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Stream This: Webcasting Large Entertainment Events - Seeing Through the Hype

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I love webcasting more than any other facet of this industry. It’s how I got my start 14 years ago and it’s what I used to do for a living. But it’s sad to see that, so many years later, there is still no successful business model in place for large-scale entertainment webcasts, aside from a few exceptions relating to sports content, such as MLB.TV.

In the years between 1997 and 2001, there were at least a couple of large music and entertainment webcasts each night on sites like SonicNet, Rocktropolis, MTV, Pepsi.com, and many others. Back then, no website was making any money from the traffic or from the content, but they didn’t need to. All that mattered at that time was getting eyeballs to your site and growing your page count while showcasing content available for free. Since the bubble burst in 2000/2001, there have been very few webcasts that have tried to reach a wide mass audience with entertainment-based content.

You'd think that, given the current state of broadband penetration and the degree of hype surrounding online video in general, we'd be seeing more large-scale webcasts. The problem is that no one has yet to find a way to monetize the content. While this is a topic we talk about every day in the industry in terms of on-demand content, producing live content is even more expensive and requires more in the way of resources and time. Some have tried doing pay-per-view (PPV) events with no success, as consumers are not yet willing to pay for something that has always been free.

No Cash Cow
When it comes to the content, entertainers and other rights holders want huge payments, as they think this stuff is worth a lot of money online. They falsely believe it is the equivalent of a PPV event on TV. They quickly learn, however, that there is no money to be made with PPV for webcasting, and they always end up scrapping the webcast when they realize it is not a cash cow. How many large entertainment webcasts have you seen in the past five years?

It takes a lot of work and money to put on a webcast, and even more when its goal is to reach a global audience. But that is exactly what MSN set out to do with the Live Earth series of concerts back in July. The Al Gore-promoted concerts had close to 40 video feeds from countries all over the world for a span of 24 hours. The cost to produce something like this runs into the tens of millions, especially since some of the content was also to be broadcast via traditional TV on NBC and Bravo, among other channels. (Which begs the question of why I—or anyone with a TV, for that matter— would watch it on the internet.)

Since it needs to be TV-quality and not just web-quality, that means even more cost in the way of audio and video production. Throw in the cost to license the content, pay the artists, pay for audio and video production services, buy satellite time, and purchase encoding services—not to mention distribution costs to deliver this via the web—and you’re talking serious money. That doesn’t even take into consideration the dollars spent on manpower, with perhaps 80 people dedicated to encoding and 100 people dedicated to running the website.

This event may make back some of its money, since NBC was able to sell advertising around it, but even if it does it’s almost surely a loss leader. Without the TV broadcast, some sponsor or MSN would have to kick in millions of dollars to cover the webcasting and production costs. The worst part about this whole thing is that it’s just going to play into the hype about millions of people watching video on the web as if it’s TV. It’s not. Remember Live 8 in 2005? How did that make money for the organizers or the webcasters? Where are the ROI articles saying how successful the internet medium was for webcasting to big audiences? Most of the revenue generated from that event came from DVD and content licensing deals after the webcast for mediums other than the internet ,not the webcast itself.

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