Tag Archives: Online TV

Online TV Vs. Traditional TV: Who wins?

adoption-of-pay-tv-services-in-the-us
You will find more statistics at Statista

Remember the charts in 2008 showing iPhone’s market share under 5% versus Nokia’s above 50%? Doesn’t the Cable TV chart above remind you to those Nokia charts trying to show that the inevitable won’t happen? And then, it is only a matter of time.

For TV, the shift to online might happen sooner than what a first glimpse at the chart may suggest. If you add Netflix, Hulu, Amazon and iTunes shares on the chart, you get that online TV has already surpassed Cable TV. Yes, data can tell many different stories depending on how you show it.

Internet bandwidth is less and less a bottleneck for online TV to offer the same picture quality as Cable or Satellite. As we get more connected TVs, the difference between traditional and online TV blurs. For live TV, the consumer TV experience is the same whether the signal is carried over a cable, a satellite or an IP connection.

Very soon the only difference between traditional and Online TV will be the technology that carries the signal. While live TV on cable and satellite use a broadcast carrier, live TV for online is unicast.

To a viewer that does not change much. For an advertiser that is a big difference.

- With broadcast, all consumers must watch the same ads. You can only target your ad by understanding what content/TV-show appeals to what demography.
- With unicast, each consumer can watch an unique personalized ad. That means that marketers can tailor their message to the segment of one.

It is not only that marketers could program TV ads with the same granularity as you can program a Facebook or LinkedIn Campaign (e.g. I want my ad to be seen only by male people working for AT&T in Illinois). It is that you could even imagine to personalize your ad with the name of the viewer, or if permission given, with his customer history.

What do you think will be more valuable to advertisers? A mass media ad, like those aired on TV today, or the possibility to target specific niches, and even persons?

That is the hidden power of online TV, and this is what traditional media agencies (and TV broadcasters) don’t want you to know… so that you keep wasting half of your marketing budget.

“Half of the money I spend on advertisement is wasted. The trouble is I don’t know which half.“
—John Wanamaker (1838-1922)

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Why Google gives Android for free?

mobile-advertising-forecast
You will find more statistics at Statista

The chart already answers why Google gives Android for free.

Google is set to dominate advertisement, in any digital form.

  • Google dominates online, which it is about to surpass print media as an industry.
  • With Android, Google is set to dominate mobile ads, whatever form it may take, beyond search and display. As eyeballs go to mobile, Google will have an advantage position by controlling the OS.
  • And TV is the next one to disrupt. Youtube might be turning to be profitable by now. The experiments in online video ads are beginning to pay off, as it shows the amount of content agreements Youtube is getting into.

Googe wants to control the underlying technology platform, so that whatever evolution digital ads go, they are at the leading edge. Chrome and Android are the most obvious cases. On2, Widevine acquisitions followed the same rationale.

Google strategy to kill competitors is also getting more and more obvious: Give for free the core value of your competitor.

  • Google Apps against Microsoft Office
  • Chrome and Chrome OS, to make the OS irrelevant, as all apps run in the browser.
  • Android against Apple iOS

Digital advertisement, powered by Google, is one of the biggest enablers of the Digital Renaissance. Google enables both publishers and advertisers of any size to benefit from online advertisement. They are one of the biggest ‘patrons of the arts’ for the long tail.

Highlight data points in the chart:
Mobile ads market in US is $4 bn in 2012. Facebook managed to get $339m, even if they just started mobile ads this year.

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Online Movies 2019

uhd

In 2019, while Music downloads are mostly free, people is ready to pay for Movie downloads.

The Music industry has changed in the past ten years and artists make their work known by distributing it for free. Their revenues come from fans fees, live performances, merchandising, ad endorsements and downloads of live concert videos.

Movie producers maintain theaters as their main source of revenue, but they also cash on HD downloads, at a few dollars each, and TV-rights from Pay-TV broadcasters. TV movie channels have survived due to the high number of people that still find “zapping” as the way to discover what to watch this evening.

With set-top-boxes powered by 128 cores CPUs, 250 GB RAM and flash drives of  32 TB, fed by a broadband connection of 8 Gbps, the premium content is now delivered in Ultra-HD at 4320p with 20.2 audio channels and 60 frames per second. HDTV 1080p is the standard quality, except from some lower resolution user-generated-content sites at 720p.

The Immersive Game Consoles just announced promise to deliver a new genre of  immersive games, but also immersive movies and immersive communications within a 3D virtual reality environment.

