DVB World 2010 – Lisbon: Online TV is increasingly being dominated by broadcasters controlling access to their content, rather than making it available to third party sites, according to Screen Digest’s Ben Keen.
In a presentation entitled The Over-the-Top TV challenge, Keen explained that high content prices and low revenues mean that service providers often take a loss on pure play service.
Although most of today’s TV content is being monetized by advertising, the traditional TV that consumers pay for on a programme-by-programme basis is being dominated by Apple’s iTunes store. According to Screen Digest projections, UK online TV revenues will be worth around $0.56 billion by 2012, with advertising only contributing $0.1 billion and subscription an even smaller proportion. The $3.2 billion US total paints a similar picture, through drawing on higher advertising revenues.
In the United States, broadcasters have been able to build up their own advertising revenues by withholding their content from the pay-TV companies, resulting in the TV Everywhere strategy adopted by cablenets Time Warner and Comcast as well as Verizon’s IPTV network FiOS.
Keen noted the ‘Trojan Horse” approach adopted by games consoles manufacturers, and exploited in the UK by Sky and the BBC iPlayer. “We call then Trojan Horse devices because the consumers buy them for one thing and discover there are many other things they can do with them,” he explained. Since 2009, 90.9% of online TV show revenues have come from device dependent purchases.
Although this approach has so far not been tried in the US, Keen remarked on the similarities between the Sky approach and the success enjoyed by Netflix since it added the ability for customers to download movies as part of the hitherto DVDs by post subscription.