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Friday, October 31, 2008
Evolution is key in profiting from Internet video
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In their never-ending quest to increase revenue, many media companies, network operators and retailers are turning to online video distribution to help monetize their digital media offerings while improving the experience for the end-user. Often, they are deploying broadband video content beyond the single screen — the PC — and reaching consumers who increasingly consume it through the TV, the web and on mobile devices.
While there’s no denying the explosive growth of Internet video distribution and consumption, the debate about the viability and real revenue potential of digital video businesses continues. Trying to reach the 73 percent of computer users consuming broadband video, advertisers attracted $500 million in online video advertising in 2007, according to eMarketer. Despite the increasing consumer adoption of Internet video and the subsequent “gold rush,” to deliver content, many companies are struggling to manage the technology and business complexities of content delivery as the industry evolves.
If you are a media company, telecommunications operator or retailer looking to make Internet video a profit center for your company, my advice is to follow four simple rules:
1. Evaluate and implement many business models;
2. Unify the back-end tech of the video platform;
3. Automate the delivery process;
4. Turn reporting into strategic decision making.
One of the central challenges in increasing revenue today is the diversity of both commercial outlets and economic models. Some distribution partners are based on an ad-supported model where they or another company serves as the ad network. Others require pay-per-view or download terms. The most innovative and successful companies are those employing multiple models including ad-supported, rentals, subscriptions and download-to-own. Since no one size fits all, any and all business models should be considered as the digital media industry is still evolving.
As the number and type of distribution outlets and digital video services increase, the process for creating a unified process for managing and distributing digital video content becomes more complex. A primary challenge is the complexity around trying to package and deliver a single video archive across multiple viewing platforms and service providers.
Currently, only a few organizations do this efficiently, while most continue to rely on redundant manual processes for each distribution partner. This leads to the incredibly inefficient duplication of effort across each stage of the content preparation process, without allowing for a comprehensive view of how content is being managed, distributed and, more importantly, consumed. Automating the complex processes of online video services reduces costs, minimizes mistakes and makes distribution more efficient.
Broadband video also enables a level of data collection that is unprecedented in the broadcast industry. The right digital media platform can gauge many variables: how much of a video or an ad was watched, the amount of ad impressions completed, when and where videos are paused and many other metrics that broadcasting simply cannot provide.
Once collected, data must be aggregated across distribution channels and fed into an appropriate business intelligence dashboard to facilitate strategic decision making. An effective dashboard allows decision makers to see how consumers respond to a particular service and provides key data points for adjusting strategies. Tracking and adapting to shifting consumer demands and habits is the key to maximizing revenue associated with broadband video and digital media businesses.
Undoubtedly the explosive growth of broadband video will continue unabated. However, the rules have evolved and will continue to change. It is no longer enough to deliver a “single-mode” service that relies on one delivery method or economic model. Many of us have seen this movie before at other points in time in the media, content and entertainment industries. It really all comes down to this: adapt or perish. To keep up with the digital video boom, it will be critical to experiment, measure successes, and adjust to changing market and consumer demands.
Keith Kocho is founder and CEO of Newton-based ExtendMedia Corp. He can be reached at kkocho@extend.com.
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