Wednesday, December 06, 2006
Networks Struggle With Revenue Model
Network television execs have done a 360 degree turn in embracing the Internet as a distribution vehicle for their programming, but determining the value of their shows remains elusive.Time Warner has established a digital production division that will leverage its television programming into packages suitable for online distribution, according to MediaPost.
TW CEO Dick Parsons said "the company needs to find the sweet spot between leading and following the consumer" and figure out how to extract revenue online without undervaluing the content. The networks quickly learned that not too many people would pay $1.99 to watch an iTunes version of a "free show" and have moved on to ad-supported streams, but so far the few ads they are producing online don't come close to their TV equivalents in creating ad revenue per viewer.
Time Warner has this nice distribution vehicle called AOL that has a massive audience, and they should open the keys to their TV kingdom there.
You can see plenty of clips from HBO (part of TW's empire) shows Entourage or Real Time With Bill Maher on YouTube, but nothing current on AOL's In2TV website. Time Warner should offer clips for free and develop pay per view models for its top HBO shows. HBO makes its money from subscriptions, but by pricing shows high enough, they wouldn't threaten their cable deals.
In Australia, broadcasters are competing with online versions of current TV shows that will be available either as pay-per-view or supported by ads.
Most TV programs aren't worth paying for, so in most cases ad-supported is the way to go. Using clips of shows can generate ad revenue while also functioning as free advertising.
Posted By Jason Dowdell at 10:38 AM
Permanent Link: Networks Struggle With Revenue Model
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