TECHNOLOGY, REVENUE SEEN STILL PROBLEM FOR STREAMING VIDEO
SAN JOSE -- While more than video streams were served over Internet last year, streaming video still is far too immature to be viable business because of technical limitations, lack of consistent revenue model and other issues, Digital Hollywood conference here last week was told. That’s good news for traditional TV and cable because serious battle for viewers has been put off. But it’s bad news for content creators because new revenue from re-purposing TV programming over Internet also is years away, speakers said.
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ABC.com Vp-Gen. Mgr. Brian Bowman said issues that needed to be addressed included renegotiating with TV unions for rebroadcasting TV content over Internet. “Re-use of any content that was shot for cable or television is incredibly complex,” he said. “Companies that are re-broadcasting video over the Internet are exposing themselves to the guilds. And contractual obligation is not just between us and SAG [Screen Actors Guild] and us and [other unions], but also the local cable affiliates who currently don’t allow the use of their content.”
Disney and its various online divisions are among most aggressive in experimenting with streaming video. Bowman cited Drew Carey Show simulcast of additional live added streaming content on Web during regular airing of show. Results on surface were impressive -- not only were ratings higher, but 600,000 consumers went to ABC Web site to access streamed Internet content during time period. But Bowman said: “We simulcast 600,000 streaming videos served during 30 minutes and there was a 50% failure rate. And this was using the cream of the crop, Real (Networks), Akamai, Digital Island.” Bowman said experiment was subsidized by participants: “Had we actually had to pay for this, it would have been extremely, extremely expensive. And I don’t think the eyeballs are there for the advertisers to be associated with something like that.”
Given realities such as those, ACTV Entertainment Vp Brent Imai, said broadband financial success still was several, expensive years off. “I don’t think any company is going to survive long-term without deep pockets,” he said. One thing that has backed Internet entertainment sites, streaming or otherwise, into corner was their promise to advertisers to deliver accountability and trackability of audience response far beyond what traditional TV could offer. Bowman said advertisers since had been squeezing Internet content sites by holding them to higher standard and saying they could get lower CPMs on cable: “Advertisers tell me, ‘You guys screwed up because when you asked for a $30 CPM you promised me trackability, you promised me an ROI and you promised me local targeting. And if you can’t provide that ROI, you better drop your rates.'”
Bowman said ABC.com currently obtained 90% of its revenue from advertising but is looking at other streams such as slotting fees, licensing, subscriptions. He said TV advertising slump was having trickle down affect and upfront TV ad market was off 25-30% now: “That’s going to have an enormous impact not just on television advertising, but cable advertising, print and the Internet.” Nonetheless, he said, Disney parent company has vowed its Internet division would be profitable in 18 months.