Tuesday, May 02, 2006

Making Money from Broadband

As a warm up for my speaking gig on Wednesday at World Telemedia in Berlin, I thought it might be interesting to reflect on some of the commercial aspects of running a TV service over IP.

The first lesson is that there is no golden bullet. Like most other businesses, it takes graft and more than a bit of nous to make a success of a broadband or mobile TV channel. The industry is so young that there are few clear winners to date.

What does work is a systematic approach to all of the opportunities presented by a TV over IP service.

Sponsorship has proven to be the most effective revenue stream to date for channels like Cycling TV and Ford's Go Beyond channels.

Advertising is becoming more viable as advertisers and agencies alike wake up to the potential of targeted and accountable delivery of TV ads.

Viewer paying is not as strong as many people might suppose, but the right content and audience can deliver good revenues through sponsorship, pay per view or microcharging, or a combination of these. Microcharging involves making small incremental charges as content is consumed and is likely to become popular for mobile channels.

Other income streams include ecommerce - it's surprising how many people will pay for physical and downloadable content even when it's available online to stream for free; gambling hasn't really taken off, but there are companies such as Permium TV who are, apparently, doing very well through this.

Competition and premium income from mobile charges are already reaping large revenues in some contexts and, as the prevalence of text competitions on traditional TV shows, this is likely to become a substantial source of income as the cellphone becomes more and more of a personal wallet.

What is certain is that there is serious money to be made from delivering the right content to the right audience in a convenient way they appreciate.

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