Streaming Media Europe Keynote #4: Creating Original Online Video Content—Where is the Funding?
Nicholas Wheeler, managing director of ITN On, the online subsidiary of ITN, spoke today at Streaming Media Europe about the vagaries of the changes that online has wrought on the creation of original video content.
"There are a diversity of content and business models emerging," said Wheeler. "Besides the traditional bespoke content production, where the content creator is paid up front, the owner chooses where the content is viewed and the distributor makes money on sales of content."
Wheeler posited that the "career path" of a piece of content created in the old model was fully mapped out at the outset, including mapping of the long tail.
"A newer model of original content creation is emerging where content is created on a more speculative basis and syndicated out," said Wheeler. "This new model means that content creators share a bit more in the risk, similar in some ways to the existing co-production models. Yet the new model means that the content creator may see a bigger share of both the risk and the reward as they share in the growth of the content's revenues."
What we have now, Wheeler is saying, is a shorter, fatter long tail in digital media, which also starts right at the very beginning but is completed in a much shorter time frame.
"In this new model, we do have long-tail issues if the technology changes in mid-stream," said Wheeler, "and we always face the fragmentation of media."
Wheeler explained this fragmentation by way of an ITN example: having produced the News at 10 for the past 55 years, ITN was used to having its content consumed one time.
"Watch it or miss it drove our content for decades," said Wheeler. "Now we put our content on dozen of different sites and it has a much longer life than just the 10 o'clock time slot."
Moving on to value, Wheeler said he sees three areas of value in the online world: timeliness, exclusivity and aggregation.
"We must create new value in order to ask consumers to pay for content," said Wheeler. "Timeliness may be one value: while someone can watch news content at home for free, if they want to watch it wherever they are, that may generate a value model. Since paying for content on the mobile is the norm, we think this model mike make sense for timeliness value growth."
On exclusivity, Wheeler pointed out that Sky's purchase of premiere league football has pushed viewers to Sky. He added, though, that these exclusive content deals are few and far between, which leads to the third value model of aggregation.
"Today we're seeing a world where we might move from 12 million viewers all watching News at 10 at the same time," said Wheeler, "to 12 online sites of 1 million viewers each. In this model, we have to work out the confusion and complexity of how advertisers view these separate 12 sites versus the one single location - television - that they have valued in the past."
"As such, it's hard to monetize at the same level," Wheeler continued, speaking of the industry as a whole, "so this has led to "free content" concepts used to drive up the number of viewers. On the whole, we're not at the level of viewership to generate enough advertising revenue to lead to the creation of free original content for free, but we soon may be."
Wheeler then provided examples of companies aggregating all their products in to a new media model, including Hasbro which has a conglomerate of toys and games that it has leveraged to commission movies around those toys, such as Transformers, in a similar way to what Disney's MacBean talked about in an earlier keynote.
"Hulu is another example," said Wheeler, "as they take old content and share it for free, but charge for advertising. Hulu has stated a lack of interest in creating original content, so they are relying on others to take the risk."
To encourage online innovation, Wheeler offered a few tips.
"To move to a new platform in its own right, services are required," Wheeler said, referencing Club Penguin as a way to move to engagement as a model for new revenue. "Twitter is another example, as is mint.com, and Current TV uses integration to allow users to make advertisements. If the advertisement is good enough, they'll publish it on the web and perhaps even to television."
Wheeler ended with two other examples.
"Radiohead is selling direct to the customer," Wheeler said, "defying their label in a way that allows them to directly interact with fans, sometimes giving away the music for free as they sell other content around the music. The biggest recent announcement, though, is that NewsCorp is beginning to charge for all its content."
"But Rupert Murdoch has also said 'we have one certainty, we can never be sure where the industry will end up'."