Thursday, August 16, 2012

Three revenue models for online coverage of live events

With the Olympics and Tour de France, we saw examples of three live streaming revenue models: license fee, advertising and pay per view. Here is a quick look at each.

BBC Olympics, license fee

The BBC streamed 2,500 hours of free, live coverage, but you had to have a British TV license. The TV licenses cost £145.50 per year for a color TV and £49.00 for a black and white TV. The fee allowed you to watch the video streams on any device and gave you permission to store, but not distribute, the content. If you came to the site from a non-British IP address, you were blocked, but that was easily circumvented using proxy servers. In the future, they may be more aggressive about discovering and blocking proxy servers.

Archived footage will be available until January.


NBC Olympics, advertising supported

To view their live coverage of the Olympics, NBC required you to have a cable TV account with an authorized provider and a subscription level with access to several NBC cable channels. (That restriction may have been imposed by NBC's owner, Comcast). On top of that, they showed a lot of ads.

Like the BBC, authorized users were free to view the live coverage on the Web or their tablets and phones. One could circumvent the account restrictions by using the user name and password of a friend with a qualifying account. Again, in the future they might be more aggressive in blockng that sort of access.

NBC's archives are on line at this time, but they have not announced their plans for future access. Since they run ads, they may leave them up indefinitely.

NBC Tour de France, pay per view

For the Tour de France, NBC charged a $29 fee, which, as with the other events, entitled the user to watch on the Web, a phone or tablet. There were no ads, but, unfortunately, access to the archive footage was dropped shortly after the end of the event.

My least favorite this year was the ad support model, which was done poorly. When navigating the Web site, it seemed that every new page view had a pre-roll commercial, and arbitrary commercial breaks in the middle of event coverage were irritating and distracting -- the screen would go black for a few seconds in the middle of an event, then they would run as many as six commercials before resuming the action. To add insult to injury, they boosted the audio volume during commercials.

I preferred pay per view, but many viewers would opt for ads, and there is a lot of room for improving the experience. For a start, NBC needs directors to watch the action and insert ads intelligently. Ad targeting -- showing individuals ads based on demographic, social networking and search signals or asking them for hints as to the kinds of ads they were interested in -- would also improve the experience. There could be hybrid models like allowing the user to choose between pay per view with no ads and paying a smaller fee and seeing just a few, well-placed ads.