Skip to main content

MONETIZATION CHALLENGES IN DIGITAL VIDEO MEDIA

The real challenges facing media companies today are not technology or opportunities, but how to monetize activities in digital video media. The popularity of video downloads and streaming video on internet and mobile devices is growing exponentially and motion picture and television production companies are rushing to create deals to participate in the phenomenon.

The biggest challenge is finding workable business models. A combination of technology and capricious consumers are altering existing media business models and making success with new models difficult. The traditional business models of media are eroding as audiences and advertisers respond to changing media markets and today both legacy and new media are struggling to find effective new business models for their existing operations and new products and services.

It is complicated because a fundamental shift in financing media is underway and many companies are finding it difficult to adjust their business perspective. During the period of industrial society consumers made relatively few direct payments for media and business models worldwide were based primarily on advertising expenditures, license fees, and tax payments. In post-industrial society, the rise of new social and economic arrangements and the proliferation of types of media and media content, business models are shifting toward a consumer model. Today, for every dollar spent in the U.S. on media by advertisers, consumers now spend 7 dollars. Media have shifted from a supply driven market to a demand driven market.

This means that companies must spend a good deal of effort ensuring they are creating value for customers. However, it is not enough to create value for customers. At the end of the day, economic value must be created for the company or it is not running a business.

Although media firms are rapidly entering digital video provision, there are significant business problems with contemporary deals involving new forms of digital video media. Companies are not buying return on investment, but are buying market share in hopes that income will follow. The trend is especially evident in social media, where companies are pinning their hopes on Internet advertising growth and increased abilities to better target advertising. It is a big gamble because social media users have been ad averse and click through rates are less than one-tenth of those on other internet sites.

You Tube was purchased by Google for $1.65 billion but has advertising revenues of about $250 million and My Space, which was acquired by News Corp. for $580 million, receives about $450 million in advertising revenue. On the face of those numbers these do not appear to be rationale business investments, but what the firms are actually doing is buying large audiences in hopes of positioning themselves as leaders in online advertising.

They are doing so because Internet advertising expenditures are heavily concentrated and the top 10 sites in the U.S. account for 70 percent of the total advertising expenditures. The high prices for social media are part of a fight for the top because of the ad revenue concentration. The companies are taking a business risk that may or may not pay off depending on the willingness of the users of those social media to accept advertising and monitoring of their activities.

Across digital video media we are now seeing a variety of company strategies. Some firms are pursuing ad-supported free media business models, whereas other firms are taking the road toward conditional access as part of subscriptions to Internet and mobile services. Still others are mixing income streams from both conditional access and advertising. The industry is not yet mature enough and consumer preferences are not yet clear enough to determine which will be the most successful revenue model. As a result, firms need to be agile, flexible, and able to change rapidly in their approach to digital video media.

Popular posts from this blog

CAN PUBLIC BROADCASTERS HARM COMPETITION AND DIVERSITY?

This is not trick question and it is being increasingly asked as public broadcasters grow larger, offer multiple channels, move into cross-media operations, and increasingly commercialize their operations. The Federal Communications Commission will have to consider that question shortly when it considers the effort of WGBH Education Foundation—operator of WGBH-TV, the highly successful Boston-based public service broadcaster—to purchase the commercial radio station WCRB-FM. WGBH is the top ranked member of the Public Broadcasting Service in the New England and produces about one third of PBS’ programming. It operates a second Boston television station, WGBX-TV, and WGBY in Springfield, Massachusetts. In addition it operates FM radio stations WGBH (Boston), WCAI (Woods Hole), WZAI (Brewster), and WNAN (Nantucket) and is a member of National Public Radio and Public Radio International. It operates two commercial subsidiaries involved in music rights and motion picture production. This mo...

Slow down

Estamos na última semana do verão e por aqui o tempo continua bem bom. Claro que não está mais tanto calor como em Agosto, mas ainda consigo andar de camisolas e tops de alças, t-shirts, vestidos e saias. Num ou noutro dia lá precisei de um blazer ou quimono de manhã cedinho ou de noite, mas ainda está calor. E o que é que eu quero com este paleio todo? Não, não é conversa de circunstância vir aqui falar do tempo. Só me chateia um bocado ver imensa gente já cheia de frio e em colecções de outono dos pés à cabeça quando ainda temos muitos dias com máximas perto dos 30º!! Really!!! Eu já dei uma olhada nas novas colecções e já me apetece o frio para vestir-me em layers, cores mais escuras, malhas, mas calma... O chinelo no pé e a sandália ainda estão mais do que permitidos! Porque já andam de botas, camisolas com gola e manga comprida, casacos de couro... se está tanto calor? Estamos em Setembro, ainda está bom tempo, não andem por aí cheias de roupa da nova colecção, qual vitrina da...

Why should you have a uniform?

Desde maio que não partilhava um look meu aqui! Oh-Meu-Deus!!!! IMENSO!!! Acho que nunca estive tanto tempo sem publicar por cá os meus outfits, mas a verdade é que não tenho tido tempos mortos para conseguir fotografar. Quando tenho tempo não tenho fotógrafo disponível. Este foi o look que usei no jantar do meu aniversário, há mais de um mês, I know, e é daqueles looks bem simples mas que resultam sempre lindamente. Eu adoro este tipo de combinações. E não podia ser mais apropriado aos últimos meses que têm sido non stop. Confesso que cada vez mais sou adepta de deixar pronta a roupa que vou vestir no dia seguinte antes de dormir. Pensar no que vou vestir antes de sair para o trabalho acaba por me gastar demasiados minutos, ainda não estou bem acordada, tenho o raciocínio lento, noto que perco mais tempo quando na verdade o que eu queria era ainda estar a aproveitar a cama! Não sei se são como eu ou não, mas este tipo de combinações salva-me os dias, ou melhor, uns minutos a ma...