1.
Bocconi University
Faculty of Economics
Master of Science in Economics and Management for Arts,
Culture, Media and Entertainment
Business models for web TV
Supervisor:
Paola Dubini
Examiner:
Massimiliano Nuccio
Master thesis by:
Alessandro Masi
1286053
A.A. 2008/2009

2.
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To my grandfather
“If you’re walking down the right path and you’re willing to keep walking, eventually
you’ll make progress” – B. Obama
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Abstract
The thesis aims to define peculiar business models for web TV, still an almost
unexplored ground inside the economic theory, despite technological progress and a
steady growing audience made it recently so attractive in terms of investments for
both entrepreneurs and advertisers.
Even though there is not yet agreement on a definition, it is essentially a video box
contained into a webpage. The audiovisual content can be live or on demand, and
watched for free or by payment, or the user can subscribe to the service. The
majority of the videos on the web are user-generated.
Many players entered this market in the recent past, and the figures show that the
offering is growing steadily, supported by an increasing demand. The path seems to
take to the result that every website will have audiovisual content and every user will
be able to watch content that is tailored to his taste, according to the “long tail”
theory of the infinite market niches.
Advertising in the main source of revenues but, according to the strategic
positioning, it can be mixed with or substituted by others.
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Contents
Introduction
1. What is web TV
2. The research
2.1 Methods
2.2 Data analysis
2.3 Findings
3. Case studies
3.1 Glomera
3.2 ShareMedia
3.3 Google Video – YouTube
3.4 RCS Digital
3.5 Libero Video
3.6 Relevance of the case studies
4. Strategic issues and business models
4.1 Economic framework
4.2 Economic structure
4.3 Business models
Conclusions
Acknowledgements
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Resources
Appendix A
Appendix B
Appendix C
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7.
Introduction
The research question on the basis of the present study is whether exists an
economic reasons for the growth of web TV or not, and what are the business
models that make it sustainable in the long term.
It will prove the point that there is a solid economic foundation on the ground of
such expansion, besides it will identify the business models assumed according to the
strategic variables.
The first chapter seeks to provide a definition of what is web TV, why it is different
from IPTV, and why it is so innovative and therefore attractive in terms of business
opportunities.
Then, a statistical research over 152 websites brings to actually identify peculiar
features that characterize web TV, dominant modalities of revenue enhancement,
source and characteristics of the audiovisual content, and finally licensing, uploading
and privacy regimes. The analysis focuses on the variables that determine the
business model: type of content, operator and source of revenues.
In the third chapter, a case study over five different successful instances of web TV
is conducted, in order to analyze reasons of such good performance. Case studies
are organized into four main sections: general information about the company (brief
history, definition of the business line, primary competitors), business strategy
(business framework, key points of the offer, market positioning, critical factors of
success), business model, and future scenarios.
As a result, strategic issues and business models for web TV are identified. The
objective is to better understand the dominant models: it can be used as a guideline
either by present companies or for future business opportunities in this field.
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1. What is web TV?
What exactly is web TV? There is no agreement on a definition. It comes with
different names – web TV, IPTV, enhanced TV, personal TV, and interactive TV, for
example – which signify slightly different things. At the lower end of complexity, it is
merely a narrowband two-way Internet-style individualized (“asynchronous”) channel
that accompanies regular one-way “synchronous” broadband broadcast TV or cable.
This internet channel can provide information in conjunction with broadcast
programs, such as details on news and sports, or enable transactions (including e-
commerce) in response to TV advertisement. This is known as “enhanced TV”. At the
other end of complexity is a full asynchronous two-way TV, with each user receiving
and transmitting individualized TV programs, including direct interaction in the
program plot line. In between is one-way broadband with a narrowband return
channel that can be used to select video programs on demand (VOD).
Every new medium starts as a substitute and then evolves into something quite new.
Web TV, too, will first be used to access video servers that store existing programs,
making them available for viewing at any time. But soon, going beyond the
convenience of viewer choice and control, web TV will enable and encourage new
types of entertainment, education, and games that take advantage of the Internet’s
interactive capabilities. This assumes, of course, technical capability and economic
viability (Ross, 2008).
As asserted in a study by Noll (2004), web TV is many things, or even a combination
of things. In its most obvious implementation, web TV is conventional television
obtained over the Internet. Rather than watching television programs broadcast over
the air or over cable, television programs are accessed over the Internet and then
watched in real time, using a technology known as video streaming. Not only
conventional television, but also movies, cartoons, and video shorts.
Web TV is the adoption of an Internet-like interface in accessing and watching
television – a new form of video navigation over the Internet. Web TV is a more
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interactive approach to controlling the television experience with the ability to obtain
all sorts of ancillary information while watching television, as promoted by Wink
Communications.
Web TV is the use of the home TV set to view Internet sites, as offered by WebTV
Networks, perhaps in conjunction with conventional television viewing, the so called
Internet-enhanced TV, which could evolve into Internet-delivered TV on a wide basis.
Web TV is the use of the Internet protocol to store and transmit video, both at the
TV studio and also to various locations. Rather than storing and transmitting digital
video as a continuous stream of bits, the digital video is packetized into packets
specified by the Internet protocol (Ross, 2008).
It is now useful to go more in depth and define clearly the different forms Web TV
actually assumes. Basically, a webcast is a media file distributed over the Internet
using streaming media technology, multimedia that are constantly received by, and
normally presented to, an end-user while being delivered by a streaming provider.
Internet television is a commonly streamed medium. It is a television service
distributed via the Internet. The two forms of viewing web TV are streaming from a
single or multiple websites and downloading in the form of video podcasts or
individual files. The video may be also broadcast with a peer-to-peer network, which
doesn’t rely on a single website’s streaming. Peer-to-peer software applications are
designed to redistribute video streams in real time on a P2P network; the distributed
video streams are typically TV channels from all over the world but may also come
from other sources. The draw to these applications is significant because they have
the potential to make any TV channel globally available, because it is not a central
server to broadcast the signal to every single user, so the flow can spread easier and
with lower infrastructure costs for the broadcaster, eventually higher for the user
(Blumenthal, 2006).
Internet television differs from IPTV in that IPTV offerings, while also based on the
IP protocol stacks, are typically offered on discrete service provider networks, highly
managed to provide guaranteed quality of service and good bandwidth, and usually
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requiring a special IPTV set-top-box. The official definition of IPTV, approved by the
International Telecommunication Union focus group (2007) on IPTV is as follows:
“IPTV is defined as multimedia services delivered over IP based networks managed
to provide the required level of quality of service and experience, security,
interactivity and reliability.” It is characterized by single or multiple program
transport streams (MPTS) which are sourced by the same network operator that
owns or directly controls the delivery to the consumer.
Compared to IPTV, web TV is a quick-to-market and relatively low investment
service, since it rides on existing infrastructure including broadband, ADSL, Wi-Fi,
cable and satellite, which makes it a valuable tool for a wide variety of service
providers and content owners looking for new revenue streams. A web TV provider
has no control over the final delivery and so broadcasts on a “best effort” basis.
Elementary streams over IP networks and proprietary variants as used by websites
such as YouTube are now rarely considered to be IPTV services (Vogel, 2007).
The relative ease of establishing a web TV service seems at first a threat to IPTV
operators’ huge investment, but both services do not necessarily compete for the
same customers and there are some synergies between the two such as a common
technology platform in the form of web-based technologies for content storage and
delivery.
Broadcast IPTV has two major architecture forms: free and fee-based. The free
sector is growing rapidly and major television broadcasters worldwide are
transmitting their broadcast signal over the Internet. Because IPTV uses standard
protocols, it promises lower costs for operators and lower prices for users: using set-
top boxes with broadband connections, video can be streamed to households more
efficiently (Harte, 2007).
The IP-based platform offers significant advantages, including the ability to integrate
television with other IP-based services, like high speed Internet access and VoIP. A
switched IP network also allows for the delivery of significantly more content and
functionality: content remains in the network and only the content the customer
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selects is sent into the customer’s home. That frees up bandwidth, and the
customer’s choice is less restricted by the size of the “pipe” into the home. However,
this also implies that the customer’s privacy could be compromised to a greater
extent than is possible with traditional TV or satellite networks, since enables the
service provider to accurately track each and every program watched and the
duration of watching for each viewer.
