Generating Revenue Online: International Sales

By Kenneth Locker (French)

The global media industry is in the midst of a major transition as it seeks to reinvent itself in the wake of a dramatic increase in the number of new technology platforms that are enthusiastically embraced by consumers. It is vital that television producers not only create cross-platform extensions of their programs, but do it in such a way that they can easily be included as part of the foreign broadcast license. Below some insight about how producers can better understand and prepare for international multi-platform distribution.

Understand regional differences and opportunities

Virtually all broadcasters have some sort of web portal. Sites such as the BBC, TF1 (France), TVE (Spain), RTL (Germany) have robust websites with diversified content and generate millions of unique visits per month. The ultimate opportunity here is that in a very uncertain global economic environment, anything that differentiates content is valuable and having a strong web component could be a key determining factor in making a TV sale to a broadcaster.

Larger broadcasters that have interactive departments can work with the content integrating it into the larger portal. Smaller broadcasters that have limited resources will expect the content owner to do most of the work.

What to consider during development to keep interactive components viable in all markets

It is important that the initial design of the web property take into consideration localization. An easy-to-use comprehensive localization kit is imperative. Basically the kit deconstructs the site into its core elements. This will include a series of templates that include a spread sheet with each line of text broken out into its own cell, each of the graphics separated into Photoshop files so that any embedded images can be adapted to local needs and any other graphical or text element presented in a way that specific elements can be changed according to specific local requirements. This will make the project more attractive and cost effective for foreign partners.

Also producing the project so that it can be integrated into an “I-frame” environment is important. An I-Frame (from Inline Frame) is an HTML element which makes it possible to embed an HTML document inside another HTML document. This allows the broadcaster to easily integrate it into their portals. If clips are used, it is important to make sure that all the rights are cleared for the music and other sounds and voices and any actors that may be used.

Viable usage models: Multiplayer Games, Virtual Worlds, Social Networking

The challenge for broadcasters is that, particularly for younger audiences, TV is becoming the new radio. The PC is rapidly becoming their entertainment platform of choice and the broadcasters are challenged in both trying to capture and retain their audiences as well as monetize them.

We have found broadcasters very interested in adding large scale websites that supplement their programming. Casual games, multiplayer games, immersive virtual worlds and social networks are the most desirable. They encourage repeat long-term visits and if they are effectively connected to the TV show, it will drive on air viewership.

In the children’s arena, which is the core of Cookie Jar’s business, the developer must adhere to the guidelines of both COPPA and CARU (see definitions below). These government sanctioned oversight organizations provide usage rules as to how much personal information can be elicited from a child and where and how advertisers can promote their products. Most countries have some form of government oversight for children’s online content. Obviously this is something that has to be considered during the development phase.

Viable business models

The reality is that, as of September, 2008, many preconceived notions of new media business models evaporated with the implosion of the global capital markets. It remains to be seen what the ultimate impact of this will be and in what time frame and what form the recovery will take place. As consumers have less disposable income they spend less on goods and services and therefore it is inefficient for advertisers to spend money advertising for things people can’t buy. Historically entertainment has been reasonably recession proof; it has represented a good value in terms of expenditure.

In the past there have been three basic business models that we (i.e. Cookie Jar) have used:

  1. Not break out the web component as a separate element but include it as part of the overall TV license agreement and add a ‘premium’ to the license agreement (e.g. an additional $500 per episode). This is often more palatable to broadcasters as they may not have a separate new media budget.
  2. The second model that has been successful is for the license fee for the new media component to be equal to the license fee of a single episode. That is, a license fee is paid and it ultimately has to be negotiated on a case-by-case basis as to what is provided. The producer has to analyze the value of each territory in terms of the overall economical potential of the site. Obviously these fees vary but it could be anywhere from $500 to $10,000 per territory (N.B. these are prices that were viable prior to the current economic crisis). It may take successful sales in several territories for the web component to recoup its cost. This model makes sense for larger complex sites such as immersive worlds or multiplayer games where there is the potential of a business model that may generate some revenue.
  3. The other model is to partner with the broadcaster, whereby they will dedicate some on air ad inventory promoting the game and position a link to the game (or whatever) prominently on their website. Generally the revenue share is anywhere from 30/70 to 50/50 in favor of the new media developer. In this advertising model the broadcaster is not paying anything (perhaps localization costs), but is linking (i.e. sending users to the producer’s website) and receiving a revenue share from that traffic. In this model there is little risk for the broadcaster as they are not investing in the game and most cases will not host it; they are merely providing marketing and promotional support. Projects such as multiplayer games and virtual worlds can lend themselves to both advertising and micro-transaction/subscription models. This can be a great incentive for broadcasters who want to continue to capture and monetize their TV audience as they move online. Business models are still somewhat nascent. The advertising models are going through significant changes. Display advertising (banners, etc.) have diminished greatly in value while video ads such as pre roll and mid roll insertions have increased. Ultimately new forms of advertising have to be developed to fully maximize the opportunity.

Conclusion

The key opportunity and challenge for the new media producer in both foreign and domestic cross-platform licensing is to effectively leverage the derivative value of all platforms linked to the brand to gain awareness and value to all stakeholders. If you can connect the on air and on shelf with the online you will have brand whereby the whole is far greater than the sum of its parts and overall value can be driven exponentially by the dynamic synergy of the related platforms

Definitions:

COPPA: The Children’s Online Privacy Protection Act of 1998 (COPPA) is a United States federal law. The act, effective April 21, 2000, applies to the online collection of personal information by persons or entities under U.S. jurisdiction from children under 13 years of age. It details what a website operator must include in a privacy policy, when and how to seek verifiable consent from a parent or guardian, and what responsibilities an operator has to protect children’s privacy and safety online including restrictions on the marketing to those under 13.

The Federal Trade Commission has the authority to issue regulations and enforce COPPA. Also under the terms of COPPA, the FTC designated ‘safe harbor’ provision is designed to encourage increased industry self-regulation. Under this provision, industry groups and others may request Commission approval of self-regulatory guidelines to govern participants’ compliance, such that Web site operators in Commission-approved programs would first be subject to the disciplinary procedures of the safe harbor program in lieu of FTC enforcement..

The Act applies to websites and online services operated for commercial purposes that are either directed to children under 13 or have actual knowledge that children under 13 are providing information online. Most recognized non-profit organizations are exempt from most of the requirements of COPPA.[1] However, the Supreme Court ruled that non-profits operated for the benefit of their members’ commercial activities are subject to FTC regulation and consequently also COPPA. The type of “verifiable parental consent” that is required before collecting and using information provided by children under 13 is based upon a “sliding scale” set forth in a Federal Trade Commission regulation[2] that takes into account the manner in which the information is being collected and the uses to which the information will be put.

CARU: The Children’s Advertising Review Unit (CARU) was founded in 1974 to promote responsible children’s advertising as part of a strategic alliance with the major advertising trade associations through the National Advertising Review Council (comprising the AAAA, the AAF, the ANA and the CBBB). CARU is the children’s arm of the advertising industry’s self-regulation program and evaluates child-directed advertising and promotional material in all media to advance truthfulness, accuracy and consistency with its Self-Regulatory Guidelines for Children’s Advertising and relevant laws.

CARU’s basic activities are the review and evaluation of child-directed advertising in all media, and online privacy practices as they affect children. When these are found to be misleading, inaccurate, or inconsistent with CARU’s Self-Regulatory Guidelines for Children’s Advertising, CARU seeks change through the voluntary cooperation of advertisers.

CARU’s basic activities are the review and evaluation of child-directed advertising in all media, and online privacy practices as they affect children. When these are found to be misleading, inaccurate, or inconsistent with CARU’s Self-Regulatory Guidelines for Children’s Advertising, CARU seeks change through the voluntary cooperation of advertisers.

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