How to Monetize TV Everywhere

While more content is being delivered to multiple devices via an over-the-top (OTT) format, the flashpoint for TV Everywhere in its broadest definition will occur when content and service providers iron out the proper model for monetization, said John Clancy, president and CEO of Azuki Systems.

A lot of what has been seen thus far could be classified as an authentication of services, where users can watch what they already pay for via home subscription on their handheld device.

"This puts the burden on the service provider," Clancy said. "I think people have tried to morph that into, 'That is TV Everywhere,' but it is not. It is a pass-through. (There is) no monetization .... Service providers don't make money. They actually embrace the cost."

The first step of monetization is to have quality and reliability that are equivalent to content in the home. "(Operators) have spent billions and billions (of dollars) making their managed wired network perform well and generating a good user experience. The big challenge for OTT video, traversing the Internet, is how to make sure it has the same or better levels of quality," Clancy said. "If there is a big dropoff, (consumers) will not pay for it."

Deciding whether the OTT content will primarily be live, VOD or a combination is the next step. With VOD, there are two options: a subscription model, like Netflix (NASDAQ:NFLX) uses, or a pay-per-view model, like iTunes. But for live TV and "ultimately" for all of OTT, the biggest monetization model will be advertising, Clancy said.

When evaluating a multiscreen solution, therefore, operators should make sure that their advertising platform can be seamlessly extended to envelop the new devices. In other words, make sure the new system does not require the ad platform to be ripped out and replaced, Clancy said.

The ability to dynamically insert ads pre-, post-, or mid-roll also is important, but the Holy Grail is targeted advertising, Clancy said, noting that handheld devices provide the opportunity to take targeting past a blanket zip code. "(The engine) should be able to correlate the user device and the content."

This is connected to the ability to entitle users and content. As consumers bring more devices into the house, they will want to add them to their service. An operator might allow them to add five for free, for example, but charge a small fee for each additional device. Analytical tools can then determine what content was consumed, where, and on what device, Clancy said. This is what will help with the targeted advertising.

Monta Monaco Hernon is a free-lance writer. She can be reached at mcmhern@yahoo.com.

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