Media Production

IPTV – Moving Beyond the Normal TV Set: Is It Working?

As IPTV grow in popularity (perhaps with producers more than viewers) lots of organizations are moving from broadcast or cable TV to the web. Sky Angel announced recently it will relinquish it’s on-air presence completely with a move to the web. The Black Family Channel is doing the same. I’ve had numerous organizations come to me for advice on the switch, but the questions remain – Will there be viewers? How do we pay for it? How many can actually watch IPTV from their living room instead of their computer screen? Check out this story from the Wall Street Journal about the issue and tell me your thinking about the future of TV networks:

TV Channels Move to Web, Think Outside the Cable Box
By BOBBY WHITE
August 10, 2007;

When the Black Family Channel launched on cable television in 1999, its executives and celebrity investors — including boxer Evander Holyfield and the Jackson Five’s Marlon Jackson — had big plans to bring socially responsible TV shows to African-Americans.

But in May, the Black Family Channel said it was abandoning TV, and instead would become an online-only channel. Despite some inroads — it eventually reached 16 million homes — the Atlanta-based company had struggled to get cable providers to offer the channel in enough homes to attract advertisers. The Internet, which offers tools like social networking and blogs, provided a fresh opportunity. “Today, if you want to start a cable network, it might be easier to schedule a ride to the moon,” says Rick Newberger, chief executive of the Black Family Channel. “But in the world of broadband, you can do so much more than just run programming.”

Across the cable TV industry, other independent channels are also turning away from TV to the Internet. The Lime Channel, which focuses on healthy living, pulled out of cable last year and now offers its programming online and as video on demand. The Employment and Career Channel, which began streaming online in 2002, has junked its attempts to be a cable TV channel to be an online-only outlet. Others, like the Horror Channel and HorseTV (which revolves around equestrian events), have also opted to go online. The shift illustrates how the Internet is offering a second chance to certain segments of old media. Web-based TV is now becoming a more viable business route, and Internet video is exploding. Running an online-only video channel, which doesn’t require expensive cameras and broadcasting gear, is cheaper than operating a cable TV channel. While starting a new cable channel today takes an initial investment of $100 million to $200 million, a broadband channel needs just $5 million to $10 million to get going, says Boston-based research firm Broadband Directions.

The Internet is offering a new outlet for voices — including those of ethnic minorities — that weren’t heard from as much under old media. The Black Family Channel was repeatedly denied carriage by cable and satellite operators, who cited a lack of community interest in its programming. On the Web, Mr. Newberger says he expects to more easily tap into the African-American community.

All of this could turn Web-based TV into a more competitive medium. Overall, the worldwide market for online content is expected to grow to more than 131 million households by 2010 from about 16 million households last year, according to research firm In-Stat.

But the cable channels’ move to the Internet is a gamble. Transforming into an online channel often requires a wholesale change, including hiring new employees with Web and software expertise. Finding an audience online is also daunting. And the business model for online video remains unclear. The Horror Channel initially planned to rely on Internet advertising as a source of revenue, but the site didn’t generate enough traffic to attract enough advertisers.

Tom Adams, president of Adams Media Research, a Carmel, Calif.-based media and entertainment research consulting firm, says the Black Family Channel is facing a major challenge by moving to the Web and will have to create eye-catching content to attract viewers. “Without a big brand behind you, you have to do a lot to make it work,” he said.

Indeed, the track record of many online-only channels is mixed. Many of the Web sites don’t get enough visitor traffic to make the radar screens of Web trackers. The Employment and Career Channel says it hasn’t turned a profit since going online in 2002. The Lime Channel registered nearly 179,000 visitors to its Web site in June, up from 175,000 in January, but still down from the eight million households it reached while on cable TV.

“We’re making things up as we go along,” says Nick Psaltos, founder of the online-only Horror Channel, Guttenberg, N.J. “The opportunity is there, but without the right execution, we won’t be able to seize it.”

The idea behind the Black Family Channel was to build an alternative to Viacom Inc.’s Black Entertainment Television Inc., which reaches 80 million homes. BET has been criticized for carrying sexually charged music videos and controversial programs like “Hot Ghetto Mess,” later retitled “We Got to Do Better.”

The Black Family Channel created programs aimed at parents and kids, including a spelling game show for fourth- and fifth-graders and a baby boomer talk show. From its launch, however, the Black Family Channel was a struggle to operate, say former employees. Many cable and satellite operators believed viewers had enough African-American programming from channels like BET, and another African-American channel called TV One.

