Internet Video
Market & Data Reports - 15/11/2008
Conditions of profitability
One thing is clear: Internet video will continue to expand and now constitutes a path for development and diversification for TV industry players. Timeshifted viewing is still only nascent and a great many players from inside and outside the television industry are gambling on a position in this market. After the first trials and rollouts, we have reached a consolidation phase where the issue of turning a profit is being raised. Up until now, only the sectors leaders appeared capable of achieving a positive revenue/cost differential with their services (excluding committed costs).
| Reference |
Language |
Support |
Nbr of page |
Price |
|
| M83008 |  | PDF | 59 |
3500 Euros
1750 euros excl. VAT |  |
| M83008 |  | PDF | 60 |
3500 Euros
1750 euros excl. VAT | |
Additional copy at 300 euros excl. VAT Euros
For immediate access, please select "Online access" and choose payment via PayBox
1. Online Video will become a Mass Market
1.1. IP video consumption skyrocketing
USA, France, The UK
1.2. Video will continue to drive internet traffic growth
1.3. Picture quality and multi-platform offers
2. The Services
Case studies: strategies, audience, offer, business model, distribution mode
2.1. Short, mid and long tail
2.2 Catch-up TV- ABC
BBC iPlayer
Hulu
M6 Replay
2.3 Premium VOD
Apple
Amazon Unbox
Canalplay
Netflix
Video Marc Dorcel
2.4. Niche services or Web TV networks
2.5. Video portals
YouTube
Dailymotion
Joost
Veoh
2.6. Social networks
MySpace
3. Technologies and Distribution Costs
3.1. Download, progressive download, streaming
3.2. Unicasting (transit)
Solution
Distribution costs
3.3. CDN (95th percentile, GByte)
Solution
Distribution costs
3.4. Multicasting
Solution
3.5. P2P
Solution
Hybrid P2P
Distribution costs
4. Revenue models
4.1. Advertising
Advertising models for UGC video distribution sites
- Ad Banner or in-stream ads
- Ad revenue Sharing
Advertising models for TV channels internet services
Niche video sites: value hard to qualify
4.2. Fee-based models
Coexistence of fee-based and ad-funded markets
Premium channels cannot switch to a free model online
DVDs dematerialization
5. Conditions of profitability
Simulations by type of service/player
5.1 Model construction
Model hypotheses
Outputs
5.2. Catch-up TV model, e.g. ABC, M6 Replay
Hypotheses
- audience, content, revenue, distribution costs, personnel & administration
Results
Leverage effects
5.3. Premium VOD model, e.g. Canalplay, iTunes
Hypotheses
- audience, content, revenue, distribution costs, personnel & administration
Results
Leverage effects
5.4. YouTube / Dailymotion type model
Hypotheses
- audience, content, revenue, distribution costs, personnel & administration
Results
Leverage effects
5.5. Model benchmarks
Income and costs per video
Cost per hour of video
Value-added per video
6. Guidelines
Growth of video consumption
Impact on the growth of IP traffic
PPV and ad revenue and gross margin
Costs and Peer-to-peer issues
Differentiated results for the leading premium VOD, catch-up TV and UGC services
How to improve the services economic equation
|
Online video towards a mass market?
What are the concrete consequences of a short, mid and long-tail approach?
What are the key players offering in each category of service: catch-up TV, premium VOD, niche services, Web TV networks and video portals?
What impact on the different revenue models: ad-funded, fee-based?
What are the next stages in the development of UGC-based services?
What impact the migration of services will have on the TV set?
How profitable are the different types of service?
What are the keys to improving the economic equation of these services? |
The analysis of the conditions needed to achieve profitability presented in Chapter 5 are based on the results of a model developed by IDATEs experts, the goal being to provide simulations by type of service and by type of player.
Economic modelling concerns three types of service:
A premium VOD offer delivered only online, based on PPV revenue and using a content distribution network (CDN) architecture;
A free, ad-funded catch-up TV offer delivered in streaming video, distributed over a CDN;
A viral video platform, such as Dailymotion or YouTube, offering short videos, subsisting on in-stream or banner ads. Delivery is through a combination of CDN and peered unicasting.
Model hypotheses based on elements from the leading services:
Usage data: number of unique visitors, page views, videos watched per month;
Gross and net income elements: CPM, ads sells costs, payment to affiliate sites, unit prices, percentage of videos that can be monetised, revenue sharing;
Distribution cost data including the size of the video file depending, its length, the nominal bandwidth per video, annual rates based on monthly volume/traffic commitments, hardware and storage costs including collocation services (racks and associated services), routers, traffic aggregators and the servers themselves;
Last integrated cost items, sales/administration and general costs factored in as a set rate.
4 calculations provided:
Gross profit (income net ad sales costs, revenue sharing distribution costs, including bandwidth, hardware and server costs);
Gross margin (gross profit divided by net income);
Operating profits (gross profit sales/administration and general costs);
Costs and income per video and per 1,000 videos.
Sensitivity measurements are also performed to determine the conditions for the services profitability/improvement. |
|
|
