The Role of Advertising in iTV and IPTV Media and audience based business systems
This is a very broad brush stroke across some very complex issues.
IPTV or iTV, is an enhancement to traditional video media. Previous limitations have been removed.
The Commercial requirement for IPTV is not born due to the technology, but rather the economic opportunities that the technologies have brought about, and the requirement to bring about commercial solutions to the economic challenges. In this case, Wide Area Computer Networking. Wide Area Computer networks are now commonly deployed as high-speed Internet Protocol connections.
Principle challenges brought about by the technology, is not distribution, nor is it duplication, replication or production. These technologies provide easy to use consumer interfaces, which allow them to easily transfer and playback video content. Additional easy to use interfaces are produced to enable transfer to a multitude of devices. Youtube has shown that one upload of a content asset can effectively be virally marketed for viewership audiences of over 49 million views. Numbers close to this level can be achieved without the support of traditional broadcast networks or news and video outlets. Such numbers can be achieved by an author with a very limited production budget. Potentially, down to a mobile phone and a friends personal computer. The mechanisms for mass media have changed.
So what is the problem?
Monetising content. The problem is not how to easily distribute content, it is how to inherent economic value in association to viewership, for the entire value chain.
Within this issue, there are a range of components, as the diagram attempts to describe.
The value chain represented in this diagram, present some component which is currently automatically embedded within any content piece, whilst others have not been established to the same level of certainty. Economically, there are a range of members throughout the value chain who are able to profit, whilst others are not.
This is not a new problem. The problem started upon inception of the medium. However, the problem has grown rapidly. Video is a broadly used medium. Video is easy to understand, easy to consolidate, easier to segment and orientated into a range of suitable business rules. It is a known intangible asset. It is easier to understand than the array of intellectual property assets that are progressively also becoming translated onto computer network compatible systems.
We are entering a level of internet commercialisation, whereby it is becoming apparent that not all internet data should be treated equally.
Voice traffic, needs to be treated differently, and in-order to ensure it is reliably provided. Similarly, video has a range of unique requirements.
Local Content Distribution.
The Distributor once provided free local networking. However, as bandwidth developed, in bursts, reliability becomes a greater issue. Local distributors are no longer able to develop their localised networks without on-charging for consumers.
Today, they on-charge the full cost of internet bandwidth. Although some local locations are more expensive to service, than other locations on the other side of the planet, these drivers relating to poor competition should not preclude the common sense approach of charging consumers a lower price for local services, than what it costs to secure the same service, from an international location.
Today, the distributor provides ubiquitous content access to services across the globe. These services include Virtual Private Network services, which assist users with a range of practical technical tasks.
Equally, these services provide direct access to international sites where content is accessible freely. Sites such as Hulu, ABC iView, BBC iPlayer and a raft of other similar sites provide near-first release, accessibility to premium content freely.
Further to the ability to access, additional services such as ad-muncher, enable a user to remove the advertising embedded within these streams. Which, accumulatively enable a user anywhere in the world to watch new-release content, ad-free for the cost of the access device and the monthly usage or subscription charges charged by the distribution organisations.
Yet, commercially there are limited commercial options to make the same content service available to consumers, from local sources. Further to the limitation of access, if access is available locally – it is often more expensive by a compound rate. This does not seem to be a commercially viable paradigm, but rather an un-viable one, that is the cause of rapidly changing drivers to a new marketplace.
The Platform created by internationally competitive efforts is one of freely available content.
Advertising revenues is the key. However, do the same advertising rules apply?
Advertising on mass controlled markets, such as broadcasting territories or newspaper, are more easily be supported by market leaders advertising budgets on a fairly exclusive basis. National and international brands, with their sizable budgets and senior relationships are highly appealing to these groups, as the medium has limited coverage, and each sale provide a much more sizable transaction. Furthermore, the sales teams that execute the budgets are only required to manage a limited number of relationships; the ones with the multimillion dollar advertising budgets.
Perhaps it is not reasonable to expect that these cultural media houses are able to migrate to the internet philosophy.
More recently, a range of new advertising products have started to become available.
These products begin to service a new sector of SMB Advertising Services.
The SMB market has traditionally been outside of scope for video based advertising. In fact, until internet, there was a significant difference between the scope of services made available to SME and Enterprise markets, to those that are offered to the SMB market.
In-order to service the SMB Market, the shape of the advertising services industry needs to change. Become more open to business, and allow for smaller transactions. However, no-matter the availability, advertising also needs to be easy to associate to the content people watch. This has an effect on syndication, and related syndication business models, which can provide for an array of media service providers, integrating into a singular delivery path.
Similarly, metadata systems for content association also need to be progressed, in-order to best, beneficially service the content creator and the advertiser, whilst providing a coherent, and streamlined user experience.
However, as a result, your fish and chip shop may be advertising on the 6 o’clock news, in the not so distant future. Nonetheless, there is a lot of work do be done between now and then.
I look forward to keeping an eye on the continuing developments in this sector. Stay tuned.