Business Models for Web TV - Research Presentation

Business Models for Web TV - Research Presentation

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  Business models forweb TV Alessandro Masi Milan, 19 Dec 2009
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  TOWARDS WEB TV… •Shift of the audience from traditional to new TV • Increase of Internet broadband connections • Media integration process Web TV = open online video distribution over unicast or P2P protocols
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  RESEARCH QUESTION What arethe business models that allow to generate revenues from web TV? How are they shaped according to the strategic objectives? Is web TV a sustainable business in the long run? Is there any theory that supports (or denies) this argument?
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  RESEARCH METHODS • Top200 websites (Unique Visitors) for online video distribution, either of user generated or professionally-produced content • 44 variables analyzed for each website: features, business model, content licensing, uploading and privacy regimes • Accessible from Italy • Language: italian and/or english • 2 on-demand or 1 live channels (at least) • Self-organizing maps and k-means algorithms cluster analysis; two-step clustering
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  MAIN FINDINGS… Two primaryvariables determine the business strategy of a web TV: • Business model • Type of content Those two variables are inter-dependent, and the choice is also related to the core business of the operator. Then, some secondary variables allow the web TV to differentiate from competitors: • The range of VOD channels • The amount of live content • The role of the community • The type of advertising
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  MAIN FINDINGS…
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  BUSINESS MODELS • B2cpremium model  sale of the contents (pay-per-view or with subscription), with marginal revenues from advertising • B2c ad-based model  banner, pre-roll, overlay, ad-funded content • B2c mixed  premium + “freemium”, ad-revenues sharing, • CRM-based model  communication and interaction, both internal and external • Free model  self-financing and fund-raising • B2b model  service, solutions and content providers
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  BUSINESS MODELS PA – subscription PA – subscription PA - PayPerView PA - PayPerView PA - free with advertisement PA - free with advertisement PA - free (no advertisement) PA - free (no advertisement) PA – donation PA – donation 0% 50% FE - Operator - Broadcaster and 0% 100% Local TV FE - both produced and UG content FE - Operator - News and 50% FE - only professionally-produced content magazines 100% FE - only UGC FE - Operator - On-line video company FE - Operator - PA and other companies 100% 90% 80% PA – donation 70% PA - free (no advertisement) 60% FE - only UGC PA - free with advertisement 50% PA - PayPerView 40% 66% PA – subscription 30% FE - only professionally- 20% produced content 10% 0% FE - both produced and UG content 5% 14% 12% 3%
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  STRATEGIC ISSUES Pure strategies Pureplayers  ad-based, integration of premium contents, b2b market Portfolio strategies Web editors  ad-based with premium sections Multichannel/portfolio strategies Other media  ad-based Multichannel strategies Broadcasters  ad-based and premium model CRM strategies PA and companies  free
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  MONEY??? US online video ad spending in 2011: • $4,309 mln REVENUES • 9.8% of total • Pay-per-view for VOD online ad spending • Subscription Source: eMarketer • Donation • Advertising (banner, Google Ads, embedded video) OPERATING COSTS • Production, acquisition, or digitalization • Storage • Publishing and distribution
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  WEB TV’S LONGTAIL “Forget squeezing millions from a few megahits at the top of the charts. The future of entertainment is in the millions of niche markets at the shallow end of the bitstream.” Anderson, C. (2006). The long tail: why the future of business is selling less of more.
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  WEB TV: STRENGHTS& WEAKNESSES Strengths Weaknesses Multi-channel Loss of control Content (niches) over contents Ad-hoc contents DRM systems UGC Lack of visibility Personalization Interactivity Accessibility The “logic of the Economics Targeted free” advertising Ad skipping Undefined business model
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  IN CONCLUSION… • Thecurrent context is highly scattered, given the high accessibility to the market: webcasters shape the business model according to different strategic objectives, which are basically related to the core business of the operator and to the type of content. Either a clear definition of business models or innovative ones are needed. • The majority of money for web TV currently comes from advertising. The free-logic of the Internet does not allow to rely on premium services (subscription and pay-per-view), but webcasters should find the way to monetize by increasing the value of the offering or enhance the involvement of the communities (e.g. advertising revenues sharing, UGC, self-financing). • Internet overcomes distribution constraints and limited offering and makes possible even to the smallest business to generate revenues reaching the market niches: the long tail theory explains the reason for the growth and the long-term sustainability of web TV business.
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  Thanks for yourkind attention!