Internet allows three different distribution modalities, alternatives and bidirectional:
unicast, multicast and P2P.
The first one is based on the Internet model client/server: the client asks, the server
manages each single request; such modality is typical of the web TV, and every one
user more corresponds to higher capacity of the server, and therefore to higher
infrastructure managing costs, that is the opposite of the broadcasting model.
The second one does not present such problem, since each source can serve a
virtually infinite amount of clients, that are differently from the broadcast model,
known to the source; however such structure works only inside private IP networks,
closed and controlled, and for this reason this is the protocol on which the IPTV is
based: only telecom operators (Telco) can build a network with a multicast
transmission capacity, so that only authorized users can view that contents.
The P2P protocol allows overcoming the unicast paradox without the closed logic of
the multicast. Each single user of the P2P network becomes also a retransmitter, a
server, for other clients.
As a result, business models and offerings change. Both web TV and IPTV ensure
through the Internet protocol the interactivity and the multimedia capacity, but
through unicast, multicast of P2P (bidirectional) give to the user the possibility to
benefit in asynchronous or non-linear and off-line ways from the audiovisual
contents, with a step towards a multichannel service: advertisement and VOD selling
become the principal streams of revenues. VOD is particularly used as a source of
revenue for IPTV, whereas for the web TV it is usually free, financed through
advertisement, and it allows personalization and the possibility to create a personal
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programme schedule, usable whenever the user wants. The limitation for the IPTV is
given by variety and diversification of contents, based on competition among
providers (Eastman and Ferguson, 2006).
At the beginnings, the term web TV was used particularly referring to broadcasters
that used the Internet as an alternative channel for its programming, and therefore a
traditional live television signal distributed through webcasting.
New possibilities were then given by the evolution of the streaming towards the
progressive download and the P2P, together with the diffusion of the On Demand.
However, it was most of all the technological and economical accessibility to
production and publishing of contents to shift the role of users from passive to
active. Nowadays, everyone is able to create and edit videos, to publish and share
them on the web. The Web 2.0 era comes with a revolution and with the expansion
of the UGC (User Generated Content) world. Nevertheless, videos can be enjoyed
through cell phones and iPods, through the podcasting.
The explosion of Web 2.0 and UGC brings to the success of On line video companies,
such as YouTube, that are video sharing websites that allow the user-producer to
publish the content usually for free, being such companies financed by advertising.
Such companies offer a wide range of services: video uploading in different formats,
licensing of the content through copyright or copyleft licenses, syndication,
personalization of the player, pay-per-view contents managed through DRM systems,
advertising spaces (Sparrow, 2007).
Sometimes programming is not left entirely to the user’s uploading activity, so that
the transmitter manages a very peculiar business model, where contents are mainly
user generated but responds to a precise editorial choice.
All in all, web TV is all of that, and is characterized by a model that is open towards
whoever is a right holder on the content, is highly diversified and dynamic, since a
huge amount of small and medium producers provide contents.
Taking into consideration the definition of “value chain” by Michael Porter (1985), it
seems that it may be a useful key to analyze the logic of the web TV, seen as
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subsequent activities, with the principal changes from the traditional television
distribution system.
Figure 1: comparison between traditional TV and web TV value chains.
For web TV, network provider and service provider consolidate into the internet
service provider. As far as the content creation, a transmitter on this platform can
buy contents and formats from outside, but can also produce inside ad-hoc for the
web, can digitalize its programming if coming from other platforms, or open to the
UGC; packaging and aggregation of programming has to be intended as a managing
activity of the space available on the server for the contents; publication and
distribution is based on the rent of the on-line band necessary; navigation and
selection processes are managed in terms of layout, to allow the client to access to
the diverse collateral services, such as on-line guide, forum, chat, payment of
premium contents; viewing and consumption experiences imply for the transmitter a
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series of activities such as the running of the band, and the management of
interactivity and contents and services providing requested by the user.
In conclusion, web TV is radically different both from traditional and from IPTV:
communication with the user is bidirectional (unicast or P2P); accessibility is at the
maximum level both from the transmitter (low investments) and the user (mostly
free) side; fruition is possible almost everywhere, also off-line; contents are also User
Generated, On Demand, and channels are virtually unlimited; fruition time is decided
by the user; high interactivity; consuming activity is mainly on a singular base; user
has an active attitude towards the medium; satisfaction is connected to the choice
and not seen just as distraction and recreation.
2. The research
This chapter analyses a whole set of features, the business model, and also the
content licensing, the uploading and the privacy regimes of 152 websites that can be
included, following the definition given in the first chapter, into the broad category of
web TV. The aim of the research is to find out peculiarities, common features and
differences within the sample, in order to move closer to define which strategic
variables determine the type of business model chosen by each web TV.
2.1 Methods
First of all, the sample has been selected starting from the top 200 websites, in
terms of Unique Visitors for online video distribution, either of user generated or
professionally-produced content., accessible from Italy and whose main language is
Italian or English. A third criterion is the presence at least of two on demand or one
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live channel. The tool used is Google AdPlanner, a database that measures websites
performance.
Data have been then organized into a dataset, using the software Excel 2007,
composed of 152 websites and 94 variables, so that the total observation was
14,288. The sample has been therefore purified from 48 websites, that had not
enough dignity to be included in the sample, or they were not in line with one or
more of the criteria, or their domain had been recently cancelled.
The final step of the analysis has been the cluster analysis through Self-Organizing
Maps (SOM) and k-means Algorithms. The software used is MATLAB r2007b.
Self-Organizing Maps-SOM (Kohonen, 1995) provides a non-parametric model of
data mining without hypothesis on data distribution: data are not-supervised and not
target defined a-priori, and spatial organization of data is given through topological
maps. SOM helps to classify and visualize clustering and projection, and therefore it
gathers data and helps reduce dimensionality. The cluster analysis involves the 152
samples and 44 variables, selected as more relevant for the objective of the
research. The variables of the dataset have been transformed into binary algorithms,
in order to allow to the software to process the data.
Afterwards, in order to define better the clustering composition, a two-step clustering
is conducted by using SPSS Statistics 17.0, since the two-step clustering is designed
for hierarchical cluster analysis of large samples with categorical data. The clusters
have been also categorized by variable importance.
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2.2 Data analysis
To begin with, the research considers the figures related to Unique Visitors1 and
Average Stay2 for each web TV. The first measure is also, as just said, one of the
criteria to choose the sample.
Such figures have been analyzed on a worldwide base and not on a specific country
base because, in terms of amount of visitors, and therefore creation of communities,
this criterion is more relevant then the country-based one. It is clear that, in terms of
advertising investments, the specific territory would have to be preferred, particularly
if the advertiser wants to target a specific population. However, the most important
mechanism to advertise on the web today is to be part of the Google AdSense
network or alternatively to entrust a media center to plan the advertisement
campaign effectively, and both of them are characterized by a worldwide base.
As far as the first class of figures, as shown in the table below, YouTube leads with
84 million Unique Visitors worldwide. To be noticed that such figure is quite hard to
measure, especially on a world scale, it is subject to change month by month and
further it comes from statistic estimation.
However, it gives a general idea of the audience for a particular website. As
expected, YouTube leads, but it was not expected to find an Italian website, Ansa,
within the first fifteen. Taking a look to the rest of the table, Flickr and Metacafe, two
social networks that include a relevant amount of video content, fill the second and
third position, followed by another giant among the pure video-sharing and film
streaming websites, which is MegaVideo.
1
Unique Visitors (users) is the estimated, unduplicated number of people who visit a site over a
specific month; it gives the idea of the percent of the target that is possible to reach.
2
Average Stay is the average time a visitor spends on the site; gives the idea of how much the site is
able to attract and then retain the visitor, and therefore for how much time he is exposed to
advertisement.
