ONLINE VIDEO REVENUE MODELS

WHAT WORKS, WHAT DOESN'T AND WHY

Jimmy Storrier

Head of Customer Development

Juno Interactive

http://junointeractive.com.au

DID YOU KNOW?

Videos per Day:

Annual Revenues:

2 BILLION

$700 - $900MILLION

Videos per Month:

Annual Revenues:

1 BILLION

$100 - $250MILLION

Annual Revenues:

Mins per Month:

660 MILLION

>$2 BILLION

THIS ISN'T A TEA PARTY ANYMORE

WHAT IS VIDEO CONTENT WORTH?

CONTENT

=

$0

USERS EXPECT CONTENT TO BE FREE

PEOPLE ARE SMART AT DETERMINING VALUE

THEY DON'T KNOW IT, THEY JUST DO IT

YOU HAVE TO LIKEN P2P TO TAP WATER. It is always going to be there;it's free, and people are going to use it.

Wayne Rosso, President, Grokster

BUT BOTTLED WATER MAKERS MAKE A LOT OF MONEY TOO

WE'LL ALL BE ROONED

said Hanrahan

BEFORE THE YEAR IS OUT

The horse is here to stay, but the automobile is only a novelty, a fad.

I think there is a market for maybe five computers

There is no reason anyone would want a computer in their home

While theoretically and technically television may be feasible, commercially and financially it is an impossibility

The telephone has too many shortcomings to be seriously considered as a means of communication

Who the hell wants to hear actors talk?

It's not necessary to change.

Survival is not mandatory.

W. Edwards Deming

OLD MODEL

VS

NEW MODEL

OWN THE DISTRIBUTION

OWN THE CONTENT

=

GET REAL RICH

WHY PEOPLE USED TO PAY:

THE INTERNET

YOU CAN'T OWN THIS

DISTRIBUTION EXCLUSIVITY:

SO WHAT?

CONTENT EXCLUSIVITY:

SO WHAT?

YOUR VALUE CONSUMER VALUE

THE CONSUMER IS KING

NOT IN THE CONTENT BUSINESS

IN THE AUDIENCE BUSINESS

NO CHANGE IN BROADCAST RATINGS

45% INCREASE IN PIRACY

LARGE DECREASES IN WEBSITE TRAFFIC

TRADING ANALOG(UE) DOLLARSFORDIGITAL PENNIES

VALUE OF A PERSON NOT WATCHING

=

$0

WHAT CONTENT OWNERS HEAR:

I'M A PIRATE... ARRRR

PIRATES ARE NOT THE ENEMY

WHAT PEOPLE ARE ACTUALLY SAYING:

GIVE ME WHAT I WANT, WHEN I WANT, WHERE I WANT

VIDEO ADVERTISING

ONLINE VIDEO IS NOT TV 2.0

NOT ALL M'S ARE CREATED EQUAL

TELEVISION CP

ONLINE VIDEO CP

CPM IS EVIL

KILL CPM

LET'S DO SOMETHING DIFFERENT!

MEDIA PLANNER / BUYER

MEDIA PLANNER / BUYER

DETERMINE WHAT ADVERTISERSWANT

CHARGE THEM FOR THAT

1) NOT A TEA PARTY

2) CONTENT IS WORTH NOTHING (ON ITS OWN)

3) VIDEO ADVERTISING IS BROKEN (BUT CAN BE FIXED)

QUESTIONS?

WHY RESEARCH ANALYSTS KEEP THEIR CV UP TO DATE:

The paid download market will continue to grow throughout 2007 - from $98m to $279m at the end of the year but growth will slow significantly at that point

Forrester, 2007

115%

82%

46%

Paid Downloads

YoY Growth:

MOVIE CONTENT