Streaming Becomes a Revenue Stream

Cable programmers continue to ratchet up the amount of broadband content on their Web sites, fueled by marked increases in broadband penetration. That, in turn, has caused advertisers to increasingly look at the new media as a viable spending option.

It appears the industry has moved beyond an initial phase, one in which people posted some content and crossed their fingers that revenue would follow. Programmers have scaled their investment in online activities to match advertiser interest, and now that interest is growing as broadband itself becomes an Internet draw.

“We see a strong demand in the ad market,” says The Weather Channel vice president of product management Tom Flournoy. “We see incredibly strong revenue potential.”

Says Scripps Networks senior vice president of interactive ad sales Jeff Meyer: “As little as a year ago, we had two advertisers, and that was because we weren’t very sophisticated. We’ve begun to broaden that out, and we’re now working with 10 advertisers.”

MTV Networks senior vice president of digital music and media Jason Hirschhorn sums it up: “The ad community has caught up with us.”

The Interactive Advertising Bureau estimates that total Internet advertising reached $7.3 billion in 2003, a 20% jump from 2002. Accustream Research estimated that subscription and video streaming-based advertising revenue will hit $625 million this year and $864 million in 2005, for a 40% increase.

It’s all a positive spiral: More broadband connections are causing content providers to place more broadband content on their sites which is driving viewership, and thus ad dollars.

The Web sites for Cable News Network ( and TWC ( each report more than 23 million unique users per month. MTV: Music Television’s site (, has 14 million users per month. It’s apparent that news, sports and entertainment content appeal to broadband users. And they’re attracted to either niche or mainstream content.


Among those programmers supplying niche fare is Scripps Networks. It provides Comcast Corp. and MSN with 120 broadband clips each month from Food Network, Home & Garden Television, Do It Yourself and Fine Living. Most clips are between two and five minutes in length.

“Most content is a cut-down of, 'What is the best the networks have to offer?’ ” says Scripps director of programming, emerging media Kent Takano. “But we also have 10 series that are in original production which are for the Web only.”

“It’s a seasonal schedule, not unlike linear,” Takano says.

Food Network debuted its “Kickoff to Grilling” on Memorial Day. Summer also will feature outdoor design and travel topics. “July will be 'Summer Outdoors,’ ” he says. “August is 'Endless Summer,’ and September is 'Month of Makeovers.’ ”

Scripps will film 20 “episodes” of each new Internet-only series, which Takano says it designed to fill in the gaps that exist with programming that’s converted from linear TV. Topics include car care, home styling and low-carbohydrate cooking.

“The library has great material, but sometimes it’s hard to cut down,” Takano says. “We feel we need to put our own face to broadband and create series specific to broadband so it gets its own attention.”

Between Scripps’ own site and traffic from its content partner sites, the company streams millions of video clips each month, according to Meyer.

A year ago, says Meyer, most sites consisted predominantly of text, supported by video. “Now it’s video-centric packages supported by text.”

With that video comes increased interest from advertisers. Kohler, Coldwell Banker and General Motors are regulars on the site, which is now sold in conjunction with the TV upfront market and Scripps’ VOD content, he says.

The site carries 15- and 30-second spots, along with a display ad that runs alongside the video.

“We’ve seen a lot of interest in the upfront for non-endemic ads to get into broadband video,” Meyer says. “Advertisers see it as another way to reach consumers, and they want to be in that environment.”

Meyer believes that over time, advertisers will move from traditional ads to storytelling.

“We’re able to bring the sensibility of Scripps,” Meyer says. For instance, “Kohler has long-form video.”

Scripps has started a new custom-programming unit to help advertisers create longer form ads, which Meyer says fills a gap in the ad community.

“Agencies are good at telling a story, but not great at telling three- to five-minute stories.” He says longer-form programming is relatively inexpensive to produce, and can include tips to keep viewers interested.


The Weather Channel is another network that arguably has found a bigger niche on broadband than on television, in terms of usage, because the high-speed connection gives people instant access to the weather information they want.

“We make broadband front-and-center on our site,” Flournoy says, through a mix of off-air content and video created specifically for the site. always carries one major video news story at roughly two to two-and-a-half minutes in length. There are also shorter segments, some as short as 15 seconds.

TWC also provides premium content for a number of suppliers, including Real Networks Inc., AOL Broadband and Comcast — typically local-city forecasts in greater detail. The screen usually consists of three panes: video, a text forecast and a radar map rolled into one.

“The streaming-video component is the proprietary in-studio forecast,” Flournoy says. “This is something that nobody else is doing.”

TWC’s 25 million unique users per month span both and its affiliated partners.

“We have an online deal with Comcast focusing on desktop applications,” he says. “We offer video in the Platinum Desktop package, which puts weather on their PC for $30 a year. It’s something that you really need a broadband connection to take advantage of. It includes radar maps, video content and current conditions.”

Like Scripps, TWC also supplies content to Comcast’s The Fan video programming wheel, as well as to MSN Video.

