TV Broadcasting Revenue Models…

Posted on 13 Σεπτεμβρίου , 2006


Television has undergone three distinct periods of development since it replaced radio as the major entertainment media of the household in the 1950’s:

  • The first period was characterized by viewer passiveness inasmuch as the market was dominated by few players, as in the case of the USA and Australia, or was generally dominated by publicly funded broadcasters and only a few private players, as was the case in Europe. Viewers simply consumed what was broadcasted on the screen and stood up to change channels if the option existed.

  • The proliferation of private TV, the introduction of the remote control and the beginnings of subscriber TV heralded the first boom in television broadcasting. From the late 80’s onwards viewers find themselves having a multitude of choices to choose from. In the USA, pay cable TV offered 100’s channels, the free network television domination at that time begun its slow but definitive erosion. In Europe private broadcasting boomed and publicly funded channels find themselves in crises. Pay TV eventually is also introduced in Europe. Zapping and the use of the remote control fragmented the audience shares.

  • The conversion and management of media into digital assets together with the automation of scheduling, traffic management and play out, is the new millennium evolution that dominates a change to the back end of the broadcasting value chain introducing a front end user interface to the media products consumers. The time where the media consumers participate in the media production and programming is emerging (Big Brother reality formats, live voting interactive systems)

Respectively to each era the technology, the distribution and the business models were altered fitting to the new environment every time.

Traditional television is a “one-to-many” approach that reaches a passive viewer who has no immediate means of responding. The strategy is based on brand building and emotional appeal to a variety of audience segments. The most steady TV audience though, the heavy viewers that sustain the audience share base of TV channels and troubles the measurements, have been characterized as “The coach potato viewers”. (As wikipedia suggest couch potato is (originally U.S.) slang for a person who spends most or much of his time sitting or lying on a couch, or perhaps an armchair or recliner, watching television in his underwear and often drinking beer)

In this environment the advertiser asks from the advertising agency to create the campaign; the agency defines target and creative concept, based on advertiser’s strategy; the media planner plans the campaign throughout the media landscape; and the sales representative firm (internal/external) sells advertising on behalf of their clients’ strategy. The tool of these transactions is the airtime sales, which practically capitalizes the produced by the television program GRP’s (Gross rating point = Reach x Frequency x 100)

Due to media fragmentation and proliferation, reaching target audiences with television, advertising is becoming increasingly difficult and expensive. While channel counts have increased dramatically, TV advertising effectiveness is actually dropping and advertisers are demanding greater accountability and ROI. Ad budgets are being reallocated into direct marketing campaigns and other more “measurable” media.

The evolution of the revenue models from advertisement to subscription fee based continuous with new ones such as: pay per view, e-commerce, value added services, commissioned content, commissioned transactions, etc. that represent only parts of the fragmented audience (B2C) and customers (B2B) markets. The interactivity that the digital back end of the new broadcasting landscape introduces is perhaps the most promising carrier for new revenue models even though it never matured enough in the digital satellite broadcasting business cases.

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