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Among the top 15, we also find two web TV with mainly live content, Justin TV and
UStream TV, respectively with 12 and 6.1 million Unique Visitors a month.
Figure 2: top 15 Unique Visitors (Users) and Average Stay
Finally, the German MyVideo is together with Ansa, the only site whose primary
language is not English.
Figure 3: top 15 Italian web TVs for Unique Visitors (Users) and Average Stay
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Shifting to the Italian websites, that certainly cannot attempt to the worldwide base
for a problem of scarce spread of the Italian language in the world, we find six web
TV with news content, such as Ansa, TGCom, Repubblica TV, Corriere TV, Gazzetta
TV, Sky TG24, within the top 15 for Unique Visitors worldwide.
Internet is first of all a huge network, and therefore the presence of many news
services with video content is not a surprise at all.
The second cluster in the chart above is composed by shifting media, which are
already operating on other platforms, like TV and radio. Those sites are RAI TV,
ComingSoon, LA7, Deejay, RTL and RadioRadicale: their main strength is a built
reputation and so a customer base of faithful clients that goes to be an addition to
new clients on the web.
The third cluster relates to web portals, which are also Internet Service Providers in
Italy, which chose to add a relevant amount of video content in order to increase
users for the many services they provide. They use web TV as a way to create
communities, diffuse the brand awareness and eventually retain such customers for
other services. Those sites are Libero Video, the first video-sharing portal in Italy,
and Yalp, web TV part of Telecom Group and relative to Alice, its Internet branch.
The last spot is occupied by FilmGratis, a portal for videogames downloading and
film streaming, a classic example of entertainment content website.
The research also considered, as said above, the Average Stay of visitors: this figure
is particularly interesting and useful if compared to Unique Visitors. As a general
understanding of the matter, it can be argued that news content, such as
Bloomberg, websites with live content, such as Justin TV, and film streaming
websites, such as MegaVideo, besides video-sharing websites that combine a wide
range of UGC with professionally-produced contents from partners, such as YouTube,
lead this chart.
On the contrary, social networks with video content characterized by big amount of
Unique Visitors, such as Flickr, tend to retain visitors for approximately 7-8 minutes,
that is more or less the time needed to interact with the other members of that
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community, and pure video-sharing website with mainly funny UGC, such as Break,
tend to have an Avg Stay of 5-6 minutes, that is more or less the length of one or
two videos.
Figure 4: top 15 web TVs for Average Stay of users
The table above shows the top 15 web TV ordered by Avg Stay. First of all, the
figure for web TV is above the average of the generic website, for which the Avg
Stay is approximately 6-7 minutes. This is due to the strategic role of videos, as an
retention element for the visitor: he usually looks at the webpage at the least for the
time the video is shown.
The table shows a range from 9,40 for RAI TV to 30 minutes for Bloomberg, and is
essentially composed by websites with news content, such as Ansa, live streaming,
such as Pandora TV, or film streaming through P2P, such as MegaVideo.
As a result, the general finding from this analysis is that brand, reputation and
community, influence the Unique Visitors figure, but the type of content, its quality,
its uniqueness and its relevance, influence the Avg Stay figure.
The second part of the research relies on an analysis of 94 variables (see Appendix
B) over the sample of 152 websites (see Appendix A). The following part of this
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chapter will go more in depth over the most important, the ones that are considered
as decisive to the definition of the strategic issues and the business models in the
on
last chapter.
Taking a look at the foundation year and the registrant country, the bar charts below
show a peak in the year 2006 and a neat prevalence of US and Italy as registrant
countries, even though the latter is due to the fact that the sample has been picked
hough
out among websites accessible from Italy, otherwise it would have been unlikely to
be so close to US. Seventy websites have been registered in the US, fifty
fifty-five in Italy,
and seven in the UK, but worthy to be mentioned is the presence of countries as
Portugal, Romania, and even Curacao, in the Holland’s Antilles.
Registrant country
70
60
50
40
30
20
10
0
Australia
Canada
France
Germany
Hong Kong
India
Ireland
Israel
Italy
Netherlands
Portugal
Romania
South Korea
Spain
Sweden
Switzerland
UK
USA
Curacao
Figure 5: registrant countries
As far as the creation year, the bar chart shows an upward trend with a sharp
increase from 2003 to 2006, when web TV founded reach the peak at twenty
twenty-eight.
Then, the trend reverses and drops to just seven in 2008, with a slight recover in
2009, when fourteen web TV have been created so far.
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Created year
30
25
20
15
10
5
0
Figure 6: year of foundation.
The first variable that has been checked over the sample has been called “Content
production”. The question was if the web TV content was on professionally
only
produced, only User Generated, or the web TV had a mix of those two.
As the pie chart below shows clearly, the preponderance of web TV with only UGC
stands at the 41% of the sample, whereas the remaining 59% is almost equally
divided between only professionally produced and both produced and UG content. By
the way, this means also that such 59% contains, at least in a part, professionally
professionally-
produced content.
The strategic choice to be done in this case is whether to spend money to involve
professional partners and enrich the content quality, or otherwise to increase the
value of the community and push on the viral effect usually provided by UGC.
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Content production
FE - both produced and UG content
FE - only professionally
professionally-produced content
FE - only UGC
33%
26%
41%
Figure 7: content production source.
:
As showed in the bar chart below, UGC only web TVs overtook the others in 2005,
year of foundation of YouTube, and 2006, but during other years, the amount of
types of businesses grew almost at the same rate, excepted 2000. To be noticed
that, in the last three years the birth rate for only professionally produced web TV
professionally-produced
overcomes the others by far: this probably means that strategy is shifting towards
higher quality contents, since clients are more demanding and the Internet is filling
the gap with TV as the first medium for videos distribution.
16
14
12 FE - both produced
and UG content
10
8 FE - only
6 professionally-
produced content
4
FE - only UGC
2
0
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Figure 8: content production source and foundation year.
roduction
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As far as the type of operator that is involved directly into the business, the research
identifies basically four core groups:
• The pure players, companies that operates as Internet Service Provider or born
with the Internet as core business (Web Editor), or companies that have as core
activity the running of a web TV (Online Video Company).
• Broadcaster and local TV, companies that have as core business the production
and/or distribution through broadcasting, satellite or cable TV, of video contents.
• Other media, companies already operating into the media industry, specifically in
the publishing industry (News and magazines) or Radio
• Public administration (PA) and other companies, which operates a web TV as a
public service or as an instrument for internal communication (corporate web TV).
The time series below shows the peak in the birth of web TV managed by pure
players and broadcasters in 2006, that also fluctuate with a similar trend.
Despite the few companies coming from other sectors within the sample influences
the analysis, is worth to mention the slight increase of birth rate between 2008 and
2009 for the other groups of companies, especially News and Magazines: this means
that the barriers to entry for new players are being knocked down, because of the
drop of the costs of infrastructure and the spread of the advertisement among more
actors in order to reach untapped market niches of clients.
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24.
16
FE - Operator -
14 Broadcaster and Local TV
12 FE - Operator - News and
magazines
10
FE - Operator - On-line
8
video company
6 FE - Operator - PA and
4 other companies
2 FE - Operator - Radio
0
FE - Operator - Web
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
editor
Figure 9: operator core business industry and foundation year.
At this point, crossing the two features, Content production and Operator, through a
bar chart with the amount of operator on percentage base, we see that about the
65% of content is UG only for pure players, whereas the prefer the professionally-
produced content at about the same level, that is 65-75%. In particular,
broadcasters and radios choose to include in their programming very few UGC, at the
most they include a mix of professionally-produced and UG content.
This result is could be due either to specific strategies or to the availability, as
regards to broadcasters, of content from the traditional television. If the first is true,
the most likely reason is the preservation of the brand image, which UGC could
damage, if not supported by an active community of competent uploaders.
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25.
100%
90%
80%
70%
60%
50%
40%
30%
20% FE - only UGC
10%
0%
FE - only professionally-
produced content
FE - both produced and UG
content
Figure 10: content production and operator.
:
As far as the flow of the content, it can be divided into Live and On Demand.
