We’ve seen from the recent debate over Google’s ability to make YouTube profitable, how hard it is to make money from Web video, especially the free-to-watch, ad-supported variety.
John Malone, the billionaire media mogul and chairman of Liberty Media and DirecTV has spoken to The FT about how moves by US networks to put their content online for free may prove to be a bad move in the long-term.
Beijing Olympics Live Online
He drew particular attention to NBC’s plans to offer hundreds of hours of coverage of this summer’s Beijing Olympics online for free, a risk seeing as the network paid $2.3bn for US broadcast rights for the games a few years back.
“I think the idea that they’re going to put television shows and movies on the internet, bypass their traditional distribution and have no way of collecting [revenues] is absurd.”
“Very expensive events – expensive to buy and expensive to produce – are not going to have adequate underwriting through advertising.”
“You’ve got to be very careful what you promise to the public on the internet. They’re going to have a very hard time getting anyone to pay them for their content.”
Malone has a good point, and it is certainly the case that the networks are taking a big risk offering content on the Internet for free at this stage in the hopes advertising revenue will cover the costs involved.
If experiments such as Hulu fail to prove profitable, how do the networks and programme-makers then extricate themselves from the position they have got in to and start charging for content instead? Web users just wouldn’t stand for it.
Protecting His Interests
However, it is also clear that Malone is trying to protect his business interests because as chairman of a pay-TV broadcaster, if the online experiment does succeed, people will no longer be willing to pay for cable TV services and the like.
The joint NBC and Microsoft collaboration offering free live and on-demand Web coverage of the 2008 Summer Olympic Games in Beijing is definitely going to be an interesting showcase of the technology to watch the outcome of.
While NBC will likely lose revenue on the Web compared to what they can make with a traditional broadcast, if the coverage draws millions of Web viewers to NBC’s site, it will not only show the potential of such an event, but help NBC gain viewers.
Malone is certainly entitled to his opinion, but when set against his obvious desire to keep the current business model in place, it has to be taken with a pinch of salt.
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