TV shows continue to be ad sponsored, and also available streamed from the Net with the option to download them for only $0.99,  free from inserted and overlay ads. 

The cash cows for Pay-TV operators are live sport events, broadcasted in HD and Ultra-HD and enriched with interactive features like multiple-angles and “watch-with-friends”. 3D VR immersive live events broadcasts are not available yet, but it will come in the next ten years before 2030.

This post is a fictitious prediction of what could be written about online video and movies in ten years from now. I can not guarantee it will happen but I am ready to take bets of $1.29, $0.99 or $0.69

 

Online Video Gets the Headlines, IPTV the Revenue

An interesting analysis from Telco 2.0 compares the business of YouTube versus Hulu in 2008. The table summarizes the key data used in the analysis:

YouTube Hulu
No of videos/day 1000+ million 3-4 million
Average duration 2.75 min 27.5 min
% clips with ads 3-4% 80%
Average CPM $10 $15-20
2008 Revenues $118 m $52 m
2008 Loss $91 m $9 m

According to Telco 2.0, YouTube would be generating revenues of $118 million, versus $52 million for Hulu, while the low percentage of videos carrying ads in YouTube would make them lose $91m versus only $9m for Hulu.

Hulu business model is closer to that of broadcasters and it shows in a better margin. To make their disruptive model fly in the next years, YouTube will count on:

  • decreasing costs of infrastructure: storage, processing, bandwidth and efficient data centers
  • ability to place ads in clips from amateurs and semiprofessional creators
  • agreements with media companies to become their online video platform in return of a share of ads

Meantime more players are coming to the party, like CBS betting on tv.com to compete with Hulu (NBC Universal and News Corporation’s online video joint venture).  But, in a crowded market, also others are getting weaker, like Joost giving up their P2P model and with few options to survive only as one more flash video site. Despite Joost’s announcement, do not discount P2P TV, that is far from dead in China.

As for IPTV, according to a report from Gartner in September:

“Worldwide subscriptions to internet Protocol television (IPTV) services are on pace to reach 19.6 million subscribers in 2008, a 64.1 per cent increase from 12 million subscribers in 2007, according to Gartner, Inc. Worldwide IPTV revenue is projected to total $4.5 billion in 2008, a 93.5 per cent increase from 2007 revenue of $2.3 billion.”

In 2008, no doubt Online Video got the headlines, but the IPTV Telcos still got the bucks.

How Can IPTV Telcos Defend from Online TV?

Some facts about Online video:

  1. Online TV is growing. The number of people watching online video will grow from 563 million in 2007 to 941 million in 2013 according to ABI research, echoed by NewTeeVee.
  2. People watch far more hours of TV from the couch than on the PC. According to Nielsen (see table above found via GigaOm), 142 hours/month for TV versus only 2.5 hours/month for Internet video. Online TV will sure grow, but still a long way to catch the habit of watching TV from the sofa. A habit that will surely remain for long duration shows, like movies or NBA games.
  3. TV devices connected to Internet will grow from 28 million in 2007 to 300 million in 2013 according to IMS research echoed by NewTeeVee.
  4. Some lucrative consumer segments are ready to pay for quality, speed, ease-of-use and exclusive content (e.g. Apple knows very well this segment). Some reports foresee penetrations as high as 20% and even 50% in developed countries urban areas.
  5. Online TV is social. YouTube social component is part of its success. Joost has just added Facebook Connect.
  6. P2P will keep growing, and that includes also a growth of licensed content relying on P2P or P4P networks, although illegal traffic will still dominate for some time.

IPTV Telcos should defend from the threats of Online TV by embracing it:

  • Address facts 1 to 4 by providing a one-stop-shop to integrate Online TV within the IPTV Service. Provide a quick, easy-to-use way to enjoy Online TV from the couch, integrated into the IPTV Service. Why not embed iTunes, YouTube or Hulu channels?
  • People will manage to have only two to three devices connected to the TV in the living-room. IPTV Telcos should position their set-top-box to be the box to connect the TV set to Internet without hassle (including legal P2P) and in the way defend from other boxes that could make IPTV replaceable later (e.g. Apple TV, PC2TV or HTPC units).
  • Add Facebook Connect to IPTV, so that you can see who of your friends is watching the show, or browse what shows your friends are watching.

In other words, keep the boxes from “over-the-top” players away from the living-room for as long as possible. Differentiate from the “over-the-top” players with the unique experience that IPTV can provide on exclusive live HD content, like live concerts (expect music artists to do more of these, as recording sales drop) or sport events.

Related posts:
Will Internet TV Kill IPTV?