« IPTV now means Initial Projections Takeoff Vorldwide | Main | Meet the new viewer, same as the old viewer »
December 01, 2005
One small step for VOD; One giant leap for Marketing
Three major networks ABC, CBS, and NBC took small steps away from a business model that has served them for about 50 years. For the first time, they agreed to let viewers see for a fee current prime-time hits on cable and satellite video-on-demand (VOD) and via Internet download. Putting a price tag on such transactions could open a flood of opportunities for others and that is why I think it is short sided of the networks to approach VOD in this way.
For example, let's say that I had access to 10 million viewers in my network but that my subscribers want their VOD for free. Maybe on an average week, each household watches two VOD episodes. How could I be enterprising about this?
First, I might expect to pay the broadcast networks $20 Million (that is, 10 million homes watching 2 shows each at $0.99 per show). If this were linear television, Nielsen would say those viewers might see 88 commercials (22 ad minutes per hour, 30-second spots, in two hour long shows). However, I am a benevolent media mogul and will cut the number of ads by 25%
I suspect that I have 660 million ad impressions (66 commercials shown to 10 million homes). That's a significant opportunity: revenue selling 660 million commercials at a fixed cost of $20M to the networks for their content.
If I could get $0.03 per commercial served up, I breakeven. Everything over that is profit. More interesting is moving the ad model into a more interactive and accountable platform. Perhaps add some behavioral targeting. Marketers should theoretically love that approach: the best of both the television and online worlds.
What's wrong with the above scenario? First, the networks would not sell me VOD access to their content. Instead, they would likly drop their $0.99 per episode pricing and demand a cut of the advertising action. Second, only Comcast and Time Warner have VOD networks large enough to generate the numbers in my example. This year without the popular programs, Comcast has already served up more than 1 Billion VOD streams. Finally, the media buyers do not yet know to buy from my benevolent media company. But there are two large companies that have active plans to provide VOD media buying tools to the agencies.
That is how close we are getting to a workable, non-linear television ecosystem that remains free to the viewer.
Trackback Pings
TrackBack URL for this entry:
http://www.reinventtv.com/cgi-bin/mt/mtb.cgi/252
Comments
Post a comment
Thanks for signing in, . Now you can comment. (sign out)
(If you haven't left a comment here before, you may need to be approved by the site owner before your comment will appear. Until then, it won't appear on the entry. Thanks for waiting.)
