Monday, February 15, 2010

Ubiquity first, Revenue Later, URL

Ubiquity first, Revenue Later, URL,
~"Eric Schmidt on criticism that Youtube may have been a bad investment"

What brought this topic up is Shofha business model, which is basically a paid service, where users pay a certain amount of money for watching new/old movies or TV shows. TV stations and movie producers expect to make money either by paying to watch what they produce through movie theaters, cables and subscription based stations such as ShowTime, or via ads.

Ads normally take so mush time especially when there on peek. I recall sometimes it took more than 10 minutes of ads during one of the hot shows on one of the satellite TV stations. Alternative to this is the paid service, where the users pay some money to watch not just ad free content, but also new ones. Shofha does just that, but it delivers the content over the Internet allowing for better user tracking, management and payment services. The VOD is so good that the user can pick what to watch and when.

Hulu does the same, but it is taking it to the next level, allowing for a better user experience. It delivers the content via the web and on demand, exactly the way Shofha does it, but with one exceptional and dramatically difference, IT IS FREE! The deliver unique and new/old content for free, enabling by doing so the effect of "World of Mouth", or social media in other worlds. Sharing the content is so meaningful when the it is free, sharing a payed content is like recommending a product to a friend, not sharing it. So how do they do it?

Hulu.com launched for the public in March 2008 with an interesting advertising model. In 2008, Hulu, even with opposite expectation, reached the sixth most-watched video-content provider by Sep 2008 with NielsenOnline reporting 142 million streams and 6.3 million unique monthly visitors, see for details http://www.wired.com/epicenter/2008/10/hulus-pageviews/.

Hulu has even surpassed other content provides, such as cable companies and TV channels and networks. http://www.businessinsider.com/chart-of-the-day-hulu-has-more-watchers-than-time-warner-cable-2009-8.

Hulu 30 min of shows worth 2 min of commercials! In a 30 min show, there will be 30 sec at the upfront brought by, 30 sec in the midway, and then the closing commercial, indicating in each how long the would be, which is great for me. I will not mind a 30 sec brought by upfront when I'm watching free content that is expensive and hard to get. Another issue is that I will be grateful for the sponsor, since they made this content free. I guess all the pieces came together in this business model.

For Shofha to be as successful as Hulu, they need to provide the following

- High-production-quality television shows and movies, which they have to some extent.
- Hulu business model: short commercials, indicating how mush it will be
- Allowing to share the content, including social networks.
- Allow social collaboration over content such as
- chatting with the same people watching the same show at the same time.
- Allow for comments, ranking, etc.

I think if Shofha does that, they will be so successful to a point where user's will start plugging their computers/laptops to their TV's, abandon by doing so the traditional content providers.

Imagine the following
- Free content
- New and unique content
- Allow sharing and collaboration
- On demand
- High quality
- Acceptable commercials model

And for the content provider
- Create and maintain a user base
- Track user interests, to be able to provide more specific content that match their tastes.
- This business model will ensure big if not huge user base, which will attract sponsors and advertisers
- Feel free to add more, as this kind of business will open new opportunities all the time.


To achieve all of that, Shofha or any other content provider should first create the user base by offering this service for free, maybe with very limited commercials at the beginning, and then expand the network of partners and sponsors as they add more content, and exponentially attracting more users: URL - Ubiquity first, Revenue Later.

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