July 11, 2008
One thing is for sure, the on-demand, commercials-free nature of broadcast has huge implications for the pricing of TV content, for both consumers and advertisers. Afterall the media owners, or the content producers, have to generate streams of revenue that would continue to justify the ever-increasing costs of production.
In an on-demand world, there is quite a possibility of doing a pricing model where consumers get to decide whether they want to see any advertising at all or not. If they do, one can even push the extent of advertising they would be exposed to. For instance, if a consumer decides to pay 100% of the price for a movie, he or she may watch it without any advertising. But if he or she decides to let advertising subsidize it, the payment might actually be just 50% of the actual price. On devices like Apple TV or other media centres, this is quite possible to do even today.
Apple have just patented a technology whereby they can “insert” advertising into any audio-visual media file (mpeg4 etc). What this technology does is that it puts “tags” within the file at various intervals, and then when a viewer reaches that point in a programme, the programme is interrupted and a series of ads are streamed-in from a remote location. The movie or programme continues once a number of ads have been watched. This service is much like an ad-server for internet banner or search advertising. This allows for insertion of ads with precise targetting as each and every playback can have different advertising inserted.
Now from the pricing point of view, how would advertisers begin to pay for something like this? Interesting thought, as the waste element of mass TV broadcast advertising can now be down to zero. As in internet advertising you pay for a click, you would in this case be able to pay for a “view”.
Google have also started experimenting with content distribution via their ad-sense server- and are figuring out ways of incorporating advertising into streaming content. It is over the internet on computers for now, but it might well be on the televisions of future. I will write more on the innovations in the TV sets business in the later posts. For now, click on this New York Times link for a read on Google’s initiative: