Slide Deck: The Economics Of Video On Demand

Highlights from address by Oliver & Ohlbaum’s David Cockram to Westminster Media Forum, November 9, 2010…

“I think the days of prophesising that on?demand television will destroy traditional linear television viewing, business models and broadcasters have passed.   It is now accepted that linear TV will continue to dominate, at least for the next few years, probably as far as we can ever predict into the future. 

“In terms of revenues being generated, the future outlook really does depend on what you believe will happen in terms of advertising to CPM yields online.  At the moment, broadcasters have been enjoying particular high yields, £20-plus is the figure that gets bandied around, but it is questionable as to whether these yields are sustainable as on?demand TV impact volumes grow. 

“Of course we might look towards direct consumer payments, even micropayments which we have heard a little bit about today, to generate substantial new income streams.  However, broadcasters have already played with pay?per?view business models and there hasn’t been much success to date.

“There is a huge propensity to pay for all sorts of games, video content and the like on iPhones, but thus far those sort of pay?per?view models have failed on TV, maybe there can be some kind of change and merging of the two business models as we move forward.

“Around a third of all gross income from the on?demand services from the broadcasters today is paid away to underlying rights holders and talent while broadly speaking terms of trade between producers and broadcasters dictate that what is left is split 50?50.”