Move Networks’ new CEO on monetizing Internet video
Two-year-old Move Networks is following an ambitious plan to move the telecom industry toward business models that finally monetize so-called “over-the-top” Internet content rather than let it cannibalize video subscriptions. The company’s downloadable media player authenticates existing video subscribers and allows them to watch some content online. But the company’s new chief executive officer, Roxanne Austin (the former chief operating officer of DirecTV) says service providers can go further than the free online models discussed today, ultimately turning Internet video into new incremental revenue streams.
On the evolution of Internet video business models: We’re at a unique time. We’re finally talking about getting paid for content on the Internet. It’s one of the reasons I came [to Move] at this stage. We’ve been talking in this industry for a long time about video on the Internet, in phases. We went from, “it’s all going to be free” to “it’s going to be user-generated content” to “it’s going to be professional content paid for by advertising.” Now people are saying there’s going to be video everywhere, but the ad model alone doesn’t work; somebody’s got to pay for it. The model you see now is the first step. We’re taking a [video on demand (VOD)] model and allowing people who have a subscription today on a paid service to watch content [online]. That will evolve to [include] not just a list of VOD. If I were DirecTV or Comcast or whoever, if I could truly broadcast over the Internet my full TV lineup, I think people might be willing to pay for it and not just pay for a subscription.
On adding incremental over-the-top (OTT) revenue to TV subscriptions: We have the ability to broadcast through the Internet, encode [content] once, and people can watch it on their TV, their PC or their phone. I think people will be willing to pay for our service [in addition to cable TV subscriptions]. We’re at the first stage of this. The conversations we’re having today we weren’t having a year ago. The conversation today is: If you have a paid subscription, you get to watch [free content online]. That’s a great first step, but it’s not the end game because people won’t produce content unless they get paid for it. At the end of the day, there’s a win-win for everybody. As a consumer, if I could get on my computer and stay connected to my DirecTV service anywhere I went, I’d be thrilled. We can also do enhanced ad insertion, so we can increase ad revenue. We also have a lot of data on who’s watching what.
On ESPN’s online subscription model: ESPN is a clear example of where subscriptions work. That’s a single-channel subscription. We provide that service. If you have a highly desirable selection of content that people can’t get today, [people will pay extra for it]. You can’t go on your computer today and pull up a channel guide and pick from 80 or 100 channels. And you can’t have a built-in DVR on it and you can’t have perfect HDTV-like quality that starts immediately with no buffering [like Move offers].
On why content providers still need cable providers and IPTV providers: The big S: subscriptions. In 2008, DirecTV, EchoStar, Comcast and Time Warner Cable alone paid [a combined] $22 billion for content. You can’t walk away from that.
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