As streaming video and downloadable movies on the Web begin to hit their stride both in technology and breadth of content, providers are scrambling to make a profit in a weak economy. This month's column will look at some unique ways that companies are charging for web-video services and content. Perhaps we can learn from the following examples as we chart our own paths in incorporating profit-generating commerce into our web-video production.
RealNetworks
This company could almost be a poster child for making money off of streaming content. Like most media companies, RealNetworks is just beginning to take flight in the area, but the deeper its business model is examined, the more it looks poised for success. Its first step was to increase market saturation by giving its player away for free. No problem there, the company would make it up on the back end by constantly refining and charging a premium price for its server software solutions.
The problem was that Microsoft decided to enter the market and produce its own streaming format, player, and server. Real felt the heat and even though its market has been significantly gouged, it still kept plugging away with new innovations and cutting-edge video and audio-delivery technology. At the same time, it developed a media portal called RealGuide, which created alliances with content providers so that the users who downloaded RealNetworks' player could enjoy a wealth of content. It was a great idea, but hardly a big profit-making venture. However, as a way to reach consumers it worked on several levels — providers received great promotion and Real had more users downloading its player to watch the content.
Meanwhile, Microsoft was developing its own portal for media. Finding alliances was no problem for Microsoft, even when drifting into the world of entertainment. Real had to make a move, and that move was GoldPass. The concept was chancy at best — users paid a monthly fee to have access to exclusive web content. The idea may have been a tough sell at the board meetings because many questioned why people would pay for video and audio content when most media was free on the Web. GoldPass membership numbers were respectable, but not the flood Real had probably hoped for. Then Real announced it would carry the live feed from CBS's Big Brother 2, which had been free on RealGuide.com during the first season. It would now be a feature of GoldPass and Real would charge users to see it.
Consumers were outraged and one group even started a web petition on Actionize.com that generated more than 5,000 digital signatures. This petition called for a boycott of CBS. Tempers flared until Big Brother hit the airwaves. That's when more than 25,000 users paid the fee to watch the Big Brother 2 live, 24-hour feed. The options were $19.95 to view just the series or $9.95 per month as part of GoldPass services.
Content providers sat up and took notice. Big Brother not only took advantage of the immediacy of web video, it also showed that content is king and sometimes if you build it, and people want it badly enough, they will come. This came at a time when the GoldPass service was really starting to roll, exceeding the 300,000 mark in number of users.
Now Real is pivoting reality-based shows around its GoldPass services. In fact, if you look at the current month's slate of exclusive content, you'll see Mark Burnett's Eco Challenge and the king of all reality shows, Survivor. Currently, the Survivor: Insider content includes never-before-seen footage from each week's show. Survivor fans are intense in their loyalty (a key demographic in any market). GoldPass also offers a selection of audio from Audible.com, the NBA Audio League, NBA.com TV, CNN Uncut, Sam Donaldson, NASA TV, The Wall Street Journal, and more.
Real is not pausing to rest either. It is currently set to launch its new RealOne subscription service, which is described as a significantly enhanced subscription service built upon GoldPass. In addition to current GoldPass staples, content will be added from the Animal Channel, ABC News, CNET Networks, E! Entertainment, Fox Sports, ON24, RadioAMP, and The Weather Channel.
Also set to launch is RealOne Music, which will feature secure, downloadable music content from such artists as Christina Aguilera, Björk, The Corrs, Eric Clapton, Whitney Houston, Madonna, Dave Matthews, and Britney Spears. In addition, the service will feature access to 7,000 Internet radio stations. This service even has its own new player called the RealOne Player (catchy!). The company is also promoting RealArcade, a separate player designed to play, download, and buy puzzle, action, and strategy games. It will be interesting to see RealNetworks develop more revenue streams based on content. Real is driving increased use and market share of its players by exclusive content. The initial stages seem to be paying off.
Apple
Consumers surfing Apple.com wanting to download the latest Star Wars Episode II: Attack of the Clones trailer got a surprise when they clicked into the QuickTime gallery. In order to play the new “Breathing” trailer in full-screen 640-wide size, users must now upgrade to QuickTime Pro. All Star Wars Episode I trailers were available in all sizes without limitation. However, because of increasing bandwidth expense and the ever-growing saturation of broadband users, Apple needed to switch gears a bit. Consumers can still view the smaller-size trailers for free at www.apple.com and www.starwars.com. However, to view the larger size, they must pay $29.95 for the Pro upgrade, which is an interesting option because until now the upgrade probably wasn't of much interest to the average consumer.
There are options to edit and save movies and prepare content for streaming with the $29.95 version, but users interested in creating movies will probably already have Adobe Premiere or iMovie. Apple introduced a way to encourage consumers who were hungry for specific content to upgrade, even though it is debatable whether the Pro upgrade is even needed because large movies play back just fine in the regular free version of QuickTime 5.
It is worth noting where this concept may be headed. Apple might eventually create a broadband version of its player, where playback of larger content will need a certain player that is only available for a fee. QuickTime and Apple may not have the marketshare or the alliances to currently pull this off, but who knows what may happen in the future. Few will dispute the fact that movie trailers look jaw-droppingly beautiful when properly compressed in QuickTime format and the high-resolution versions of these trailers make other web-video movies pale in comparison.
RealNetworks is pursuing a similar concept with its separate player, but it is based on premium content and based less on the speed and quality at which the video is piped into the consumer's desktops. It would only take a few highly anticipated exclusive trailers (something along the lines of a Star Wars or Harry Potter teaser) for Apple to really push a lot of $29.95 hi-band players out the door. Where Real is using the player to sell the content, Apple could be using the content to sell the player. Both strategies are worth monitoring.
Sony
Sony is focusing not on a player, just on playing. The company's www.screenblast.com is a unique way of generating income from content by users becoming involved. Like a lot of entertainment sites, Screenblast offers interactive content, mostly keyed in around Sony franchises. But the site also offers the audience a chance to get on stage and join in. Users can post their own music, video, and creative presentations for the world to see.
But what are the tools used to create this content? That's where the commerce element steps in. Rather than selling a player that provides specific content, Sony is selling the tools to create that content, then hooking them into the site. It has created a Screenblast Creation Suite that includes rebranded tools from Sonic Foundry, including Screenblast Acid, Screenblast Sound Forge, and Screenblast Video-Factory. Users can buy the tools together or separately. This month the site began to offer basic entry-level versions of the software for free. Most of Sonic's tools are great for beginners and are feature-rich enough for experienced users to grow into. In addition, Sony offers footage for presentations. Currently, the site has video “clip art.” For example, in the Action section there are videos of jet fighters that can be downloaded and included in movies.
While hosting content from consumers and professional video artists is not all that cutting edge, Screenblast's community and the way it created its own self-contained world is rather unique. What is most important is that some of the site's support comes from users purchasing the tools to take part. People who visit see what can be done with Screenblast Acid, for example, then purchase the program and create their own tunes that are featured on the Sony site. This site is top heavy in Flash and the navigation can get a little maddening at times, but the community is forming. The concept is interesting because a lot of effort is spent on empowering consumers with pay tools to build a site with content that others will want to see, hear, and take part in.
Exploring these and other business models is critical for moving forward in the web-video business. As video producers who provide content, obviously we want to be able to provide a solution that incorporates our craft into a revenue-generating online venture. Real, Apple, and Sony are all trying, and we could all learn a lot from their mistakes as well as their successes.
