The days of completely free online TV are numbered. You’d better get used to paying up. blog.mindrocketnow.com
Tesco shuttered its Clubcard TV service on Sunday. On their support page the reason given is that they “weren’t getting the level of repeat usage [they] had hoped for”. This contrasts with Netflix’s recent launches into 6 new European territories. The health of online TV would then appear to be confused; some players are doing spectacularly well, others terminally badly.
At first glance, the online TV market appears to be playing out as you would expect in a typical tech hype cycle. We’re beyond the point where the new technology of IPTV is engineered into a commercially viable product. A multitude of players came into the market; many got bought or turned into pure technology platforms.
We’re at the point now where the service providers are finding it hard to turn the years of investment into revenue. And even successful players like Netflix are nowhere near as capable as cable in converting revenue to profit. I wonder if online TV isn’t a little different though, as it is disrupted by the very nature of its revenue model.
Google Now’s TV card service has quietly launched in the UK. It is an aggregator of TV schedules – you tell it what services you subscribe to, and what you like watching, and Google will tell you what to watch.
From a consumer’s perspective, it solves the problem of fragmentation of TV services. You don’t have to boot up and compare offerings on Now TV, Amazon Fire TV, YouTube, Freeview, Apple TV (at least in my household) – Google does it for you. And it uses its number crunching prowess to provide recommendations, so you don’t have to search, you just have to watch.
From the content provider’s perspective, this has serious ad revenue implications. Amazon Fire TV et al is no longer the destination – consumers will come to Fire TV just to transact, i.e. spend the minimum time it takes to start watching their chosen content. They will not be spending the precious time, and therefore associated pageviews and ad share, searching on the Fire TV site. By finding their content via Google Now, Google gets to serve up the lion’s share of the ads, and realise the lion’s share of the ad revenue.
For some companies, like Netflix, that relies on subscriptions, this may not be so much of a problem. But for services that rely on advertising to sustain them, this will be the killer problem. Unless the online TV service can afford to compete for a-grade content, they will to make to with a parochial consumer, and so a purely subscription model will be out of reach. And even for services that can afford the content (due to investor investor largesse), getting to actually making a profit from the revenue generated, will still be a long journey.
The days of completely free online TV are numbered. Even if you tolerate all the pre-roll, in-roll banner ads, it still won’t be enough. You’d better get used to paying up.