Technical requirements, costs of infrastructure and, last but not least, availability of
enough programming to fill a programme schedule of live contents, are the reasons
for the preference for a VOD only web TV. Video on Demand is less expensive to be
produced and distributed, allows the user to watch the video whenever he likes, and
duced
UGC can be added to programming.
Live content is present in broadcasters’ web TV, because, of course, of availability of
contents from traditional television, in a small portion in pure players’ web TV, and at
a little higher level in radio’s and PA and other companies, the former essentially to
attract audience, the latter to provide a better service to the citizen or the employee
employee.
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26.
70
60
50
40
30
20
10
0
only VOD
FE - Content - Live
Figure 11: type of content and operator.
:
On demand content can be added to the portal randomly, or following a precise
editorial line, and also it can have a high range in terms of themes, for instance
funny, sport, animals, etc. or a low range. The bar chart below shows a prevalence
below
of the on demand programming, and the low range category that overcomes the
high range within the on demand programming, whereas the opposite is true for the
on demand random, essentially because of the potential difficulties in man
managing a
high range of content categories and generally of videos following a given editorial
line. Usually, when the range of contents is high, the community auto
auto-regulates itself
and chooses which content will have success and which one will fail.
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90
80
70
60
50
40 FE - Content - On
30 Demand - low range
20
10 FE - Content - On
0 Demand - high range
FE - Content -
On Demand FE - Content -
programming On Demand
random
Figure 12: on demand content.
As regards to the live content, it can be produced for the web or for other medium,
and can be characterized by continuous3 or discrete flow from the broadcaster to the
user. Live events that are webcasted on web TV are usually produced for other
webcasted
medium, as showed in the bar chart below. Then, the slight prevalence of continuous
flow over discrete flow is the consequence of the diffusion of P2P streaming, which
allows watching live events, especially sport events, on the desktop.
sport
40
30
20
10
FE - Content - Live -
0
Discrete flow
FE - Content - FE - Content - Live -
FE - Content -
Live - Continuous flow
Live -
produced for
produced for
other
the web
medium
Figure 13: live content.
3
Traditional TV has continuous flow because gaps between two programmes are filled out by
commercials. Therefore a web TV with live contents and continuous flow is the perfect transposition of
traditional TV on the desktop.
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28.
As showed in the percentage chart below, production of live events is made
exclusively for the web by News and magazines web TV, almost exclusively for other
medium by Broadcasters, first of all because of contents availability, secondly
because of different strategies: building reputation through a format that is specific
for the web and pleasant for surfers for the former, enlarging the audience for the
latter. Pure players choose to not produce that much live events for the web because
ayers
they exploit UGC and communities, whereas radios make use of contents produced
for broadcasting TV or satellite like music videos, and PA and companies make use of
a relevant portion of live events produced for the web since this kind of production is
usually less expensive.
100%
90%
80%
70%
60%
50%
40%
30%
20% FE - Content - Live -
10% produced for the web
0%
FE - Content - Live -
produced for other
medium
Figure 14: live content and operator.
:
Moreover, content can be generalist or thematic, with the two categories almost
thematic,
equally distributed within the sample with a 50% each. Therefore, thematic web TV
is as much present as generalist web TV, and this is a result of fragmentation of the
,
audience and the searching for new niches.
27

29.
With the aim to provide some hints about web TV programming strategies, the bar
chart below crosses the operator, the flow and the thematic content. The main
results from this analysis are listed in the following directory:
• Broadcasters and local TV: live news and sport, and on demand movies.
• News and magazines: mainly on demand news and other type of content (usually
reports and interviews).
• Online video company: on demand movies, entertainment, sport and scientific
content, live music.
• PA and other companies: live and on demand science and culture, live news.
• Radio: music, mostly live.
• Web editor: on demand sport, movies and entertainment.
FE - Operato
ster and magazin compan compan Operato r - Web
only VOD
ies r - Radio editor
FE -
FE - Content - Live
only VOD
FE - Content - Live
FE - Operato Operato
only VOD
video other
Operato Operato r - On- r - PA
and
FE -
FE - Content - Live
only VOD
FE -
r - r - News line
y
FE - Content - Live
only VOD
Broadca and
Local TV es
FE - Content - Live
only VOD
FE -
FE - Content - Live
0 1 2 3 4 5 6 7 8 9
FE - Category - thematic video service - Sport
FE - Category - thematic video service - Science and Culture
FE - Category - thematic video service - Other
FE - Category - thematic video service - News
FE - Category - thematic video service - Music
Figure 15: operator, type of content and main theme of the channels.
28

30.
In addition, the bar chart below aggregates Radio and News into the category “Other
media” and crosses the operator and the type of content. This figure will be useful
for the strategic analysis of the last chapter.
45
40
35
30
25 Live orig.
20 Live transp.
15
VOD produced
10
5 VOD UG
0
Online video PA / TV Web editor Other media
company
Figure 16: operator and type of content.
There is a particular feature, called “embedding”, that was introduced by YouTube in
2006 and allows each web TV to diffuse a video among other websites with the
simple copy and paste of the HTML that localizes the video. Such feature allow
videos to be diffused in a viral way especially among social networks. The relevance
of this feature relies on the fact that the video showed on the other website is
branded, so the source is always recognizable. This has the functionality to diffuse
brand awareness and at the same time to enhance the creation of the community.
The bar chart below shows that, within the sample, such feature is present whatever
the content production model that is adopted is. Clearly, if a website has UG only
content, or a mix of UGC and professionally produced, its strategy is more likely to
tend towards an increase of the community generated by this mechanism of viral
distribution of the contents. On the contrary, a web TV with only professionally-
produced content will tend more towards a valorization of the content, which the
embedding feature might instead compromise, in favor of its popularization.
29

31.
90
80
70
60 FE - only UGC
50
40 FE - only professionally-
30 produced content
20
10 FE - both produced and UG
0 content
FE – embedding
no embedding
Figure 17: content production and embedding feature.
Concerning business models, and therefore the way web TV generates revenues, as
showed in the pie chart below, the 2/3 of the web TV in the sample are included in
the model free with advertisement, then the 17% adopt the payment model
(subscription and pay-per-view), and the same percentage adopt the free model
-view),
(composed of free with no advertisement and web TV that accept donation)
advertisement donation).
To be noticed that more than one model can be adopted at the same time: for
instance, many video-sharing websites has a premium section for which a
sharing
subscription and usually a monthly fee has to be paid. Even, many s
streaming
channels have both free and pay
pay-per-view content.
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32.
Business model
PA – donation
PA - free (no advertisement)
PA - free with advertisement
PA - PayPerView
PA – subscription 66%
5%
14% 12%
3%
Figure 18: business models.
To deepen the analysis, the research crosses the business model with the operator.
The bar chart below shows that:
• Broadcasters and local TV adopt all the models except the pay
pay-per-view, a
relevant presence in the subscription
subscription-based model.
• News and magazines adopt the free model only, either with or without
advertisement.
• Pure players spread their business model choice upon all the differen
different
categories, with an almost homogeneous distribution, even though a relevant
,
part of them adopts the pay
pay-per-view or the subscription model.
• PA and other companies adopt in a significant percentage the free model,
even though it is worth to be mentioned that more than 20% of them has
that
pay-per-view content.
view
• Radio adopts alternatively the subscription-based
subscription based or the free (with
advertisement model.
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33.
PA – subscription
PA - PayPerView
PA - free with advertisement
PA - free (no advertisement)
PA – donation
0%
20%
40%
60%
FE - Operator - Broadcaster and Local TV 80%
FE - Operator - News and magazines 100%
FE - Operator - On-line video company
line
FE - Operator - PA and other companies
FE - Operator - Radio
FE - Operator - Web editor
Figure 19: operators and business models.
:
As far as the content production related to the business model, as showed in the bar
chart below, every business model is adopted independently from the production
,
source of the content.
To begin with, the free with advertisement model characterizes a bigger portion of
only UGC web TV, but nearly the 60% of web TV that adopt this model have
professionally-produced content, which could also be sold through a pay model.
