Rights Issues, Monetization Hold Back Online Video

Written by Ryan Lawler

Friday, October 23. 2009 at 12:45 PM EDT 3 comments

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CHICAGO -- Supercomm 2009 -- Content owners have the technology to deploy broadband video services, but rights issues and questions about monetization are holding back more video from coming online, execs say.

For years, content owners have struggled to distribute high-quality video content online, due to the technological barriers involved with deploying such services. But those days are behind us, as the tools to do so are readily available.

"The platforms are there to deliver IPTV, but content owners are struggling with how to rationalize decades-old cable infrastructure and cable rights as it relates to IP delivery," says Rick Louder, vice president of sales at Move Networks Inc.

Louder cites his company's deployment of IP-based video services with Cable and Wireless plc (NYSE: CWP) international subsidiary CWI, which is using Move Networks's adaptive bit-rate streaming technology to deliver linear and on-demand programming through customer ADSL connections, without having to build out local IPTV infrastructure.

"We allowed them to use standards-based HTTP to deliver video, and they're saving an exorbitant amount of money," Louder says.

Despite the availability of technology to deliver quality video experiences, managing the rights necessary to distribute video content across multiple platforms, including online and mobile, is proving to be a stumbling block for content providers looking to transition from their existing business model to one that matches consumer demand for on-demand content that they can watch anywhere, on any device.

"Getting rights for a pure IPTV service is well known, because cable and satellite exist," says Bruce McNaughton, multimedia solutions architect at Alcatel-Lucent (NYSE: ALU). "But moving to multi-screen services, getting rights to do the same content on the TV set, as well as the PC, as well as mobile, is difficult."

Managing rights for online content is only one part of solving the puzzle, execs say. Content producers also need to figure out the best business model for monetizing that video.

The advertising model being employed by a number of content companies isn't working, Louder says, and some content owners have begun to regret making their long-form video content available for free with limited advertising interruptions.

"We're working with a number of content owners, and there's some regret that they launched some of these services, because they set consumer expectations that this will be free," Louder says.

While content owners will need to figure out the best business model for digital content, McNaughtin says they will also need to coordinate service providers to make those business models work.

"Network providers are not making any money for [online video]. Content providers are experimenting, but they're not making any money either," McNaughtin says. "The two groups need to coordinate a bit better."