Wednesday, April 2, 2008

Networks see little profit in online broadcasting

There is no surprise in this article for me; online “broadcasting” is so new and ad models are still emerging. It’s going to be a while until this kind of service draws the audience and revenues (and develops the right ad models) that are more effective than what’s online today. I also doubt that it will replace TV (why is there always this mention in articles?) - but will find its place along side broadcast media – at a larger scale than at present, as people’s behaviors shift to match new content availability... And at the end of the day, it can be profitable, just not as much as TV — which is the same as how selling music through iTunes is profitable, but not as profitable as the old CD/in-store sales model.

From The Globe and Mail -- The biggest thing keeping television networks from wholeheartedly embracing the Internet is that online programming does not make nearly as much money as traditional TV, a new report says.

The report, to be published today by Convergence Consulting Group Ltd., indicates online broadcasting, despite its growing popularity, is still viewed by networks as a complementary business, rather than a replacement for TV.

"There is no current economic rationale for broadcasters and cable networks to abandon traditional TV or attempt to accelerate a transition to a total online model," says the report, which looks at the North American broadcasting and telecom sector.

The findings indicate why online TV in the U.S., though growing much faster than in Canada, still lags behind the prime-time offerings of network television, even though the broadcasters hold digital rights to most of their content. In Canada, where broadcasters don't own those rights, much less content is available online.

Smaller audiences and fewer commercial minutes during Web episodes and clips make it difficult to earn ad revenues comparable to television, said Brahm Eiley, president of Convergence Consulting. | Read full article

1 comment:

andy said...

Web casting, or broadcasting over the internet, is a media file (audio-video mostly) distributed over the internet using streaming media technology. Streaming implies media played as a continuous stream and received real time by the browser (end user). Streaming technology enables a single content source to be distributed to many simultaneous viewers. Streaming video bandwidth is typically calculated in gigabytes of data transferred. It is important to estimate how many viewers you can reach, for example in a live webcast, given your bandwidth constraints or conversely, if you are expecting a certain audience size, what bandwidth resources you need to deploy.

To estimate how many viewers you can reach during a webcast, consider some parlance:
One viewer: 1 click of a video player button at one location logged on
One viewer hour: 1 viewer connected for 1 hour
100 viewer hours: 100 viewers connected for 1 hour…

Typically webcasts will be offered at different bit rates or quality levels corresponding to different user’s internet connection speeds. Bit rate implies the rate at which bits (basic data units) are transferred. It denotes how much data is transmitted in a given amount of time. (bps / Kbps / Mbps…). Quality improves as more bits are used for each second of the playback. Video of 3000 Kbps will look better than one of say 1000Kbps. This is just like quality of a image is represented in resolution, for video (or audio) it is measured by the bit rate.