However, both the pay models are adopted also by web TV with UGC only content,
even though at the same time respectively around 60% and around the 50% percent
of web TV that adopt the pay model have only professionally-produced content. On
produced
the other side, the free model is adopted mostly by web TV with UGC only.
As a general consideration, it can be argued that if a web TV has professionally
professionally-
produced only content, it is more likely to adopt a pay model, then the likelihood that
it will be financed by advertising or by donation grows as the amount of UGC.
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34.
PA – subscription
PA - PayPerView
PA - free with advertisement
PA - free (no advertisement)
PA – donation
FE - both produced and UG
0%
content 20%
FE - only professionally-produced 40%
60%
content 80%
FE - only UGC 100%
Figure 20: content production and business models.
Finally, the operator’s core business sector, the type of content (Live produced for
other medium and transposed to the Internet, Live originally produced for the web
ly web,
VOD user generated, or VOD professionally
professionally-produced), and the business model
variables are crossed into the graph below.
As a results, the business models, as arise from the chart, can be described as
,
follows:
• Donation and free (no advertisement) this model, not a real business model, is
advertisement): ,
typical of some not for profit companies use donation as the principal way for
financing, then the free model seems also to be preferred by web editors, PA and
news companies when the content is live.
• Free (with advertisement): this is the most diffused business mod over the
advertisement): model
Internet. The analysis shows that it is the almost exclusive business models used
by radios and news, and the prevalent for pure players when the content is user
generated.
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35.
• Pay-per-view: this business model seems to be associated with produced video
on demand, especially by TV and pure players.
• Subscription: this business model seems to be spread over different operators
and different contents, due to the existence of premium or upgraded sections
even in advertisement financed web TVs. However, it seems to be usually
associated with live content produced for the web, or with professionally-
produced VOD.
Web editor
VOD UG
VOD produced
Live transp.
Live orig.
VOD UG
VOD produced
TV
Live transp.
Live orig.
VOD produced
Radio
Live transp. PA – donation
Live orig. PA - free (no advertisement)
VOD UG
Online video company
VOD produced PA - free with advertisement
PA /
Live transp.
PA - PayPerView
Live orig.
VOD UG PA – subscription
VOD UG
VOD produced
Live transp.
Live orig.
VOD UG
News
VOD produced
Live orig.
0% 20% 40% 60% 80% 100%
Figure 21: operators, type of content and business models.
The research shows, in its final part, two different methods for cluster analysis
The first one is made using Self Organizing Maps and k-means Algorithms, over 44
variables and 152 samples.
The 44 matrixes (Appendix C) show the distribution of each variable within the
sample, then the u-matrix, redefined through a k-means algorithm, allows visualizing
the clusters.
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36.
The U-matrix, that is the matrix that gives insights into the local distance structures
of the dataset, and therefore should help to visualize clusters.
Figure 22: U-matrix clustering.
However, it is not possible to visualize any cluster within the matrix, and that means
that the variables are distributed homogeneously in the sample.
The k-means algorithm helps to visualize a given (maximum) number of clusters, on
the base of k centroids. The figure below shows the matrix obtained through the k-
means algorithm, and a scatter plot. They both indicate that the sample is composed
of 3 main clusters, even though the scatter plot shows: scattered shape; two
different cluster regions, and between them an intermediate distribution on mini-
clusters that do not allow a precise individuation of clusters; the spectrum is covered
in every part by the sample. On the base of the p index obtained from the k-means
clustering, it is possible to quantify the composition of each cluster.
Figure 23: k-means clustering.
Figure 24: scatter plot clustering.
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37.
Cluster 1 Cluster 2 Cluster 3
35 48 70
23% 31% 46%
As far as characteristics of the sample, the analysis suggests that the distribution of
the variables is homogeneous, even if is possible to identify three clusters: this
means that web TV, if analyzed through a relevant amount of variables, covering
different aspects, such as features, business model, uploading regime and privacy
regime, did not assumed any peculiar shape yet, and each one attempts to find its
niche market to differentiate from competitors.
The two step cluster analysis over three variables, that are business model, operator
and type of content, provides better defined clusters. The result is a cluster
distribution that is similar to the one obtained through k-means.
Figure 25: two step clustering pie chart.
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38.
The bar charts below show the distribution of the single variables within each cluster.
Figure 26: content distribution within the clusters.
Figure 27: operators distribution within the clusters.
Figure 28: business models distribution within the clusters.
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39.
Furthermore, the Bonferroni adjustment4 with the classification by variable says that
the variable “Content” is more significant (is a larger value) in the cluster 2, the
variable “Operator” is more significant in the clusters 1 and 3, and the variable
“Business model” is more significant in the cluster 2 but also in the cluster 3.
Analyzing this data it is possible to describe the characteristics of each cluster:
• Cluster 1: is composed by web TVs operated by an online video companies,
whose content is almost exclusively VOD, more user generated than
professionally-produced, that adopt the business model free with
advertisement, or in some cases they require subscription and they also have
pay-per-view content.
• Cluster 2: is composed mainly by web TVs operated by broadcasting
companies and radios, with a relevant presence of companies from other
industries and PA, whose content is live produced for other medium and
sometimes professionally-produced VOD, that adopt the free model, mainly
with advertising but can be financed by donations, even though they
sometimes offer pay-per-view content.
• Cluster 3: is composed mainly by web TVs operated by web editors and
companies of the publishing industry, whose content is mainly VOD
professionally-produced but also user generated, and often offer live content
produced for the web, that adopt the free model advertisement-financed but
often require subscription for at least some part of their content.
4
In statistics, the Bonferroni correction is a method used to address the problem of multiple
comparisons. It is based on the idea that if an experimenter is testing n dependent or independent
hypotheses on a set of data, then one way of maintaining the family-wise error rate is to test each
individual hypothesis at a statistical significance level of 1/n times what it would be if only one
hypothesis were tested. So if you want the significance level for the whole family of tests to be (at
most) α, then the Bonferroni correction would be to test each of the individual tests at a significance
level of (α/n). Statistically significant simply means that a given result is unlikely to have occurred by
chance assuming your hypothesis is correct.
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40.
2.3 Findings
All in all, the analysis shows that there are basically two primary variables that
determine the business strategy of a web TV:
• Business model chosen
• Type of content of the web TV
Those two variables are inter-dependent, and the choice is also related to the core
business of the operator.
Then, some secondary variables allow the web TV to differentiate from competitors:
• The range of VOD channels
• The amount of live content
• The role of the community
• The type of advertising
The graph below shows the strategic positioning of the players depending on the two
primary variables. Such distribution of the different operators will be clarified by
some case studies in the next chapter.
Figure 29. Strategic positioning of the players on depending on business model and type of content.
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41.
3. Case studies
In order to give an empirical approach to the research, some case studies have been
chosen to provide concrete instances about the analysis. Each of them has specific
peculiarities that will be analyzed and clarified more in depth.
Such cases have been discussed following face to face semi-structured interviews to
managers of that companies in the period September and October 2009.
The case studies have been organized into four main sections: general information
about the company (identity card, brief history, definition of the business line,
primary competitors), business strategy (business framework, key points of the
offering, positioning, critical factors of success), business model, and future
scenarios.
3.1 Glomera
Website address www.glomera.com
Languages Italian, English, French, Spanish, Slovenian
Commercial name Glomera
Created year 2007
Registrant name Dynamic Fun S.r.l.
Registrant country Italy
Description Glomera empowers companies and content
owners — from independent producers to major
broadcast networks — to virally distribute their
content. It aims to help them in the creation of
dynamic, connected online communities, whilst
retaining ownership and branding control.
Unique visitors (users) 8,500
Average time on site 7:30
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42.
General information about the company
Glomera.tv, managed by the company Dynamic Fun S.r.l, was founded in 2007 and
operates on packaging and distribution of contents, mainly at a b2b level.
The initial project has been split into 2 parts: media platform to create the channel,
to give a structure to the programming, and to manage it autonomously;
transmission platform to distribute using P2P or unicast protocols according to the
kind of partner.
