Streaming Media White Paper 2008 - (Page 23) www.streamingmedia.com 23 Making Internet Video a Profit Center How to Increase Revenue and Lower Costs KEITH KOCHO, FOUNDER AND PRESIDENT, EXTENDMEDIA Despite the explosive growth of internet video distribution and consumption, the debate continues about the viability and revenue potential of digital video businesses. Consumers are accessing digital entertainment over a growing array of platforms and devices, from PCs and mobile phones to portable and gaming devices. Seventy-three percent of computer users are now broadband video consumers, attracting $500 million in online video advertising in 2007, (eMarketer,“Making Content Pay,” August 2007).Yet, in the midst of this behavioral shift and distribution channel explosion, providers of video services are struggling to manage the technology and business complexities of this nascent industry. This article will address these complexities and provide digital-video business strategies to increase revenue and lower operational costs. Implement Numerous Business Models: The Revenue Multiplier One of the central challenges in increasing revenue today is the diversity of commercial outlets and economic models.Some distribution partners are based on an ad-supported model Is free really the only future of video? Not likely. While free services like Hulu, Joost, and others are enjoying great popularity, iTunes users are paying for millions of videos and the Netflix broadband rental offering is off to a nice start. The consumers have spoken, and what they really want is choice.” in which they or someone else serves as the ad network. Others require pay-per-view or download terms, and innovators support multiple models, including ad-supported, rentals, subscriptions, and download-to-own. In short, any and all business models should be part of the discussion. A core digital media platform requirement is the ability to support commercial diversity and efficiently experiment with a variety of business models. The lack of flexible processes around content packaging, pricing, bundling, and advertising prohibits effective revenue generation. In many cases, revenue opportunities are missed because service operators are not able to support certain channels or business models. An openness to business model diversity is only the first step to overcome these challenges. A successful digital video business also requires a flexible broadband video infrastructure that includes: • Support for ad-supported,downloadto-own,rental,subscriptions,couponing, gifting,and other means of monetizing the video service offering. It is no longer practical or economically advantageous to focus on a single business model. Users consume content across all models; a flexible infrastructure allows simple and inexpensive experimentation and adjustments. • Unlimited pricing, packaging, and bundling flexibility. Video assets are mere files on a hard drive until they are packaged as a product offering and made available to consumers.These video asset products may be bundled with other products, delivered as part of a subscription, or provided for free on a promotional basis.As user feedback and revenue results come in, service operators will need to change these offerings on the fly (i.e. alter the timing and length of ad placements or download pricing models) to optimize revenue and meet ever changing consumption habits. • Simple and robust integration capabilities with other value chain participants. For example, video delivery infrastructure should not prescribe to a specific ad network but rather offer the flexibility of integrating with a partner (or partners). Similarly, it should provide the ability to integrate with existing or best-in-class ecommerce and payment platforms. Unify the Backend: The Asset Ingestion, Content Management, and Distribution Backbone As the number and type of distribution outlets and digital video services increase, creating a unified process for managing and distributing digital video content becomes more complex.A primary challenge is the ability to transform and package one video archive across multiple viewing platforms and/or service providers. Few organizations efficiently do this while most stay stuck with 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. Muddled Metadata Metadata represents all of the potentially relevant data about the video asset. The challenges associated with metadata draw striking similarities to the inefficiencies in any content workflow. Metadata supports content discovery (search) for the consumer and can add significant richness to the consumer experience by providing related content such as cover art, trailers, thumbnails, and ratings. Furthermore, metadata supports the productization of assets by providing a platform http://www.streamingmedia.com
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