Broadcasters, carriers, trying to catch up with online demand for TV programming

Online television viewing has reached a tipping point, and carriers need to move faster to catch up with the trend, industry experts say. More Canadians now catch their favourite TV shows online than via personal video recorders (PVRs) and video-on-demand (VOD) combined, according to a recent survey of 1,000 people by Solution Research Group, a Toronto-based market researcher. Half of the respondents said they had watched TV programs online, and 25 per cent said they had done so in the past week, according to the survey, released March 10. About 53 per cent said they watched TV online to catch up on shows they missed. But the online broadcasting initiatives of Rogers and Bell are not yet well-known: only a third of respondents had heard or seen something about them. Carriers and broadcasters are struggling with many issues as they transition content online, but are mindful of the lessons learned from the music industry, which was clobbered by downloading before it could transition to an effective, online distribution system. One major stumbling block for carriers is developing advertising models for expanding and monetizing online TV programming—without cannibalizing existing television subscriber bases. Right now, Rogers and Bell offer online television bundled only as value-added services to subscription packages. “We’re not planning to include advertisements in our service. The way we monetize it is through our subscriptions,” Michael Freeman, director of online experience at Bell TV, said in an interview. But Rogers is exploring advertising models for its online programming, David Purdy, vice-president of video products at Rogers, said in an interview. “All of our content, except pay TV, has ads, and we’re working with specialty channels and studio partners to monetize our online service,” he said. “It’s a big part of our strategy.” Purdy pointed out that only news and sports need to be seen live, and as content migrates online, most of it can be made available on-demand. But the viewership data that advertisers use to make their purchasing decisions is still contained in silos, making it difficult to buy advertising on a specific show delivered on multiple platforms. “A big impediment is that there are different sets of data and analytics for each platform: Nielsen and others for TV, Rentrak for the Web, comScore for advertisers, and another for mobile,” Purdy said. He added that streaming and downloading on the peer-to-peer networks is deterring successful online models. “Doing the reconciliation around a media buy is very difficult with different sets of analytics. We need a unified approach, and we have to tackle this as an industry. The sooner online TV makes sense financially, the less prone people will be to piracy.” Another issue is that consumers are resistant to online TV ads, said Andy Walker, executive producer of Butterscotch.com, an online technology learning channel provided by Tucows, a Toronto-based Internet services company. “We live and die by video ads in our business model, but consumers are even resistant to pre-roll ads of 20 seconds,” Walker said. Consumers are willing to see a few ads on free, high-quality content, but producers are still figuring out how to develop successful ads, he said. “We’re missing the tools to do online TV ads well. They’re not working like we thought they would. Advertisers want clickable action but people click a lot less when they’re watching TV online than they do for Web searches,” Walker said. But the CBC has successfully worked multiple ads into its online TV service, the broadcaster’s Steve Billinger, general manager of digital programming, said in an interview. “When we first launched last September, we only supported a pre-roll ad before the program started and didn’t have mid-rolls,” he said. “But we’ve broken it down into ‘chapters’, like the scene selection on DVDs, and now we can support eight commercials in three breaks for a typical half-hour show.” Unlike Walker, Billinger said he doesn’t believe a “killer app” or revolutionary model is needed to make advertising work with TV online. “It’s working right now. I think the CBC, CTV and others are making fair chunks of change on the Web,” he said. “Nobody will make as much ad revenue money from digital as on-air, but we’re definitely making enough money to warrant those offerings.” But others believe a new advanced advertising model is critical to allow advertisers to target specific demographics and locations. “The future of Internet advertising is hyper-local,” said Carmi Levy, an independent technology analyst in London, Ont. “It needs analytical capabilities that leverage knowledge of a person’s IP address, GPS-based location, personal information, and activities that can narrow down the user profile so effectively that advertisers will see the value,” he said. “It eliminates the waste associated with traditional, blanket-type broadcast advertising coverage.” But Billinger said he is sceptical about advanced advertising. “Everyone talks about the infinite targetability of the Web, but there are privacy and usability concerns, because consumers have to sign up and create a profile,” Billinger said. “It may work better on mobile, since users have to opt in with their phone numbers upfront and are automatically sharing a lot of information. But these are very early days for mobile ads.” news@thewirereport.ca

Broadcasters, carriers, trying to catch up with online demand for TV programming

Broadcast | March 19, 2010

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