Broadcasters Are Doubling Down on Online Video

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Specialty Networks
From the specialty networks, many of which own at least some (and in some cases, all) of their content, come some of the most interesting strategies for creating an online presence. Some of their success can be attributed to having content rights and, therefore, the ability to readily take a wide range of content online; some can also be attributed to having a focused theme that is conducive to an online brand extension.

For MTV, content rights can be an issue since the network does not own all its content. The network is still struggling with its online content story, recently announcing that it will no longer allow other sites to embed its music videos, forcing eyeballs back to the MTV brand. According to Nick Rockwell, MTV executive vice president and CTO, from a CPM (cost per thousand page impressions) perspective, MTV’s online advertising business is healthy, although the network, like others, is still trying to figure out the best way to support MSOs and content rights. MTV thinks that drawing people online is better than having consumers watch DVR content because actual views of ads can be verified and monetized, even though the business model for supporting video online is still unclear. The channel has had some success with archive content. MTV’s parent company, Viacom, has cataloged some older properties, such as the entire South Park franchise, but puts very little in the way of new content up for extended periods because of rights issues and concerns about pulling eyeballs away from the TV; older content is safer because it is not going to be watched at all if it’s simply left in digital mothballs.

Discovery Communications, Inc.—which owns networks such as the Discovery Channel, TLC, and Animal Planet— has had success extending the brand via its online presence. According to Josh Freeman, executive vice president of digital media for Discovery Communications, the company’s online strategy "is all about discovery and fulfilling curiosity, and extending the consumer experience from what is watched on TV." To this end, Discovery experiments with many forms of online content, including brand extension and archive revival. While the network has many full TV show episodes online, the web experience is targeted to value-added information, including behind-the-scenes clips, with up to 400 video clips a month added to the site that are not TV episodes. According to Freeman, not only does this enforce the TV brand, it helps keep a show’s brand alive between seasons since consumers can always find something about their favorite shows and stay connected to the brand. To help support brands during on and off seasons, the online channels also provide static information (such as blogs) organized around vertical topics (such as dinosaurs or sharks) so that consumers turn to the network as a knowledge leader, regardless of what is showing on TV. In addition, the network realizes that the web is an excellent way to capitalize on the historical catalog, giving it new viewership and extending the content’s life (for example, Shark Week, now in its 21st season, is cataloged online). While this multifaceted approach is starting to be monetized, Freeman cautions that "we must not get beyond our skis," reinforcing that even done right, the business models are still evolving.

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Figure 2. According to Discovery Communications’ Josh Freeman, the company’s online strategy "is all about discovery and fulfilling curiosity, and extending the consumer experience from what is watched on TV."

For ESPN, the mission "is to serve the fan, no matter where they are," says Damon Philips, vice president of ESPN360.com, the network’s live online presence. "Fans use different media platforms at different times, in different places, for different purposes. Our experience has told us that it is not necessary for one media behavior to decrease in order for another to increase, because having access across multiple devices increases the time people can spend watching video."

Online consumers can also benefit from "infinite" channels that help them reach long tail content, get stats, and participate in social media functions, such as fantasy leagues. For ESPN, online video has done the opposite of cannibalizing TV viewership. The network has done extensive multimedia/cross-platform research and learned that people who use one medium heavily use others at an above-average level and that people who stream online video actually watched more TV than the average TV-only consumer of the ESPN brand. When the Alex Rodriguez steroid use story broke, in the first 24 hours the top five A-Rod stories on the ESPN website drove 1.6 million visits and more than 2 million views of A-Rod video coverage. At the same time, TV broadcasts of SportsCenter saw ratings jump 43% week over week. The brands have proven highly complementary for ESPN. But business models around monetizing the content are still evolving, and so far the greatest success is increasing brand recognition.

HSN, aka the Home Shopping Network, launched an ecommerce website 10 years ago and has been discovering and creating synergies between broadcast and online since then. HSN is unique in that commerce is the point of the channel, so getting consumers in front of the brand is important; cannibalization from one medium to the next is not really an issue.

While the bulk of viewers and purchasing dollars come from broadcast, according to Gerard Johnson, HSN’s director of technology, "Taking advantage of participatory channels online allows us to have expanded product descriptions, usage information (for example, recipes tied to a cooking product), and even some social networking, where customers can review and rate products they bought via the website." With HSN, consumers increasingly get curious about a product on TV and go to the web to learn more and buy. Because HSN is less worried about cannibalization than most, it has done quite a few innovative things online. To continue the online synergy, HSN runs HSN.com, a traditional website, and HSN.tv, where consumers can watch HSN live and in recent archive, essentially re-creating the broadcast channel while adding a host of features. The site also promotes some products via video on social networking sites, such as Facebook and YouTube. According to Johnson, the cross-platform strategy pays off: "Our multichannel customers tend to spend more than our single channel ones."

The single most successful specialty online video brand today, in terms of monetization, is Major League Baseball’s MLB.com. A unique twist on the niche or specialty brand, MLB owns all its content and has decided to charge a subscription fee for using the site. This "channel," which doesn’t have a single broadcast analogue, capitalizes on an avid fan base that cannot possibly have access to all games via traditional means because of limited broadcast networks. MLB.com takes advantage of the fact that the internet offers unlimited channel capabilities that provide viewers unlimited choice. MLB.com has also successfully taken advantage of the online medium for providing rich player information, statistics, social media (fantasy leagues), and merchandising, providing an integrated, video-content/rich-content experience and meaningful internet features for viewers, monetizing the site by charging as a premium TV station normally would. MLB.com also does not broadcast local games, taking advantage of its knowledge of where its users are, thereby not alienating its traditional game broadcaster affiliates.

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Figure 3. The single most successful specialty online video brand today, in terms of monetization, is Major League Baseball’s MLB.com.

Subscription Networks
Networks that rely on subscriptions, such as HBO and Showtime, are in a unique predicament. Today they monetize content when people specifically buy their channels, and any cannibalization of eyeballs from the TV to the PC is not acceptable—at least not until online monetization models have evolved. However, using online video to promote new online subscriptions is acceptable and, potentially, successful. For Showtime, online represents a way to strengthen the TV brand. The network uses online video as a way to distribute sample programming, such as a new show pilot, and also uses the online channel to build unique properties. The pilot for United States of Tara was shown on Showtime’s website and across many content partners, resulting in 1.6 million views of the pilot online. Showtime promotes the Lezberado vlogger on YouTube, which supports the broadcast show The L Word. One of the Lezberado clips is the fourth-most-watched video ever on YouTube. But everything done online must support broadcast because of the network’s revenue model.

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Figure 4. The pilot for Showtime’s United States of Tara was shown on the network’s own website and across many content partners, resulting in 1.6 million views of the pilot online, including more than 700,000 on YouTube.

Local Stations
Local stations face a unique challenge. If eyeballs move away from major broadcasters, local stations also lose eyeballs. Along with eyeballs goes money, putting local broadcasters in a bind. One broadcaster, WRAL out of Raleigh, N.C., is considered a leader in taking local content online. The station gets 2–3 million unique visits a month and 80–100 page views a minute, according to Jimmy Goodmon, WRAL’s vice president and general manager for new media. "Our strategy is born out of knowing it’s hard for networks to maintain a fair affiliate program, because it’s challenging and not worthwhile to inject local ads and content on their sites. But all things are local, all news starts locally and much content, like weather and entertainment news, is only local," says Goodmon, who adds that providing enriched content, such as HD video, is helping build a strong online brand.

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