Flournoy says TWC engages in cross-platform deals with advertisers, including Sprint, Marriott and MSN. “They stream spot and companion advertising on the video page,” he says.

The company’s Web site, like the network, has two revenue streams — subscriptions and advertising. “As a company, is profitable,” he says.


CNN’s online business has followed the dual revenue-stream model for years, with two subscription products bolstered by advertising revenue. “CNN NewsPass” is priced at $4.95 a month and features 25 to 30 video news stories each day, says Bill Stratton, vice president, business development at Turner Network Sales.

The other product is “CNN Quickcast,” a headline-type news service with stories updated hourly. Quickcast is produced solely for the online platform, Stratton says. “It has a separate production staff and separate set [for newscasts],” Stratton said.

Both NewsPass and Quickcast are offered through Real Networks subscription platform, as well as RoadRunner and AOL Broadband also carry both products, and CNN has just completed a deal with Synacor Corp. to carry both services.

Those partner deals cover upwards of 10 million broadband homes, Stratton says, a sizable part of the broadband universe. That reach produces between 23 million and 25 million unique users a month, on average, he says. Advertising exists in both services. “We look at multiple types of inventory that will provide advertisers value,” he says.

Turner also produces the National Association for Stock Car Auto Racing’s “TrackPass” and “PitCommand,” offered as separate content packages within Real’s family and also on RoadRunner and AOL also carry both services.

Charter Communications Inc. high-speed subscribers get TrackPass, and Turner also has deals with Synacor and Earthlink.

The NASCAR packages allow users to follow the driver of their choice. “That level of control of content is increasingly the direction that content providers are pursuing,” Stratton says. During race day, average usage spikes to as high as 90 minutes. “A significant number are using it in conjunction with viewing a race,” Statton says.

Such differentiated content will drive broadband penetration up.


If there is one set of networks sitting in the center of the broadband maelstrom, it could well be MTV Networks. MTV and its spinoff services sit in the perfect storm, hitting the demographics most interested in broadband technology and music videos, short-form content that’s perfect for the medium.

“We’ve had music videos since time immemorial,” Hirschhorn says. “We had a very robust product at low and high speeds.”

But the company known to always be at the forefront of trends had to cut back during the early days of the Internet, because the variable costs of the bandwidth business outpaced the revenue required to pay for it.

Thankfully, Hirschhorn says, “bandwidth prices have come down and the ad community has caught up with us. We work with clients and try to give them a personalized experience.”

An example is a new, acoustic performance series that will debut later this year on Musical groups come to MTV’s studios and tape three to five songs that will only be available at

“We’ve done 50 to 60 performances,” he says, and the network is actively selling series sponsorships. It’s the type of content that will also translate to VOD and wireless platforms, Hirschhorn believes.

Hirschhorn says MTV will relaunch its Web site in a few weeks, which, in addition to music, will carry movie and gaming content — everything that speaks to MTV’s core demographic.

“We have a tremendous amount of archive material, but we haven’t packaged it in centralized way,” said Hirschhorn. “It was always sold through the artist.”

The network’s biggest TV advertisers also are online, Hirschhorn says, covering lifestyle, soda, food, electronics and cell phone product categories. ”

“We’re also doing a lot more integration. You see a great Pepsi commercial, and it’s great content in and of itself. We see broadband as ad supported and at some point a subscription model, but I would venture into that territory very slow.”

MTV, of course, has a huge library of music videos, and it’s attempting to get the Internet distribution rights for its new and archived content.

MTV isn’t the only popular web site under Hirschhorn’s domain. Comedy Central’s site ( boasts more than 3 million unique users per month, partially fueled by the network’s popular TV programs like The Daily Show, Chappelle’s Show and Crank Yankers.

Hirschhorn would like to take the Web site a step higher with MTV’s sensibility, such as taking The Daily Show and making it “a parody news destination site.”

MTV bought, and it’s merging it into Comedy’s site. Hirschhorn would like to add a Comedians A-Z section, much the Artists A-Z section on MTV’s site. There would be a page for each major comedian, with biographical, tour and ticket information.

VH1’s Web site ( has grown from 1 million users in 2001 to 4.4 million this year. With the resurgence in interest in pop culture, some of the elements that make VH1 more successful on TV can be translated to the Web, Hirschhorn says, with added focus beyond music to movies, gaming and fashion.


And what have the pioneers learned? “Broadband users are not your typical TV watchers,” says Scripps’ Takano. We’re getting a whole new audience out there. 70% of those watchers on MSN are not typically TV watchers,” he says.

The types of content that make a difference depend on the month, he added. “Whenever we think we have a handle on it, it shifts. Uniformly, it works very well.”

Stratton sees a bright future. “We’re excited and enthusiastic [about] where broadband penetration is going,” he says. “As more subscribers come online, we can see a scenario where more people are getting online via high speed than through dialup. We want to provide appropriate broadband products for customers. High speed subscribers are increasingly looking for increased levels of control and access to their content.”

Says Hirschhorn: “We’re bullish on all this stuff. This area isn’t hype any more. We put consumers at the center of everything we do.”