Moderator: James Montgomery, CEO, Montgomery & Co.
John Edwards, CEO, Move Networks
Adam Berrey, SVP Marketing & Strategy, Brightcove
Iaain Scholnick, CEO, ImageSpan
James asked what video business models are successfully being rolled out in 2008.
Adam said there has been a lot of experimentation around ad-supported, paid content and subscription content. The model that is sticking most is ad supported. The top tier Hollywood and prime time content can support consumer payments, but for 60 years consumers have been trained to turn on the TV and get free, ad-supported content; and many content producers can make more money this way. We are finally seeing more long-form content coming online. The consumer behavior is different with short form and long form.
James asked how business models change with scale.
John Edwards said Move Networks deals almost exclusively with long form. We could do short form, but our partners mainly have long form. So we haven’t gone after the long tail. We felt we could get sustainable revenues from the popular, mass audience content. The vast majority of what we do is live or long form. But it’s a significant volume–the largest in the world (of viewers). People will come to watch prime time TV shows online. You can try a number of different ad formats. If you can deliver a high quality experience, consumers will stay longer. Quality stimulates usage. We track everything that goes on during an episode–is the mouse moving, etc. We send that data back in real time so content publisher can measure it. This is the first time this has ever been possible. If you can know who’s watching and what they are watching and what they like and what they are skipping, it allows you to do more intelligent programming, and also more intelligent advertising. Across 100 fox properties, you can target different ads to different locations. You have to have great content, have a great quality delivery, and keep the costs down. Many companies come to us paying 35c per gigabyte, we get the costs down to under a dime, closer to 5 cents. So you are looking for average margin per viewing hour. Our properties (partners) are profitable in what they are doing with us.
James: like Fox, ABC?
John. Exactly. We provide the service to content partners, a transaction fee, we don’t share in their revenue. We hope to show them how to get a profitable business model.
Q. What kind of ROI are they seeing? One year payoff, or less?
John. If you look at our stations, they are at 40-60cents per hour in revenue, and under a dime in costs, that would be the average, and we’re talking about targeting premium content that has a good strong audience with substantial views. If you look at any of our properties today, there will be a million people watching the TV shows right now. So our scale is significant. We allow that because of the way we treat the video.
Adam from Brightcove said that what John was talking about what you can do if you have a property like Grey’s Anatomy, but most people don’t have a property like that. Consumers are sitting less and experiencing the web more. The internet is a different medium. It’s also a delivery infrastructure. We can broadcast television; but it can be a lean forward experience with people participating with communities. Our publishers are taking a multi-layer strategy. Adam said there are three major segments of content, and different ways to monetize each:
1. The highest interest long-form content; you ad sales force can sell sponsorships. But this is a small slice of web audience and content.
2. Next band of content, also often sold direct,
3. Remnant content, either fragmented content, or fragmented audience, or peak demand that you didn’t forecast accurately. Then you look at whether you should integrate into ad networks. The whole ad networks scene changed in 2007 when all the major ad networks were acquired. Microsoft, Yahoo, Google and AOL are all in the mix. There are announcements every week with especially Microsoft and Google trying to get into the sales opportunities. So media companies have to decide what to sell direct, what content to partner with someone else to sell. Goal is to maximize revenue off this content. The big trend this year is how to integrate with the changing landscape of ad networks.
John. There are a lot of content people out there with publishing tools. But if you break down where the
460 billion hours of television watched in US, 920 billion in world. That is driven by about 50 entities. When you look at pure volume and where ad inventory is going to come. The mass inventory is going to come from properties that have audience now. As we move forward, yes, other content flavors will deliver volume later, but for now, the major opportunities are in a few properties. Or they’re in this mass thing like YouTube that we don’t know how to get our hands around it and collect it into something that advertisers will buy.
We carry about as much traffic as YouTube in the U.S. They have small, scattered content. Ours is 50 properties that deal with massive volumes of content; and yet ours have a very straightforward revenue model. So companies are trying to make long tail work, but it’s a difficult problem. All the greatest ad networks in the world are not going to bring audience.
Q. Let’s go to the long tail.
Iain. (ImageSpan) You have millions of different silos of content that have to be threaded against a demographic so you can sell advertising. We are working on this problem. On the video side, we are dealing with Nokia. They have a lot of video content. They are identifying the most popular downloads and trying to sell ads around that; and they want to pay the content producer something.
The panelists all seemed to agree that video on mobile is further out. It will require enabling advertisers to buy a demographic or a psychographic. But that is not available right now.
John Edwards said that Move Networks’ system allows for the content on a single pass to be prepared to run on any viewing environment, set top, Mac, PC, mobile. And it will always deliver stellar quality. That’s what we do–the video preparation. I’m not bullish on the mobile video experience soon, I think the game platforms will be an opportunity sooner.
Adam said he’d like to see an open platform for video on TV and mobile devices, like a web browser that would allow anyone to participate in this.
John said that in the US you have to get the cell phone networks to open up, but even then there would be a technical challenge since every handset is different. If Apple opens up their platform, we’ll be there in a nano-second. We’re ready from an infrastructure standpoint.
But there are 3 billion handsets; next to the TV, the mobile phone is next in number of units. Since there isn’t a standard, software developers can’t write to this. There is so much fragmentation, which prevents pulling it together and marshalling it for business purposes.
James asked if all the ad dollars are just going to follow a few highly popular properties, if the web is really going to change anything, or if we are just seeing more of the same.
John. We have a 50-60 year old TV industry that is doing well, and will do well for some time. Report to Congress last February said average time watched actually went up a little. As we move to new models it’s a little like when TV started and radio programs migrated to TV, with someone standing up reading. Then new varieties of TV started up. My daughter loves to minimize the screen and type and do other things all at the same time. We’re going to have to target the audiences, and recognize there will be multiple types. We can’t generalize everything into one great whole, and call it it. If we do that, we’ll miss the opportunity.
Adam. It’s also different times of day where people behave differently. At work someone might be on a broadband connection, and might not have time to watch a 43 minute show, but they may want to access something around a show. Most of our customers are big media companies, top brands that dominate the industry, and all of them have a multi-platform strategy. They are going to use all the different day-parts across all the different mediums.
James said AT&T just announced a test in Texas to throttle the bandwidth, and charge consumers who use more bandwidth more money. What would this do to your business model if consumers have to pay more for video?
John described how Move Networks would benefit under this scenario because its video delivery system is not centralized, but allows for caching every step of the way. It is the only video platform that works this way. They don’t use a central Flash server or anything like that, so they can inexpensively scale to tens of millions of viewers.
Adam. Consumers don’t like metered pricing.
James. That’s why they’re testing this in a small town in Texas.
Adam. We found out recently from one ISP that 1% of the ISP’s consumers account for 40% of bandwidth usage. ISPs will want to address this.
James asked for predictions for 2008. Adam said he is excited about the evolution of web properties that are run by large media companies, who are starting to produce “snackable media” that is mixed into their long-form strategy. John said this year there will be a lot of progress made in creating standardized ad formats, which will make it easier to finance new content, leading to a much better business for online video.
James asked about the next president. Adam said it was interesting how online video is affecting the campaign: Barack Obama announced his candidancy online on video; we’re working with several others to tell their story online. John Edwards said he dropped out of the race so that he could attend this conference. (Laugh).
532 total views, 1 views today