Brightcove publishers have long looked, rather successfully, to make a profitable business with online video. The most typical model, and until recently the only really practical one, is the ad supported model where content is supplied free to access to anyone while adverts are inserted either in a linear break model or in a nonlinear format like overlays. In this model the user pays with nothing but their time and attention (and in about 2% of them a click) while the brands pay the publishers for the placement. But is this all-in-one model fast needing an upgrade? Is there money being left on the table? In this series we're going to look at thoughts and solutions to a new emerging opportunity: PPV.
A new term running the course of the online video industry is Freemium: a model that gives away the baseline product for free and charges for premium upgrades. In the video world this can make a lot of sense (or is that cents?). There are 3 key dimensions that can be exploited to achieve a value differentiator to allow a user to effectively upgrade if they so wish:
- Content Type
- Content Length
- Content Quality
If you're one of the few that has access to the holy pack of content types: Sports, Live, Premium Entertainment or Adult - you have immediate potential and opportunity to charge for access to this due it's rarity, novelty and mass demand. But this opportunity is not limited to just the heavy weights, niche content such as corporate, highly specialised, or some amateur content that drives lower volumes but much higher engagement is also perfect for Freemium. In fact for these types Freemium is a preferred choice over ad funded since the content types by definition drive lower volumes and harder alignment for brands.
With more long form content becoming accessible and the concepts of PayTV being well established in the traditional broadcast industry, Content Length is becoming a value differentiator as well. Although in some geographies like the UK where Free-to-Air still dominates the mass television distribution content length might not be able to stand on its own. However if you combine it with either its type or quality then you have a very compelling offering, enough to make a viewer want to make the leap.
Content Quality is fast becoming fuel for a Freemium model. Brightcove offers, as standard, multibitrate streaming called Dynamic Delivery. Through our extensive and accessible APIs a publisher can now control access to these individual tiers of bitrates at runtime. The model where a user gets access to a lower ad-funded rendition for free but needs to pay for a higher rendition (still ad funded of course!) is truly here today and probably one of the most intuitive models to position with your viewers.
Mixing any 3 of these qualities can and do create very valuable upgrade propositions for users to part with their hard earned cash.
And it's that parting of the cash that poses the next, if not fundamental, challenge for the Freemium model. Today the main practiced derivative of the Freemium model is Pay Per View - a catch all representing the ability for a user to:
- Pay for only each stream they watch
- Pay for a time delimited access period to either the piece of content or your content library
- Subscription based payments that allow unlimited access to the content library via monthly billing
And this new model, on the surface at least, is showing some real promise. Digital purchasing was proven very successful via online stores like Amazon and Apple. Looking at the typical $0.99 per track price you could probably enter into a PPV model for around the same price for stream. Then for a publisher doing 100K streams a month we could probably imagine a conservative conversion rate of 5% of viewers in a quality differentiation model (allowing the user to watch HD qualities for a price). At $0.99 x 5000 = $4,950 per month (on top of any ad supported revenues already in play). A nice little spinner don't you think?
But if it was only that easy. The path for PPV is bumpy to say the least. Some immediate challenges are:
- Education and building of trust of the end user - swapping hard cash for access to a digital stream will involve a sell of sorts to be sure
- New financial workflows - back offices will most likely need to be rejigged to accept this new revenue flow (how big a change is unknown)
- Regulation and data protection - grabbing and holding user data, especially financial data like credit cards, is hugely sensitive and highly regulated.
- Economics of collecting funds - it costs money to take money and ecommerce rates for clearing houses can be prohibitively high. It'll be crucial to find the right provider.
- Methods of collecting funds - following on from the economics a main challenge to adoption is user experience, so how will traditional payment methods like credit card compete with new models like mobile?
But of course it wouldn't be the Brightcove At Your Global Service blog if I didn't have an answer to these problems! Enter our Brightcove Technology Alliance Program. We continue to engage and work with industry leaders and new initiatives alike to help present workable, scalable and profitable solutions to these challenges for you, the BC client.
In the following 3 posts we'll hear from 3 companies looking to take the lead and help bridge the gap between digital goods commerce and Brightcove's video platform. They'll examine some of the issues above and talk through the challenges presenting this fledging industry. They'll also talk about the gains to be had and through workable demos you can see for yourself how your Brightcove videos can be monetised via the PPV model.
These aren't just providing a thru window to established eCommerce platforms, these are enterprise architectures framing and built from the ground up, looking to solve the challenges and not just paper over them.
As always this is a discussion forum so we very much encourage and look forward to your comments and thoughts as we look to kick start this new way of making you more money.
-- Cameron Church