Introduction
The internet has opened up extensive new business opportunities and is currently transforming the way television works. This guide takes you through setting up a commercial Internet TV service using TV Everywhere’s VidZapper enterprise video management system.
VidZapper was specifically developed as a platform to enable the rapid development of commercial TV services over the internet and it should be possible to launch a simple service in minutes using the system.
Of course, a more comprehensive and customised service may take a while longer to established, with a typical time to market of a couple of weeks.
Revenue Streams
There are a number of ways to make money from Internet TV. Some of them are listed below:
Banner advertising – traditional banner and MPU adverts
Video advertising – pre-roll and instream, but the system also supports overlays; you can also consider advertorials
Sponsorship – the above can be combined into sponsorship packages
Syndication – you can charge for your content or revenue share with third party publishers
Affiliates – earn money by referring customers to ecommerce websites
Ecommerce – is surprisingly effective for online sites – the propensity to buy from online video sites is very high
Text advertising – it’s unlikely to make you rich on its own, but systems such as Google Adwords are worth putting into the mix
Below is an example of some a channel combining many of these revenue opportunities into a highly profitable channel:
Below is a typical channel income model:
| No of Viewer Visits | 35000 | 70000 | 80000 | 90000 | 100000 | 110000 | 120000 | ||
| Length of Visit | 12 | 10 | 10 | 10 | 10 | 10 | 10 | ||
| Ads seen | $28 | net CPM | 2.4 | 2 | 2 | 2 | 2 | 2 | 2 |
| Banners seen | $3 | CPM | 48 | 40 | 40 | 40 | 40 | 40 | 40 |
| Adwords | $2 | CPC | $560 | $1,120 | $1,280 | $1,440 | $1,600 | $1,760 | $1,920 |
| Affiliate | $8 | CPA | $2,800 | $5,600 | $6,400 | $7,200 | $8,000 | $8,800 | $9,600 |
| Vid Ad Rev | $2,352 | $3,920 | $4,480 | $5,040 | $5,600 | $6,160 | $6,720 | ||
| Banner Ad Rev | $5,040 | $8,400 | $9,600 | $10,800 | $12,000 | $13,200 | $14,400 | ||
| $10,752 | $19,040 | $21,760 | $24,480 | $27,200 | $29,920 | $32,640 |
The success of the model above is based on two key drivers, namely the ability to:
· attract the audiences figures and viewing times indicated
· sell all ad inventory at the indicated rates
Another key performance indicator is the revenue per viewer visit. In the above model it’s around 28c. However, we’ve seen some ecommerce channels manage $1 per viewer visit.
Costs
There are three main cost areas related to operating an internet TV business:
Technical – VidZapper takes care of all of the technical costs in one competitive package, including storage, bandwidth and content management;
Content –producing original content can, of course, be very expensive, but repurposing content that has already been produced can be an effective strategy. VidZapper supports access to third party content anywhere on the web, supports moderated user generated content, in addition to enabling you to upload and manage your own professionally produced content;
Audience Building – just building a service isn’t enough, building and retaining an audience is essential; there are a wide range of ways to do this, but VidZapper can help with its MRSS distribution tools and syndicated players. We can also advise you on other ways to promote your channel.
Naturally, you will also have the usual costs of running a business, and it’s worth bearing in mind that a percentage of ad sales will need to be paid to a sales house if you’re not selling the ads yourselves (the figures in the illustration above are after the commission has been deducted).
VidZapper can provide you with a detailed channel income model where you can model at the costs and revenues of your proposed service.
Stages of Development
Developing a commercial service couldn’t be easier with VidZapper; a basic channel can be built in minutes, with a highly customised service taking little more than a couple of weeks to deployment, reducing time to market and optimising revenue opportunities.
The typical stages for developing a service are:
| Business model and business case | First of all, we will work with you to build a business case for the service, ensuring that the project is viable and establishing key performance indicators for the project |
| Player design & development | Next comes the fun bit – designing and specifying the player (or players if you are syndicating your channel); there may be a need to develop some additional functions depending on the player specification |
| Content production | This is the part we can’t help you with, but we presume that you’re already pretty good at producing content or know people who are! |
| Content encoding and uploading | Next you’ll need to prepare your content for playout by encoding it; our system can do this for you, or we can help you do this locally |
| Scheduling | Finally you can make the content available by scheduling it or placing it in playlists |
Once you’ve deployed your service we can help you with the statistics and feedback: VidZapper supports most common statistical services including Google Analytics.