Then, the company entered to the b2b market with the brand Glomera. The first on-
line programme on streaming was TV SMAU, 44th edition of the Information and
Communications Technology international fair, with the possibility to enjoy the use of
additional contents, such as interviews to exhibitors, recorded conferences and
technical deepening.
Dynamic Fun is a company whose mission is to create and develop any kind of
wireless communication project, particularly in Entertainment and Business sectors.
Glomera is a platform that allows to create and manage, in a totally autonomous
way, personalized web TV, and offering to companies (corporate), content provider,
and video producers (video blogger), a new way to carry the contents and attract
users’ interest. It is also a marketing instrument and a system for companies to
interact with their clients. It allows also integrating the dedicated channels and the
interactive boxes into other websites.
Mogulus and Joost, and ShareMedia in Italy, offer similar services: the first webcasts
live events through unicast protocol, whereas the second webcasts both through P2P
and unicast, supporting high investments in terms of infrastructure through venture
capital resources.
Business strategy
The consumption of online video contents on the web is growing sharply. The
highest part of portals that carry video contents does not offer linearity in terms of
use of the service.
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43.
P2P protocol seems to have at least two advantages: the content provider keeps the
content since the client does not download the videos, and an unlimited opportunity
to exploit economies of scale with lower investments in terms of capacity.
Glomera’s management believe that without the use of the P2P protocol, no one
model of web TV could resist to the growth of its audience. P2P is more complicated
technologically, but more efficient economically, even though it is currently
disfavored because of lower resolution compared to the unicast, given low uploading
speed of actual connections, and the required installation of software or plug-ins.
As regard to premium contents, they don’t see them as appropriate for web TV for
two reasons: P2P can’t ensure a level of the service that is adequate to expectations
of the clients who pay for the showing; premium videos are created to be shown on
HD screens, not on a pc screen.
Glomera produces and manages web TV, and provides all tools that are necessary to
manage the programming in autonomous way in a wide range of languages. Its
target is composed either by whoever has a limited amount of videos or by whoever
desires a dedicated channel to broadcast 24/7. Furthermore, interactive functions
such as chat, comment boxes and votes to contents, contextually to the webcasted
videos, facilitate the creation of virtual communities and other forms of interaction
that are typical of Web 2.0
The innovative technology is the P2P streaming, that allows the rapid distribution of
high quality contents to an unlimited number of users, with the possibility to develop
new business and communication models, thanks to the considerable reduction of
bandwidth costs. Videos are legal, safe and protected for the content provider
because they cannot be downloaded and cannot be copied.
Private firms, professional video producers and beginners can easily upload their
videos and manage a personalized streaming channel, and also integrate it on their
website. Nevertheless, Glomera allows to webcast live events and interviews.
Moreover, the possibility to integrate the personalized channel into other websites
and portals, allows partners to increase users and be on the web virally.
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44.
Key points of the offer are as follows:
• Creation of a personalized channel: a logo, photos and external links can be added
to the channel, which can be embedded on client’s own website, and videos are
protected because can’t be downloaded.
• Contents can be managed directly through simple tools, and a personalized
programming can be created.
• Personalized interactive functions, such as descriptions, documents downloading,
images and external links.
• Social interaction tools, such as chat and comments threads.
• Reports about the audience, with the possibility to change the programming on
the base of it.
• Viral functionalities: Glomera gives the possibility to create a network of members
who can diffuse contents on their own portals in a viral way, like video sharing
and embedding, and alerts sending to know when a programme is webcasted.
• Revenues from advertising videos, which can be added to the programming, and
from banners and links to sponsors.
In order to enhance the success of its clients, Glomera provides supporting services
to the production and running of web channels, such as consulting service for the
creation and the start-up of the web TV, technical support to the running of the
channel and the programming, organization and conduct of the videos and the
channel, production and post-production of videos related to events, interviews,
conferences and reportage.
To be noticed that Glomera offers solutions both for internal and external web TV:
the former is used by companies for e-learning and know-how sharing of its
employees mainly through the unicast, whereas the latter is used to reach potential
clients through P2P streaming with a highly branded medium at a low cost.
The market positioning of Glomera starts from the objective to create a project
founded on a highly sustainable business, since it is not financed by any venture
capital fund as some competitors like Mogulus, Joost and Babelgum, and therefore it
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45.
has the objective of differentiating as much as possible from competitors and create
peculiar marks of distinctiveness.
Critical factors of success are:
• lowering of bandwidth costs;
• no limitations to users simultaneously connected;
• integration and personalization of the channel on the company’s website and
possibility to embed it into other portals;
• highly targeted communication campaigns and e-commerce offerings together
with videos;
• statistics about audience and click rating;
• simple tools for the running and the organization of contents of programming;
• differentiation and valorization of various levels of interactions: among users and
between users and company.
Business model
Glomera offers services to companies for a fee. It is a fixed and all inclusive amount
that is between 3,000€ and 5,000€ a month. However it can be lowered by the
insertion of advertising on the portal Glomera.tv, which contains the videos of the
different users of the service. A portion of the revenues from advertising goes to the
channel from which videos come, proportionally to the audience of such channel,
with the logic to incentivize the production.
The company ensures the webcasting of the channel through P2P streaming, and
with an unlimited base of users.
Future scenarios
Advertising is growing steadily and rapidly, and it will converge on videos more than
on banners. This kind of market is still partially undeveloped, and this is neither
responsibility of the agencies, which could reintroduce at a lower cost on web TV the
same campaigns that runs on other media, nor of the companies that don’t have
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46.
clear media plans. It is responsibility of media centers, which manage investments
and media planning in a portion that is so high that doesn’t allow to other actors to
enter into the market with profit, but only with marginal revenues. The only actor
that is currently able to manage video advertising at a world level is Google, which is
a kind of media center for the web, as already did with textual advertising with
Google Ads.
As far as the company, the prevalent plan is to stay into the internet business, for
the confidence into its still untapped potential. They plan to focus on:
• optimal management of the contents;
• easy interface;
• no additional software needed (Glomera works with a plug-in);
• light and little intrusive platform.
Glomera.tv, the portal dedicated to vehicle the partners’ televisions, enhances users
to enter to a bouquet of thematic channels, while partners can spread their
programming and reach new potential users. Within Glomera.tv, advertisement will
enlarge revenue streams, because thematic channels will become highly branded and
therefore will attract high investments.
3.2 ShareMedia
Website address www.sharemedia.it
Languages Italian
Commercial name ShareMedia
Created year 2006
Registrant name Unicity S.p.a.
Registrant country Italy
Description Corporate TV, interactive VOD service and
audiovisuals production.
Unique visitors (users) 7,500
Average time on site 5:30
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47.
General information about the company
Unicity S.p.a. arose from the entrepreneurship of a group of communication and
software development professionals, with the contribution of Eworks, an Italian
venture capital. It is one of the most important Italian web agencies, and it provides
integrated services and solutions for the web. Starting from 2005, they implemented
a web TV platform, ShareMedia, realized together with Unidata S.p.a.
Unicity operates in the Information & Communication Technology industry, and
offers a wide range of services, such as creation of portals and websites, e-learning
and media integration solutions. The web TV platform, ShareMedia, allows to create
and run television formats on the web and to create corporate TV for private firms,
for e-learning companies, and for the Public Administration.
ShareMedia proposes a concept that can be assimilated to Glomera in Italy. Another
competitor is Narrowstep, a British company. Different realities exist in the Italian
market, like TXY Polymedia, that comes from the broadcasting industry. It can be
assumed that ShareMedia has features that are peculiar of a system of Video
Content Management.
Business strategy
ShareMedia came into existence within a market with high potential of growth. The
idea has been positively welcomed by big companies and institutions, less by small
and medium companies, because of the difficulties to understand the communicative
potential of integrating a web TV into the company’s website.
In addition, ShareMedia found difficult to get in touch with film producers, which the
management considered as an attractive partner because of the difficulties for small
producers to distribute to theaters. By contrast, such sector saw web TV more as a
menace than as an alternative.
