Internet Video - Conditions of Profitability
IDATE, November 2008, Pages: 60
Internet video will become a mass market
This report examines the changes taking place in online video distribution and analyses content providers’ strategies, how associated costs and
revenue are evolving, as well as the impact of new TV programme formats. It also provides a working model that opens up debates over the conditions of profitability for each type of services.
“IP video consumption is skyrocketing in all of the major markets covered by this report (USA, the UK and France)”, says Jacques Bajon, Project Leader of the report, “and around the globe. Video will continue to drive the increase in Internet traffic as consumption rises, as TV services migrate to the Web and with the expected improvement in picture quality – the turning point here being the increased consumption of high definition programmes”.
- One thing is clear: Internet video will continue to expand and now constitutes a path for development and diversification for TV industry players. Timeshifted viewing is still only nascent and a great many players from inside and outside the television industry are gambling on a position in this market.
- After the first trials and rollouts, we have reached a consolidation phase where the issue of turning a profit is being raised. Up until now, only the sector’s leaders appeared capable of achieving a positive revenue/cost differential with their services (excluding committed costs).
- Although point-to-point distribution for on-demand services offers very limited chances of improving what are primarily variable costs, the path to success appears to lie in better monetisation of the services.
- What needs to be examined next is the impact of improved video quality – which is still below that of what viewers get on their TV screen – of taking greater account of the Web’s community aspect and the opportunities for carrying these services beyond the Internet and onto other devices.
Key questions
- Online video towards a mass market?
- What are the concrete consequences of a short, mid and long-tail approach?
- What are the key players offering in each category of service: catch-up TV, premium VOD, niche services, Web TV networks and video portals?
- What impact on the different revenue models: ad-funded, fee-based?
- What are the next stages in the development of UGC-based services?
- What impact the migration of services will have on the TV set?
- How profitable are the different types of service?
- What are the keys to improving the economic equation of these services?
1. Online Video will become a Mass Market
1.1. IP video consumption skyrocketing
USA, France, The UK
1.2. Video will continue to drive internet traffic growth
1.3. Picture quality and multi-platform offers
2. The Services
Case studies: strategies, audience, offer, business model, distribution mode
2.1. Short, mid and long tail
2.2 Catch-up TV- ABC
BBC iPlayer
Hulu
M6 Replay
2.3 Premium VOD
Apple
Amazon Unbox
Canalplay
Netflix
Video Marc Dorcel
2.4. Niche services or Web TV networks
2.5. Video portals
YouTube
Dailymotion
Joost
Veoh
2.6 Social networks
MySpace
3. Technologies and Distribution Costs
3.1. Download, progressive download, streaming
3.2. Unicasting (transit)
Solution
Distribution costs
3.3. CDN (95th percentile, GByte)
Solution
Distribution costs
3.4. Multicasting
Solution
3.5. P2P
Solution
Hybrid P2P
Distribution costs
4. Revenue models
4.1. Advertising
Advertising models for UGC video distribution sites
- Ad Banner or in-stream ads
- Ad revenue Sharing
Advertising models for TV channels’ internet services
Niche video sites: value hard to qualify
4.2. Fee-based models
Coexistence of fee-based and ad-funded markets
Premium channels cannot switch to a free model online
DVDs dematerialization
5. Conditions of profitability
Simulations by type of service/player
5.1 Model construction
Model hypotheses
Outputs
5.2. Catch-up TV model, e.g. ABC, M6 Replay
Hypotheses
- audience, content, revenue, distribution costs, personnel & administration
Results
Leverage effects
5.3. Premium VOD model, e.g. Canalplay, iTunes
Hypotheses
- audience, content, revenue, distribution costs, personnel & administration
Results
Leverage effects
5.4. YouTube / Dailymotion type model
Hypotheses
- audience, content, revenue, distribution costs, personnel & administration
