Zattoo Switches Its Strategy To Make Money From TV Web - NMA Dec 09
by Alex Street, NMA - Dec 3rd, 2009
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Zattoo, you may remember, is the broadcast TV aggregator that caused some controversy last summer over its syndication of UK TV channels online. Recently, when I had the chance to speak to Beat Knecht, the CEO of Zattoo, he explained to me that while there were clear lines of argument over this issue, it was no longer his focus. Like the rest of the online video and IPTV market Beat Knecht’s focus is on monetisation.
Beat breaks down the issue into 3 parts (1) ad products, (2) the environment in which these ads are consumed and (3) the benefit of a web TV site having a linear counterpart. Having a linear counterpart he admits can be both a benefit and hindrance. It can be difficult to establish an independent model when you’re the junior in the relationship. However, the failure of Joost to live up to the hype was partly the result of low levels of awareness; promotion of web TV on linear drives awareness and therefore usage. Yet whether its big brand TV channels, web TV sites or even newspapers there is a growing sense that the original revenue assumptions for online content were, well, wrong. I put this question to Beat:.He admits ‘‘the original monetisation assumption was twice what we could make, but we’ve adjusted projections and the model works’’. Zattoo adopted a dual revenue stream model collecting subscriptions in some European markets and ad revenue in others.
Without a parent company, monetisation of TV online is the only way sites like Zattoo can continue to exist. This requires not only keeping overheads to a minimum, but establishing relationships with ad networks that offer a shot at the TV ad budget as opposed to fighting over low value, high volume cost-per-click advertising. In order to achieve this Zattoo has developed ‘‘high value’’ video ad formats which are situated in the right environment for brand building campaigns. This reflects a similar trend in the
Monetisation isn’t the only aspect of Zattoo Beat’s revisiting. He’s found people are using the site for different reasons and in different ways than was originally conceived - ‘‘originally there was an assumption that use of Zattoo would be mobile – at work and in the airport lounge’’. However, 90% of use is in the home. Interestingly the least cited reason for using the Zattoo is when the main TV is occupied (graph 2). The most popular reason for using the site is that users want TV content on in the background while they’re on their home PC. This may contribute to the comparatively high number of minutes the average Zattoo user is served each month - 500. This probably reflects a difference in the level of viewer engagement with the content being viewed – graph 2 illustrates simulcasts on Zattoo are often put on in the background, while the user carries out other activities online. This multitasking behavior is something I saw a lot of during the Ashes and Wimbledon, but is probably less common when it comes to on demand.
The Zattoo experience has taught us that while opportunities exist on a pan-European basis, because TV channels and platforms are nationally-centric businesses making the most of them is difficult. It’s also taught us that web TV viewing might have a lot in common with the multitasking behaviour we associate with other online activity. Finally, its further evidence that in our original revenue assumptions for online were wrong and 2010 will see continued restructuring and shake-out in the market. It will be an interesting ride for SeeSaw in 2010.
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