CONCLUSION
This chapter summarized ten business strategies and six revenue models for converged video services such as IPTV, mobile TV and OTT services. The strategies and models used are related to the external environment and the internal resources of the providers.
Among them, bundling, flexible pricing and strategic co-opetition are the most common strategies. With regard to exclusive and original content strategies, all but the largest of the converged services face financial limitations when it comes to adopting the strategy. Their economic scale and number of subscribers need to be taken into consideration. If the newly emerging media platform is unable to pay for copyrighted content, there is very little chance that the content will be sold or made available to the new media platform. In order to reach larger audiences, the new media platforms need to re-package their content to attract viewers. For instance, Netflix deliberately uses complete release (binge viewing) but Amazon prefers to provide the new content weekly in order to stimulate discussion among viewers and prevent the subscribers from terminating the service (Sharma, 2013).Multi-screen strategies are contingent on the cost of obtaining copyrights and applicable license fees. Some IPTV operators are afraid of the high fees for the programs, since they do not see the extra revenue generated by multi-screen services. So they hesitate to provide all the content via multi-screen services. Disruptive innovation does not work for all the converged video services. Usually, the new entrants will consider adopting disruptive innovation tactics first. The incumbent tends to be a follower of the disruptive innovation in order to maintain its advantage in the market. SoLoMo also works for some converged services, but it does not fit very well for global players such as Netflix. In recent years, big data analytics has been widely employed by converged services to help the converged video services target the right users and provide the right content and services.
With regard to the revenue models, advertisements and subscriptions are sometimes used as alternative options although they can also be employed jointly in a hybrid revenue model. Most of the users do not want to pay for online content. For mobile TV, since more and more users have access to the free content via apps, it is very difficult to adopt a pay model. Therefore, the ads-funded model is very common for some OTT video services. For a big player like Netflix, large subscriber numbers can provide support in buying or producing compelling or original content. Therefore, Netflix can rely on the subscription model only and market the absence of advertising to its competitive advantage. For new services, freemium is a good model for attracting users who might only want to watch the basic content for free. Once they find the premium content interesting, they might be willing to pay for some content that is really appealing to them. Revenue sharing is a common model for many converged video services. However, since the media ecosystem is dynamic, the outcome of a business strategy applied in relation to the converged video services needs to be evaluated regularly. There is no perfect business strategy, and any strategy adopted has to be used at the right time, under the right conditions and in a smart way.
NOTES
1. According to the Audiovisual Media Services Directive (AVMSD) of the European Union, linear video content refers to television broadcasts while non-linear content refers to the on-demand services. More specifically, linear service means that the service is for simultaneous viewing on the basis of a program schedule. Non-linear service means that programs are viewed ‘at the moment chosen by the user and at his individual request on the basis of a catalogue of programs selected by the media service provider’ (EU, 2010).
2. Personal communication with X.J. Wang, 12 September 2013.
3. See YouView, accessed 3 May 2015 at http://www.youview.com/.
4. The Chinese government only granted seven OTT TV licenses to seven big TV groups. Other OTT TV-like players that do not have OTT TV licenses are referred to as video websites (or online video services). In fact, they are more flexible and dynamic than the seven OTT TV license holders.
5. Time shifting is the recording of programming to a server to be viewed or listened to at a time more convenient to the user. It has the ability to play back recorded programming by skipping commercials (Online Interactive Television Dictionary, accessed 11 June 2015 at http://www.itvdictionary.com/personal_tv.html).
6. Google did the same in Los Angeles to assist in the creation of YouTube content. See ‘Google opens LA YouTube studio free to content creators’, Deadline, 12 July 2013, accessed 9 May 2015 at http://www.deadline.com/2013/07/google-youtube-space-la/.
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