ShareMedia provides the technological resource for whoever wants to create a web
TV. It enhances the creation of thematic channels and audiovisual formats, with high
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48.
personalization features. The objective is not only to serve as support for such
initiatives, but also to project them directly: they are also evaluating the creation of a
web TV b2b, as a communication strategy for companies.
Corporate TV is a form of communication integrated into the website of companies
and institutions, and has diverse finalities: internal communication, promotion,
support and motivation to sales networks, events and presentations, information
services but also selling of entertainment contents.
ShareMedia is also present on the contents side. Unicity S.p.a. owns Blueray, a
company that is specialized on ideation, project and realization of videos for
communication, training, information and corporate image, which produces mainly
television and radio commercials, institutional videos, shorts and formats.
Despite this kind of strategy doesn’t bring to great advantages, it shows a kind of
dynamicity because the company proposes itself as able to improve the quality of
videos owned by clients.
In this phase ShareMedia strategy is focused on corporate clients, and it gives them
the possibility to create a Corporate TV. The biggest part of clients are institutions
and big companies, whereas among small and medium companies we can find Rai
Radiotelevisione Italiana, Monte dei Paschi di Siena, Arma dei Carabinieri, Ministero
della Salute e dell’Ambiente.
The collaboration with RAI concerns an experimental project of a format produced
for the web, called “L’Universo della Conoscenza”, in which there is convergence
among traditional TV, video on demand, a web portal, pay-per-view contents, and an
archive with thousands of hours of programming. The joint venture Rai-Unicity
realized a cultural thematic channel characterized by three elements, such as
qualitative and quantitative richness of contents, interactivity and the 80% of video
on demand.
However, ShareMedia provides both streaming and downloading services and
products with different characteristics, inside a unique platform with diverse
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49.
functionalities, as the possibility for the user to choose the way to enjoy the
contents.
Business model
There is not a peculiar business model, since ShareMedia exploits at least three ways
to create value and generate revenues:
• Premium contents to be downloaded at a price.
• On-line training., to be used by companies in addition to traditional training.
• Digital advertising: substitution of traditional banners with interactive commercials
or other formats that come from traditional broadcasting and are rearranged.
The objective is to embed those sources of revenues into the editorial project related
to corporate communication. However, it has been difficult to monetize in the short
and medium term so far, because clients have mainly institutional, popular or
entertainment character.
Among his clients, only one is implementing a project financed through banner and
interactive commercials. The scarcity of editorial projects is motivated by the
inexistence of clear, defined and sustainable business models.
Future scenarios
ShareMedia management doesn’t believe that web TV can substitute traditional TV
because of the attitude of people and because of different model proposed by web
TV, which is based on the On Demand and is highly “democratic”.
The actual scenario is characterized by a transition phase in which also corporate
strategy looks to the Internet as a great opportunity to distribute the contents.
As regards to ShareMedia helps companies in this transition to the web, that in the
near future will become a key in terms of marketing. ShareMedia plans to attract, in
the long run, also consumers, in addition to corporate clients.
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50.
In the short and medium term, the attention will focus on b2b, in order to overcome
the actual problems, which are basically cultural and technological, because of lacks
of interaction with the new media, and insufficient infrastructure.
The biggest challenge is to differentiate from competitors: formats and language
should change and adapt to the needs of the new platform, a crucial point for web
TV to be finally successful.
3.3 Google Video – YouTube
Website address www.youtube.com
Languages German, English, Spanish, French, Italian,
Norwegian, Dutch, Polish, Russian, Swedish,
Portuguese, Czech
Commercial name YouTube
Created year 2005
Registrant name YouTube, Inc.
Registrant country USA
Description Largest video-sharing website in the world.
Unique visitors (users) 84,000,000
Average time on site 12:00
General information about the company
In September 1998 Larry Page and Sergey Brin founded Google with the objective of
creating a service to organize online information on Internet.
Google is today the main search engine in the world, with a database of over 8
billion of URL, and the possibility to find any kind of website, given some keywords,
in a fraction of second.
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Google has also bunch of additional services, like Google Ads, Google Earth, etc. and
moreover Google Video, born as video-sharing website and become, after the
acquisition of YouTube in 2006, a search engine for videos, for 1.65 million Dollars.
YouTube was founded with financing of Sequoia Capital in 2005 and rapidly became
the most important video-sharing website in the world. After the acquisition from
Google, it has been operating as independent subsidiary of Google Corp.
Such success increased after the closing of some partnerships with important content
providers as CBS, BBC, Universal Music Group, Sony BMG, Warner Music Group, NBA,
Sundance Channel and many others, in order to diversify its offer to consolidate the
leadership and attempt to solve the big problems related to copyright.
Within the huge amount of video-sharing websites that allow uploading user
generated videos, it can be distinguished between horizontal and vertical portals: the
former , such as Yahoo!, Libero and Alice Dailymotion, offer a wide range of services
in addition to the possibility to upload user generated videos; the latter focus on
video-sharing only.
However, the main competitors for YouTube seem to be horizontal portals that
succeeded in creating wide communities through the collateral services, but no
competitors succeeded in attracting so many users just through the video uploading.
One of the main competitors was Google Video, which after the acquisition of
YouTube became a search engine for videos.
Business strategy
YouTube is the market leader vertical and generalist video-sharing portal, and it
allows watching videos, interacting with other users, but most of all to upload
contents: with this kind of platform is possible to create a personal TV channel.
The offer is dominated by User generated Contents, but its growing success is due to
agreements with majors and TV broadcasters, that enlarged the offer with higher
quality and longer videos, through which the portal increased its value and assumed
a meaning that is different from the simple logic of video-sharing. Concerning
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technical issues, videos uploaded from standard users are limited to 100MB and 10
minutes, whereas an official partner can upload 300MB videos.
Everyone can create a channel to upload videos and realize an online personal
archive, after free registration and choosing of an account, that can be: standard,
director (user can add a logo and some personal elements), musician or comedian
(logo, information about the genre or the style and tour dates, links to buy CDs),
guru (logo, genre and some links).
Inside the official partners category there are companies operating in media, such as
broadcasters and content owners, but also standard accounts that can be awarded
for creativity and success obtained by videos.
The layout of each channel can be customized: there are videos uploaded by the
user, the favorite videos, comments from other users, subscribed channels. Partners’
pages are different also in the watch page, with a small banner on the right of the
player that brings directly to the partner channel, and on the right are showed videos
uploaded by the same account.
Some factors that initiatives from the partners and determined YouTube as an
alternative platform of communication: a wide community, and the video as
communicative form. The more the community is big, the more the message from a
website is effective. This is the main reason for the success of the social networks,
such as Facebook and Flickr, but videos are even more powerful and direct means of
communication. For instance, the band Red Hot Chili Peppers and Warner Bros Music
asked fans to upload in YouTube a video based on a song that they had just released
on Amazon and iTunes, and they received more than 400 videos in 70 days: the
winner’s video has been uploaded on their channel and the person won 5,000 Dollars
and a weekend with the band.
From that moment, YouTube has a page dedicated to contests that is similar to the
partner’s one, with an interactive window on the top-right with a video that explain
the contest, the possibility to upload the video to participate and to watch other
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participants’ videos. Each organizer of the contest chooses rules and modalities,
whereas YouTube offer the service by fee.
Born as a “box” for UGC, the portal gives to users a determinant role because of the
importance of social networks in the web 2.0. However, YouTube fronted from the
beginning the problem of control of uploaded contents, both related to ethics and to
copyright protection. The company has protection systems of the rights that allow
recognizing a content that is under copyright law: if removed after a claim of a
content owner, the same file can’t be uploaded again. After then has been built a
system that recognize the ID given to any video, on the base of a series of frames,
so neither the publishing of contents realized through the editing of protected frames
can be uploaded.
Critical factors for the success of YouTube are:
• Ease of use.
• Quickness of the enjoyment: the video uploaded can be immediately watched.
• Community: possibility to comment, vote and share the videos.
• Embedding: first website to give the possibility to embed the video into other
websites, just through a simple copy/paste of the HTML code, giving viral success
and visibility to the videos.
