TV industry eyes future online

Cable and satellite distributors and broadcasters dabble in online video, but unsure of business model

For internet service providers, broadcasters and cable and satellite providers, it was a decision they had been waiting for: the Canadian Radio-television and Telecommunications Commission announcement last Thursday that new media would continue to be exempt from broadcasting regulations.
The CRTC, looking in particular at the rise of online and mobile video, found that while new media is growing in importance, "Internet and mobile services are acting in a complementary fashion to the traditional broadcasting system." As CRTC chair Konrad von Finckenstein said in a statement, "Any intervention on our part would only get in the way of innovation."
For Canadian businesses trying to capture the online video market, however, regulatory issues may well be the easiest hurdle to clear.
If the testimony from the new media hearings in February and March were any indication, online video is in its infancy, with few of the players having developed a comprehensive business model. And save for perhaps Apple's iTunes store, no one has managed to satisfy both rights holders and consumers while still making money.
This is the conundrum when it comes to internet. Most everyone agrees that online video is the future of broadcasting, or at least part of that future. And yet few of the businesses with the most to gain and lose — broadcasters, cable and satellite companies — have figured out how to generate revenue online comparable to that from their core broadcasting business.
Differing business models for online video
"The business model for online TV is not really nailed down and the revenue outlook is not yet attractive [which is] paradoxical because internet — social media, online video — is increasingly becoming integrated into consumers' lives," said consumer technology analyst Kaan Yigit, president of Toronto-based Solutions Research Group.
Not that businesses lack for ideas. Cable companies like Time Warner in the United States and Rogers Communications in Canada have been pushing for a business model built around a cable online video portal, where a company's cable subscribers can access broadcast content online, no matter who their internet provider is.
Broadcast networks in the United States and Canada that own the rights to their shows and those they acquire from abroad have taken the online distribution model directly to their customers, through either their own websites — as is the case here in Canada with CTV, Global and CBC — or by teaming up with an online service like Hulu, a joint venture of NBC, Fox and ABC that is currently available only in the United States.
There is also the downloadable media approach favoured by Apple's iTunes, where television episodes and movies are purchased, in much the same way you would buy a DVD at a video store. But even Apple is experimenting with streaming video through its Apple TV set-top box.
And there are some, like Bell Canada, who are dabbling in a bit of everything. Bell launched Bell TV Online in October last year as an early experiment in the portal idea Rogers has proposed, has the Bell Video Store, offering downloadable content like the iTunes store, and also offers some video through its Sympatico/MSN internet portal.
"We have three different commercial models, three different web properties in this area at the moment," Gary Smith, the president of Bell Video Group at Bell Canada, told the CRTC during the new media hearings in March.
"It will be interesting to see which ones succeed over time," he said.