NAB 2006: Finding the Right Business Models

"What’s worked for the last fifty years will also work for the Web," says Troy Snyder, CEO of Nine Systems. "It’s worth exploring other business models – and our system is flexible enough to handle multiple business models—but the big three are still viable."

By the "big three," Snyder means subscription and pay-for-play revenues, advertising revenues, and promotional or information revenues. For the first two, think free broadcast television and HBO or other premium channels, respectively; for the last, think direct marketing mailing lists.

"The technical discussions and DRM discussions are valid—very valid—but they’re not the core issues that need to be discussed," says Snyder. "The core issue is determining the best business model. The big three, plus sponsorships and embedded product placements, which are variations on the advertising theme, are emerging in the new delivery mediums like mobile, wireless PDAs, PCs, etc."

Snyder made his comments during "Killer Content," a session of the NAB 2006 Multimedia World Conference, a partnership between the National Association of Broadcasters and the iHollywood Forum. During a subsequent session called "Mobile Video Marketing and Advertising for Entertainment Brands," other panelists filled in the gaps.

"The buzz about ‘did you see that content on your phone?’ is non-existent," says Richard Bennett, CEO of SmartVideo. "The buzz is about the content itself: finding the right content, make sure we have the rights to broadcast it, and then figuring out which device to best deliver it on. And ‘best delivery’ means where do viewers most likely access the content?"

One of the issues raised during the session was the navigation challenges on current phones.

"Mobile devices don’t support browsing very well," says Bennett, "so location on the deck is very important for video on demand content, since we find that users aren’t navigating through many VOD clips. That’s an issue that either needs to be addressed through good search and navigation tools—or accepted as a limitation of this new media."

When the panelists fielded questions from the floor, one recurring theme was the best type of content to create for mobile users.

"I’ll be completely honest," says Bennett, "I have no idea which type of content will become the dominant content on mobile devices. I think the new mobile delivery medium will need the brainpower of a large number of content creators."

"I hate the word ‘killer application’ and agree with Richard that it’s hard to pin down what people want to watch on their mobile devices," says Erik Smith of MobiTV, "but we find that two types of content do very well—those that resolve themselves like music videos and those that never resolve themselves like the news."

"The major bottleneck is us," says Olivier Gers of FremantleMedia Licensing North America, "we haven’t found the content that drives the mass of viewers to view content on their mobile phones."

"There’s no Super Bowl for mobile content delivery", says MobiTV’s Smith. "We’re all looking for that level of ‘must-see’ content and each one of us on this panel has an idea of how."

During a meeting earlier in the day with a startup called Zattoo, which seeks to provide content aggregation tied to a DRM-protected peer-to-peer network, the question of localization was raised. Beat Knecht, who is launching Zattoo with channels provided by several content providers that need localization, says that the DRM models have grown to meet the sophistication of business models that are both rooted in the past but also beneficial for large-scale content distribution.

"We have to be able to meet the demands of the content owners," says Knecht's business partner, Sugih Jamin. "One of our content providers has fixed broadcast limitations that require their content only be shown within their domestic border. This is a challenge that might not have been viable a few years ago, but the DRM tools now can address complex business models. Now the challenge to the content provider is picking the right business model for the right delivery medium at the right time."

Nine Systems’ Snyder also pointed out that two extremes in the market are driving new business models.

"On one end of the spectrum is the adult entertainment industry; on the other end is the religious broadcasting industry," says Synder. "Both of those extremes have been able to figure out ways to tweak their models but both of them tend to fly beneath the radar of the typical broadcaster. It will be interesting to see whether the traditional broadcasters begin to consult these two ‘fringe’ industries, especially the religious broadcasters who have moved to mobile and Web video deployment, to understand how these newer business models could be moved mainstream."