a way for the viewer to verify his or her identity, and for the cable company to authorise that the individual has paid for the content in question.
The Future of TV Monetisation
While media companies work to implement their monetisation strategy, they must also keep in mind a lesson learned painfully by the music industry: when it comes to content, many consumers will follow the path of least resistance – legal or otherwise. Viewers want to be able to watch what they want to watch, when and where they want, on the device of their choice, with the least friction possible. To provide the most convenient and appealing possible experience, you need to make security and access simple and painless for paying customers to navigate.
A Last Word on Advertising – The New Tech
Server-side ad-insertion technology allows advertisers to deliver video content and the ad in a single stream to a device. Advertisers love this cloud-based technology because it reaches any device with TV-like quality ads with the ability to bypass ad blockers.
There’s no software required on the device – as long as the device can play back video in the cloud. Publishers can combine advertisement and content to reach every device. When combined with client-side software, which can block “skip” bars, or allow users to click on the video to go through to a promotional website, video content delivery is driving huge benefits for brands and publishers seeking to reach new and engaged audiences, while at the same time providing a terrific video experience for user.
Five years ago it would have been a daunting task to deliver a monetised television-like experience across all devices, but now, it is easily achievable via server-side and client side technologies. Deliver the right – content and advertising – experience to the right user on every device in a cost-effective way. The technology is available today to make this experience possible.
