Monetizing Strategies
March 21, 2012, Over-the-top TV Conference, Santa Clara, CA—A panel discussed the monetizing strategies for the OTT, TV everywhere, and multi-screen jungle. Tom Morgan form MediaD.TV moderated the panel which was comprised of Scott Brown from Nielson, Brent Horowitz from Freewheel, Eric Goldstein form Disney ESPN, and Sam Chang from LG Electronics.
Monetizing content has always been a problem as media change. In ’82, on-line classified ads killed newspapers and the first failures appeared in ’07. TV is facing a similar change a they try to maintain first right and its programming money streams.
C3 Neilson ratings?
Brown stated that the C3 ratings are the average commercial ratings for live time and VCR recording, and now include DVR playback. It measures the ad performance per minute of time. Now, C3 is moving to other platforms and services. The problem is that no one knows what the next generation will look like.
New versus old?
Goldstein offered that all of the Disney properties have made the transition to digital. The landscape of the digital world is delivering to the best available screen. They work to retain value in their networks by building more digital assets. The changes in revenue structure from ads, pay ads, pay walls, etc., have shown little cannibalization to date.
Dynamic administration?
Horowitz commented that they manage the ad revenue operations for broadcasters and channels. The models are evolving with the result that consumer choice is growing. TV everywhere is going through its first steps and working with the rights owners. The industry is working on a framework to distribute content while preserving the dual income streams. Last year, ads accounted for $60 B for the networks in a total revenue stream of $150 B. The industry is doing well in developing new models.
Apps stores for TV?
Chang responded that as a TV maker, their timing matters. The Web works on fairly standard hardware while OTT is trying to get HTML5 over a browser working. The issue for an apps store is fragmentation of platforms. TV uses a standard format and aspect ratio with minimal differences throughout the world. The Web requires much more localization and customization for the different browsers.
Brand ads do well on the Net. Car buyers make their decision in the last 90 days before purchase. Broadband can target a person to allow better ad penetration. The Net is also global, so international brands can do well. Ad spending in China is over $100 B versus $80 B in the US. International branding can be local and immersive.
Ads have two issues; formats and ad rights for actors and content?
Goldstein noted that ad agencies are still using short form content, but are starting to use more interactive materials. By moving to a dynamic platform, they can ensure relevance and engage the viewer on that platform. Hulu provides personalized content and gives people choices for the ads they can watch.
Ad rights are part of a linear stream on mobile and are simulcast dynamically inserts ads into the stream.
Horowitz agreed that brand ads are the bottom of the funnel. The issues of contracts and sponsorship raise the question of what can happen and what cannot. The alternative delivery systems have to build a scaled business on the Web that uses new technologies to dynamically block and reinsert ads on the fly.
Brown added that scale and targets are the issue. TV has various metrics on consumer consumption and pre-evaluation to address the mass markets. There is a lot of information and feedback available that is rapidly changing the entire environment.
Content is moving to the mobile space, particularly into the tablets. One difficulty is to measure tablet use, which is a change in viewing platforms. If the rule is to go to the best screen available, tablets are a good alternative to TV. TV can be used in a watermark measurement mode, but tablets can’t.
Tablets can use ID3 tags and watermarks, but the implementation needs work in the distribution system. On-line campaign ratings are possible. They integrated some measures into Facebook using a combination of samples and census to develop some return path data. Smart TVs will increase the opportunities to measure, based on the execution of on-screen widgets.
Dual income streams? Services like Netflix and Hulu+, hits on app store?
Chang opined that services are increasing and moving into other silos like music. The challenge is to convert the small apps into premium services after 3 months. People will pay for compelling content. recently, they ran Beauty and the Beast in 3-D in Korea and many viewers paid about $25 to watch. The key is to make the transaction easy and complete.
Disney and Comcast carriage? Operators are moving into new territories?
Goldstein responded that it is a big deal and advantage to have multiple channels and deliver good content to all parties. The shift to whenever, wherever is just taking advantage of services that you already paid for, so it should be portable with the user. Yes, there is a challenge in authenticating users. However, by creating a virtual MSO space, the industry can deliver what the users want. ATT Uverse is one example that is being driven by the cord-never-had demographic.
Free to net, but supported by ads?
Horowitz answered that there are lots of opportunities, just look at Yahoo, Disney. Now people are supplying some of the content and creating a gap between super premium and user-generated content. There are lots of sources coming on line and there are many layers of value.
Content is the product, distribution is the retailer, ad sales are the aggregator, and data covers all.
Brown commented that 91 percent of all TVs have cable or other provider, and only a small percentage never use these connections. TV measurements look at commitment and socialization. The embedded ads allow measurement with the ads. TV is a dynamic marketplace with many ecosystems coupling value and measurements.
Networks moving into a dual income stream, broadcast and on line. Who will pay?
Goldstein said we are seeing a changing model and a windows shift. ABC Family is moving content to an authenticated content model. Some of the increased content will not go to air, but will find other outlets. On the network side, there are editorial selections for branding such as DirectTV’s NFL Sunday. Also, people are getting content through game consoles, so there are more levels of access.
Horowitz added that it’s a big market with supermarket margins. In stores, most of the income comes from the end caps, and connected TV is just securing the shelf space.
Chang noted that linear content is fine for 80 percent of all consumers, most are willing to pay for their cable every month. The problem is in getting better navigation and fewer ads for the money. A menu is a very poor interface for navigation. The offerings need more flexibility. Better targeted ads and other long tail content have low costs per thousand people, but have high costs to produce.
