Business Models for Web TV - Research Presentation
Business models for web TV Alessandro Masi Milan, 19 Dec 2009
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
RESEARCH QUESTIONWhat are the business models that allow togenerate revenues from web TV? How are theyshaped according to the strategic objectives?Is web TV a sustainable business in the long run?Is there any theory that supports (or denies) thisargument?
RESEARCH METHODS• Top 200 websites (Unique Visitors) for online video distribution,either of user generated or professionally-produced content• 44 variables analyzed for each website: features, businessmodel, 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
MAIN FINDINGS…Two primary variables determine the business strategy of aweb TV:• Business model• Type of contentThose two variables are inter-dependent, and the choice isalso related to the core business of the operator.Then, some secondary variables allow the web TV todifferentiate from competitors:• The range of VOD channels• The amount of live content• The role of the community• The type of advertising
BUSINESS MODELS• B2c premium model sale of the contents (pay-per-view orwith subscription), with marginal revenues from advertising• B2c ad-based model banner, pre-roll, overlay, ad-fundedcontent• B2c mixed premium + “freemium”, ad-revenues sharing,• CRM-based model communication and interaction, bothinternal and external• Free model self-financing and fund-raising• B2b model service, solutions and content providers
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 TVFE - 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%
STRATEGIC ISSUESPure strategiesPure players ad-based,integration of premiumcontents, b2b marketPortfolio strategiesWeb editors ad-basedwith premium sectionsMultichannel/portfoliostrategiesOther media ad-basedMultichannel strategiesBroadcasters ad-basedand premium modelCRM strategiesPA and companies free
MONEY??? US online video ad spending in 2011: • $4,309 mlnREVENUES • 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
WEB TV’S LONG TAIL“Forget squeezing millions from a few megahits at the topof the charts. The future of entertainment is in the millionsof niche markets at the shallow end of the bitstream.”Anderson, C. (2006). The long tail: why the future of business isselling less of more.
WEB TV: STRENGHTS & WEAKNESSES Strengths Weaknesses Multi-channel Loss of controlContent (niches) over contents Ad-hoc contents DRM systems UGC Lack of visibility Personalization Interactivity Accessibility The “logic of theEconomics Targeted free” advertising Ad skipping Undefined business model
IN CONCLUSION…• The current context is highly scattered, given the high accessibilityto the market: webcasters shape the business model according todifferent strategic objectives, which are basically related to the corebusiness of the operator and to the type of content. Either a cleardefinition of business models or innovative ones are needed.• The majority of money for web TV currently comes fromadvertising. The free-logic of the Internet does not allow to rely onpremium services (subscription and pay-per-view), but webcastersshould find the way to monetize by increasing the value of theoffering or enhance the involvement of the communities (e.g.advertising revenues sharing, UGC, self-financing).• Internet overcomes distribution constraints and limited offeringand makes possible even to the smallest business to generaterevenues reaching the market niches: the long tail theory explainsthe reason for the growth and the long-term sustainability of web TVbusiness.