In 2003, Black Family Channel managers launched a campaign to convince satellite operators to carry their channel. In one instance, a manager presented a leather-bound book with 4,000 signatures from interested viewers to an operator. But the operator didn’t budge.

“Everyone hoped we could find our way,” says Samara Cummins, the channel’s former vice president of affiliate sales, who left last year. “Unfortunately, the financial burden took a toll.” She says that while cable channels need at least $500,000 in monthly revenue to survive, the Black Family Channel took in less than $300,000 in monthly revenue, primarily from financial services and consumer products advertisers, such as Verizon Communications Inc. and auto insurer Geico Corp., a unit of Berkshire Hathaway Inc.

The Black Family Channel is now revamping its old Web site into a new online destination that will combine video, social networking, user-generated content and ecommerce, says Mr. Newberger. The site is set to launch in November.
[Rick Newberger]

Mr. Newberger, a 20-year cable veteran who previously headed Vanguard Media Corp., says the new Web site will make money through advertising, subscription fees for some services, and merchandise sales of things like T-shirts. He says he plans to contact prominent deejays, bloggers and community advocates in the African-American community to get the word out about the site. The goal is for the channel to break even after a year, he adds.

To prepare for the jump to the Net, the channel in May laid off most of its nearly 60 employees, many of whom specialized in TV production and advertising. Mr. Newberger has since begun contracting with an online agency to build the new site; he declines to name the agency. The channel is also about to embark on a hiring binge, with plans to initially recruit 12 new staffers including recent college grads and media professionals with experience in social networking and Web video. Overall, the Black Family Channel is putting in $2 million to
$4 million to switch to the Web.

Kenneth Reaves, 47, an Atlanta-based financial adviser, says he often allowed his three children to watch the Black Family Channel unsupervised, which he rarely permitted for other channels, so he was disappointed when the channel left the air. Now he says he looks forward to the Black Family Channel re-emerging online, since he anticipates that the Web site will combine educational video programming with other Web resources.

“If they play it right, the channel will be able to take advantage of all sorts of opportunities,” Mr. Reaves says.

Write to Bobby White at bobby.white@wsj.com1
URL for this article:
http://online.wsj.com/article/SB118670346621793681.html

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4 Comments

  1. I know its not IPTV per se but PC, I wondered if you could elaborate on the philosophy behind your “Change Revolution” podcast … seems like the quality really differs from the Biola interviews to the more recent pip overlays in “Who’s Influencing You?. Are you seeing this a just a video blog? or something else? Have you had good subscription numbers? Is there a concern that the lower end quick turn around nature of some of the clips may be a poor reflection on your true capability as a media creator? Just curious …
    My question is not meant to be malicious in any way as this, I think, is a concern of many folks who are in “the business” who want to embrace the relevancy and immediacy of these new forms of web distribution but at the same time don’t want to sacrifice quality, where do you think is the balancing point?

  2. Hey PHil, I was thinking about this post and the one where you described Sky Angel's latest venture. The only thing that comes to mind is, "buffering". If anyone watching a program has to deal will a pause in the program while they get a pop-up that says"Please be patient while the server is buffering…" People will last for about 2, maybe 3 of these moments, and then they'll be gone. That, in my opinion, should be the #1 priority for IPTV content providers… figure out how to have absolutely no buffering time. I'm not a tech guy, so I have no idea how that can be achieved, but seems to me that this factor will determine whether people stay with it or not. For regular web-surfing, people are already used to waiting, but for real-time programming, everyone wants it to be continuous and totally glich-free, right?! Do you know of any IPTV "think tanks" that are going in this direction? If so, how far has it progressed?

  3. Buffering and IPTV.

    I am not an expert in this field, however I have some experience in working on VOIP projects.  The bigest challenge when working in the IP realm is buffering.  In the voice communications we are used to hearing normal convesation, the first voip systems did not prioritize voice data over normal data over the network, and voice communication was "choppy" until the software was modified to prioritize voice packets.  In the past seven years these challenges have been resolved and VOIP is a huge success.

    IPTV opens up a huge distribution streams for providers, at virtually no cost in comparision to traditional broadcast.  The audience that will be utilizing these services are more forgiving of new technologies, and will embrace the convenience over the content.

     

     

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