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Successful Internet TV – 1) Know Where You’re Going
In starting any business, I like to follow the unfortunately, but appropriately, named ‘SORE’ method, and this might be relevant to your Internet TV project:
- Strategy – establish your strategy and your goals, especially where you’re going
- Operational Plans – break your strategy into a specific set of plans; in this instance I’d look at: technology, content, commercial, promotion, financial
- Resources – what resources are you going to need from employees or outsourced capabilities to financing
- Execution – most importantly of all, eat elephants – break down your plans into bite sized tasks that you can track and tick off on a day by day basis
Strategy
Strategy was largely covered in the last post on this subject, but to summarise, if you don’t know where you’re going you’re never going to get there. This doesn’t mean that you shouldn’t question and change your strategy, but doing this too often is likely to scupper your eventual success.
Make sure that you do your research, especially by figuring out what you don’t know but need to know (current advertising rates, most popular websites for your sector) and challenge yourself.
The objective isn’t to establish a strategy based on your instincts, but to establish one based on the realities of your market. Pretending that you will get $30 CPM when the market rate is $15 can mean make or break for your service.
Also, don't confuse strategy with tactics. Tactics are what you deploy to achieve your strategy and can more easily be changed - they come under Execution. For example, you might decide that a key tactic to get your channel off the ground is to find an anchor sponsor rather than raise funds. You might even take the tactic a step further and offer shares or a discount to your first sponsor. These help your strategy, but they aren't your strategy, which may be to build a channel attracting x audience with y profits by 201x.
Operational Plans
Operational plans help you think through what building a business is going to take in great detail, they encompass your tactics and have the sole aim of advancing your strategy. It can be a list of bullet points, or far more comprehensive documents. If you’re looking for funding you’re likely to use these plans as the basis for a comprehensive business plan that you can use to show to potential investors.
Technology Plan - you will inevitably need to use technology to deliver your service. You will need to plan how you select, deploy and maintain your technology. For example, you can build your own video content delivery network, which is likely to save you money in the long term if you become huge, but is likely to cost you a seven figure capital outlay in the first instance. In this case, a plan to outsource this element of your technology might make more sense.
Content Plan - this is probably the area you know most about, so you know how expensive and time consuming content is to produce, and now you have to stop thinking about content like a programme maker and start thinking about it as a channel operator. The commissioning editors that you find challenging are now you! You need to figure out what content you need and in what quantities, you need to set production budgets and have an acquisition strategy; if you're looking for user generated content you need to figure out how to get the the people generating this content. Above all you need to get content that will engage and retain your audience. For example, regular live events or a regularly posted new show are good ways of alerting your audience and getting them coming back for more.
Commercial Plan - needs to look at the realities of the marketplace and what your 'formula' is; for example, you might identify that you need 100,000 unique viewers watching two ads a day, generating CPMs of $20 to break even. Now, what happens if you only sell part of your advertising inventory ? Or, how many subscribers at what fee do you need to break even ? Are you better off going after 10,000 paying $10 or 100 paying $100 (you want the latter, since they will consume less content and bandwidth, thus lowering your costs).
Promotion Plan - how do you build your audience ? How do they find your channel and how do they know to return to it regularly ? What will it cost you to build your audience ? Will the cost of acquiring your audience be less than the cost you can make from your audience ? And will that be enough to enable you to make a profit.
Financial Plan - finally, you will need to bring all of the above together into a spreadsheet and project your profit/loss and cash requirements. Of course, this is something all business do (or, at least, should do). But before you can complete the financial plan, you'll need to look at your resources.
You may decide that you also need to plan other aspects of your business such as Operations - determining how you will handle administration, human resources, etc..
Resources
These are the things you need to build a successful business. In the case of an Internet TV channel, they're most likely to be:
- Suppliers - of technology, content and promotion
- Staff - the people you need to help you build the business
- Capital - this can take the form of the equipment you need and the money you need to fund your business as it gets off the ground and expands
Suppliers are easy to research and find online, but selecting the right supplier to work with is tough. I tend to look at the following: experience - have they done similar work before; empathy - are they someone you feel you can build a working relationship with ? cost - what are they going to charge ?
Staff is probably less of an issue to content producers than it is to most businesses - if you're used to controlling thirty people on location, then you can juggle a team made up of contracted or part time workers; figuring out when you need full time staff is more difficult. There are certain roles, such as ad sales where continuity is important.
As for capital, it's easy to raise millions and spend millions building a business, but that means that you need to get a very high valuation for the business - remember, money costs.
In my experience, companies that start and grow without raising initial funds are more likely to succeed; however, this may not be possible and, at the time of writing, the options for a channel without an audience in raising funding are very, very limited. The best option is friends and family, or to take out a secured loan from the bank. You will need a track record and a proven business formula before you can go to an angel investor or a venture capital fund or company.
Execution
Drive the spreadsheet, not the business.
You can get lost in the planning and the delivery, but building any successful business is really just a case of controlling your costs, achieving your sales and then ensuring that you deliver the bottom line you specified in your financial plan whilst managing your cashflow (content producers are often spoiled in being paid on the nail by TV companies - the open commercial market is far crueler).
It sounds simple, but this is the part that most people hate and fool themselves over - it's often easier to deal with a client crisis, or be on location, or do another presentation to a sponsor. All of these things are essential, of course, but it's important to ask yourself 'what task in my operational plan does this advance ?' and 'does this fit in with my strategy ?'.
Distractions and opportunism are the biggest enemies of a successful internet TV strategy.
There will be some more specific information on execution in the following posts on this subject, when we start getting more specific about the challenges of launching an internet TV service.