Results
Leverage effects
5.5. Model benchmarks
Income and costs per video
Cost per hour of video
Value-added per video
6. Guidelines
Growth of video consumption
Impact on the growth of IP traffic
PPV and ad revenue and gross margin
Costs and Peer-to-peer issues
Differentiated results for the leading premium VOD, catch-up TV and UGC services
How to improve the services’ economic equation
Tables, figures & insets
Table 1: Catch-up TV: premium business model simulation
Table 2: VOD premium business model simulation
Table 3: Viral platform business model simulation
Table 4: Revenue & costs per video and (000) videos according to revenue and monthly video consumption hypothesis, in EUR
Table 5: Cost per hour of video according to monthly video consumption hypothesis, in EUR
Table 6: Value added per video according to revenue and monthly volumes hypothesis, in EUR
Figure 1: Number of videos viewed, USA
Figure 2: Use of the Web in France for entertainment purposes
Figure 3: Residential traffic growth forecasts
Figure 4: Reasons for dissatisfaction with the quality of Internet video (2007)
Figure 5: Cross-media ad campaign for the movie "Arthur and the minimoys"
Figure 6: How services are positioned
Figure 7: ABC.com survey
Figure 8: ABC.com
Figure 9: Advertising interface on the ABC player
Figure 10: Move Networks solution used by ABC
Figure 11: BBC iPlayer
Figure 12: M6 Replay
Figure 13: Hulu 14
Figure 14: Fox network’s catch-up TV
Figure 15: iTunes Store downloads
Figure 16: iTunes branching out into movie rental
Figure 17: Amazon Unbox "Click & Play"
Figure 18: Netflix
Figure 19: Canalplay
Figure 20: TF1 Vision offers French premieres of American TV series
Figure 21: AEBN’s pay per minute model
Figure 22: Nextnewnetworks
Figure 23: Revision3: "Body by Venus" product placement
Figure 24: YouTube, the number one video site
Figure 25: YouTube growing faster than Google
Figure 26: Examples of ad formats on YouTube
Figure 27: YouTube architecture
Figure 28: Dailymotion channels
Figure 29: Dailymotion ad rates in France
Figure 30: Joost 23
Figure 31: Coca-Cola’s Coke Bubbles widget
Figure 32: Joost: a hybrid P2P solution
Figure 33: Veoh 25
Figure 34: Veoh unique visitors
Figure 35: MySpace TV USA
Figure 36: MySpace-Hulu link
Figure 37: Progressive download vs. streaming, according to Flash
Figure 38: Download, progressive download, streaming
Figure 39: Cost per Mbps a month, according to volume of traffic in transit
Figure 40: Cost per Mbps a month, according to volume of traffic
Figure 41: Hardware as a percentage of total costs
Figure 42: How a Content Delivery Network works
Figure 43: Cost per Gb of data according to average traffic volume, in Gbps
Figure 44: Cost per Gb of data according to average traffic volume, in Gbps
Figure 45 : Multicasting system
Figure 46: Kontiki P2P solution: BBC iMP
Figure 47: P2P TV
Figure 48: Velocix pricing
Figure 49: Cost per Mbps in USD according to volume of traffic
Figure 50: Monthly cost in USD according to volume of traffic
Figure 51: Monthly cost in USD according to volume of traffic
Figure 52: Cost per Mbps according to volume of traffic
Figure 53: Growth of online video revenue an inexorable trend
Figure 54: Online TV revenue in the UK
Figure 55: But video revenue currently accounts for only a fraction of TV and online ad revenue
Figure 56: CPM per site category
Figure 57: SkyPlayer subscription model
Figure 58: Breakdown of DVD sales revenue in France, 2007
Figure 59: Growth of DVD revenue in the United States
Figure 60: Catch-up TV revenue & costs according to volume of content
Figure 61: VOD premium, revenue & costs according to the volume of content
Figure 62: Viral platform, revenue & costs according to the volume of content
Figure 63: Business model frameworks, illustrations
Inset 1: Example of Web TV networks: Revision3
Inset 2: VOD on cable in the United States
Inset 3: The VOD market in France
- Amazon Unbox
- Apple
- BBC iPlayer
- Canalplay
- Dailymotion
- Hulu
- Joost
- M6 Replay
- MySpace
- Netflix
- Veoh
- Video Marc Dorcel
- YouTube
Product Samples
A sample for this product is available. Please Login/Register to download this sample.
Customers who bought this item also bought
All rights reserved. © Copyright 2013 Research and Markets WWW4
Terms and Conditions Privacy Policy Publishers Employment Opportunities Site Map Link to us Webmaster Affiliate Network
