Television Viewership and IP Video: Adopting a New Business Model

On: September 12, 2010
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About Ronen Shay
Ronen Shay is a doctoral candidate completing his final year of Ph.D. studies in Mass Communication at the University of Florida, under the supervision of Dr. Sylvia Chan-Olmsted. His current research is focused on contemporary challenges in the field of media management and includes papers written on: windowed distribution strategies for substitutive television content, audience perspectives on the perceived quality of pure play distribution, factors affecting tablet adoption, the relationship between social media metrics and brand equity, and factors affecting cable television churn. He has presented his research at the 2013 AEJMC National Conference in Washington D.C., the University of Zurich’s 2014 Evolution of Media Branding Conference, the 2014 AEJMC Southeast Colloquium, the 11th World Media Economics and Management Conference in Rio de Janeiro, and the 2014 AEJMC National Conference in Montreal, Canada. Ronen was awarded the Second Place Student Research Paper (2014) and Third Place Student Research Paper (2013) from the Media Management and Economics division of AEJMC, for his work on social media metrics and brand equity, and windowed distribution strategies respectively. In 2013, he was also an Outstanding International Student Award recipient at the University of Florida, for his academic performance. His accomplishments at the University of Florida are supported by an M.A. in New Media from the University of Amsterdam, and an Honors B.A. in Communications from the University of Toronto. Ronen’s professional experience includes project management roles at Rogers Communications, North by Northeast, and Random Sounds, a freelance concert production service co-founded by Ronen, that successfully served clients in the Greater Toronto Area from 2001-2005. Ronen Shay also holds professional certifications in project management (PMP) and digital communication.

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“From 2007 – 2009, I coordinated website content and online initiatives for a community television station. In this time I was able to experience first hand the fear traditional television stations have of losing viewership to the Internet.”

The traditional television business model generates revenue through commercials and advertisements. This revenue is in turn used to finance production and generate profit. This model is completely dependent on viewership. The more viewers, the more valuable the advertising space and therefore the more revenue generated.

This business model went undisturbed for decades until the Internet and IP video challenged television as the supreme source for entertainment, news, and information. Many traditional television stations fell into a panic, while others were innovative enough to realize that websites and television channels share the same business model. Websites are financed by advertisers who want the same thing they do on television. On the Internet viewership is referred to as impressions or hits, but the concept is the same, the more hits the more revenue.

How can a television station use this information to their advantage? For starters, stop resisting the Internet. Let’s say a station’s total viewership was 100% before the Internet and IP video. After the Internet and IP video their viewership dropped to 50%, with the other 50% going online. At this point in my example many television professionals identify the Internet as a competitor, and refuse to post their station’s content online. They fear that by taking their content online they will reduce viewership further. What they don’t realize is that if they did post their content online they would be able to raise their viewership back to 100%. The solution is in online advertising. If you carry commercials either before, during, or after your IP video you can recover the revenue lost, and maintain 100% viewership by having 50% watch traditional television and 50% watching online. Essentially you are producing the same content and splitting it between two mediums. Advertisers won’t care as all they want is viewership.

Congratulations to FOX, ABC, Showcase, and many other television stations that have figured this out on their own. As for the others, next time you get a viewer response asking for your content to be posted online, listen! The Internet isn’t going anywhere, and if you continue to resist you will lose control of your content. People are pirating your content as I write this. At least if you post the content yourself, you will control its distribution, and therefore its monetary value. Or, you can keep resisting. We all know how well that worked out for the music industry. Doesn’t a computer company distribute most of the world’s music now?

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