Compared to traditional television, YouTube’s role is complementary more than being
a substitute, because traditional broadcasters can upload contents to catch a larger
audience, that otherwise would be impossible to reach, simply creating their partner
channel on YouTube.
Business model
Despite it is the first video portal with an amount of users that is bigger than any
other video-sharing website, YouTube did not generate as much revenue as it could.
However, Google purchased it for 1.65 million Dollars. Audience is enormous, but
economic results have been poor, so it has been necessary to develop a sustainable
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and profitable business model. First profits from the big investment came in 2008,
after some instruments able to monetize the huge audience were introduced.
There are four advertisement models that constitute the business model of YouTube:
• Active display advertising: it is the classical advertisement format, present in each
section of YouTube except the homepage. There is the possibility to choose
channels of the video platform and the websites on which advertise, with the only
condition that such websites are part of the Google content network, so that
target can be segmented and the probability of success of the advertising
campaign is higher. The contextualization is also a characteristic of Google Ads,
but in this particular case the advertiser chooses websites on which put the ad,
and not an algorithm.
• Sponsor channel: for companies that are not in the media sector, and therefore
are not in the category of official partners, but have the use of a big video
archive, YouTube gives the possibility to create, by fee, a channel characterized
by the same functionalities that a partner channel can have. It is the case of
companies that might want to sell its products, promote initiatives, advertise with
much creativity, increase the brand awareness and improve the image. Such
sponsor channel has not a fixed cost, on the contrary there is a minimum amount
in order to generate sufficient traffic towards the client’s channel, and guarantee
the success of the client. The display advertising is showed both on the portal
and, if requested on the content network of Google, in a way that increase
synergies between the two portals and the benefits are more evident. The
initiative lasts three months, then there is a down-grade to standard channel, that
differently from sponsor and partner channels, can host third parties ads by
concession of YouTube: benefits from revenues coming from this banner go both
to Google and to the owner of the channel, according to the revenue-sharing
model. As regards to the visualization of the page that contains the video, the
mechanism works only with clients that previously accepted to insert ad on their
videos.
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• PVA (Participatory Video Ads): it is a click-to-play video format that can be found
on the right-top of the home page and is usually used to promote a sponsor
channel, or a particular film or product. Besides the video, it is allowed to the
user to deepen what is proposed through: a small banner on the top of the player
that can bring to the related YouTube channel or to the related website, or two
links on the bottom of the player that can bring to the same of the homepage but
in the related page or to the channel of the uploader.
• Transparent banner on the video: it is the most interesting and recent model,
that give the possibility to watch, within the 20% bottom of the video, a
transparent banner that is contextual to the topic of the video and appears 15
seconds after the starting of it. It can be: clicked, so the video stops and another
player opens up inside the principal player, then the video starts again; closed
immediately by the user; neither clicked nor closed, so it disappears after a few
time and then appears again at the end of the video. Advertising can be included
only on official partners websites, included the standard accounts that have been
upgraded for creativity and success. Revenues from the ads are shared and such
revenue-sharing applied also to basic users pushes towards higher quality
productions. Equally to the sponsor channel, the percentage retained by Google is
not fixed but depends on the strategic value of the partner.
The last thing to be considered about YouTube business model is the complete
absence of advertisement on videos, because formats such as the pre roll damage
the user experience. Moreover, UGC have been considered as not suitable to be
source of revenue because of a matter of ethics and also because of protection of
the copyright, retained by the users.
The most part of companies contact YouTube and Google directly without passing
through media centers, so Google has created an internal structure dedicated to
customer base and created built-in specialized competences for the planning and the
creation of the ads.
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Future scenarios
The attitude is towards the improvements to the YouTube service, enhancing
innovation and research. A recent improvement has been the possibility to have a
bigger player in HD to watch the videos.
The current objective tends particularly towards the increase of revenues and the
strengthening of the community. As far as the ad formats, particularly the PVA and
the transparent banners will be implemented. It is unlikely that pay-per-view
contents will be offered, because this would distort YouTube philosophy, on the
contrary the revenue-sharing model will be extended because the catchment area is
large enough to support creativity and share revenues with the users.
3.4 RCS Digital
Website address video.corriere.it
Languages Italian
Commercial name Corriere della Sera TV
Gazzetta TV
Created year 2005
Registrant name RCS Quotidiani S.p.a.
Registrant country Italy
Description Video on demand service of the newspapers
Corriere della Sera and Gazzetta dello Sport
Unique visitors (users) 1,100,000 + 390,000
Average time on site 3:30 + 3:10
General information about the company
RCS MediaGroup is a publishing group operating in sectors of newspapers,
magazines and books, in the divisions of radio, new media and digital TV, as well as
being among the most important actors of advertising collection and distribution.
RCS Quotidiani is the publisher of the daily headings of the Group, in Italy and
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abroad. The company is the market leader for Italy, where detains a market share of
21%. In 2008 revenues from newspapers have been around 1.3 billion Euros.
RCS Digital is a company, controlled at 100% by RCS Quotidiani, which runs the
websites Corriere.it and Gazzetta.it and the development of brands and editorial
assets of RCS over digital media. The Mediacenter inside the two websites was
launched in 2005 and has been conceived to be the video box of the two principal
websites of the group. The ratio for the set-up of the websites derives from the
analysis of some best practices online, such as New York Times and Washington
Post. The two multimedia sections have been revised more than one time so far, due
to the increase of contents amount and related layout modifications.
Contemporary to the born of the Mediacenter, the company created a new
organizational structure, the multimedia offering, composed of multimedia marketing
and video production. There are two editorial units, one for Corriere.it and the other
for Gazzetta.it, composed of journalists focalized on the online. The value of auto-
production is guaranteed by the inner production staff, characterized by high
flexibility and readiness.
RCS Digital S.p.a. is dedicated to the management and the development of editorial
activities of RCS over digital media: Corriere.it, online magazines and thematic
channels, Gazzetta.it, classified offering, mobile and gaming.
Corriere.it, more than including a complete overview over the main facts in Italy and
in the world, has an offering that is characterized by thematic channels, such as
ViviMilano, Salute, Viaggi and Casa.
Gazzetta.it, the main website for sport news in Italy and Europe, has among recent
innovations, GazzaSpace, the website section that gives voice to readers, where is
possible to comment the articles, participate to the forum and express opinions about
sport news.
Both Corriere.it and Gazzetta.it put at their surfers disposal a rich TV/Video offering,
with image galleries, video contents and deepens ad hoc for the web, besides real
online news and many thematic columns by famous Italian journalists.
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RCS Digital operates in the classified ads with successful initiatives in jobs
(TrovoLavoro.it), real estate (TrovoCasa.it) and automotive (Automobili.com) sectors.
Thanks to RCS DB Games, RCS MediaGroup is also present in the online gaming with
Fueps.com, games and online entertainment portal.
The leadership positions in the online property makes RCS Digital attractive for
advertisers, because of many different and highly targeted communication forms.
In less than three years of activity in the mobile sector, RCS Digital affirmed itself as
leader in the infonews segment, thanks to an offering of over 50 information services
(SMS, MMS, and mobile Site) and to a rich portfolio of updated multimedia contents.
RCS Mobile is the portal that collects and makes available for all the operators mobile
services from five different important brands: Corriere della Sera, La Gazzetta dello
Sport, Max, Novella 2000 and Astra.
The present case study will take into consideration only the two portals Corriere.it
and Gazzetta.it, which are information products, with a video section and many
entertainment features.
The main competitor in Italy for Corriere.it is Repubblica.it. Both offer services with
photos, audio and videos, within the logic of interactivity with the user. Another
competitor inside the information field is TGCOM. A significant distance in terms of
unique visitors separates Corriere.it from the other headlines. However, despite the
difference in terms of contents and objective with the traditional portals, those are
certainly competitors in terms of advertisement collection.
In those terms, RCS competitors are also portals that offer only videos as an
entertainment and not information, such as YouTube or the Italians Libero Video and
Alice Video. Nevertheless, the will is to not compete against those kind of portals
because the offering and the strategic positioning are a way different, linked to a
logic of editorial headline and contents about current events and other kind of news.
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