One of the deceptively difficult things to do online has turned out to be the online exploitation and integration of offline broadcast and content assets, for the large companies that own these. The clearest example is AOL Time Warner - years after the merger, AOL has still not delivered on its promise to bring the might of the Time Warner assets online. News Corp / Fox Interactive will also aim to make the most of its offline assets in creating a major online presence through MySpace and possibly Blinkx, but their chances of success are unclear.
Here in the UK, two companies with broadcast assets are making significant moves online. One which I shall write about later, is the BBC. The other is Channel 4. Channel 4's online efforts are visible in two categories:
Portal: The Channel 4 website has a surprisingly large amount of content across a number of channels. The website is almost portal-like, with dating, a betting exchange, content-rich channels like Film, Sport and Motoring, ecommerce through Netflix-like DVD rental at FilmFourDVD, Flash games and cinema listings as just some of its offerings.
Next generation services: Channel 4 is already setting one foot in the next wave of entertainment technology by investing in television broadcasting online and a mobile portal. Channel 4 has said it wants to stream all its TV programming online, simultaneously with terrestrial broadcasts. A broadband documentary channel is planned for 2006. Interactive episodes of the television series Lost are being released online. Channel 4 is working with Buongiorno to create a mobile portal. Channel 4 is one of the backers of Attheraces, a betting company also funded by BSkyB and Arena Leisure.
Is any of this working? Channel4's online traffic in the past year has grown. The summer spikes are due to the latest series of Big Brother, but nonetheless Channel4 has shown steady increases in visitor numbers:
At the same time, leaving Big Brother aside, Channel 4's page views have been declining, which will affect its advertising revenues:
Likewise the time spent on the site has been decreasing, outside the Big Brother effect:
So while Channel 4 has been attracting more visitors, they are less loyal and of lower advertising value. The total inventory of page views that Channel 4 could monetize, has fallen. And, according to AdRelevance, the number of advertising impressions has fallen, even during the Big Brother period.
Channel 4's strategy is a difficult one. It must pull off the kind of success that bigger companies have found elusive. The mobile portal will provide negligible revenues for a long time to come. Broadcasting online is expensive and has a high risk level. Channel 4 will have to break through user unfamiliarity with the concept in the UK. Such a strategy could set Channel 4 up for well for an IPTV future, but that is a long way away (and Jupiter Research reckons the UK market is pretty unlikely to be a good market for that).
IT consultants always say it's no use moving your bad processes to new technology - make the processes better first. Channel 4 is building out all this new technology, which is fun and interesting, but the signs are there that all may not be well in user loyalty land. Certainly it will be even more difficult if Channel 4 only succeeds in attracting larger numbers of less loyal and lower quality users. Channel 4 cannot afford to roll out expensive projects without first making sure that they will grow user loyalty and interaction, and therefore advertising revenues. The problem cannot be solved by measuring the current performance of advertising and presenting that to advertisers in a favourable light. Channel 4 must achieve a real change in user interaction, and must start by finding out from users what they want to see and what would keep them longer, and interacting more, on the website.
For example, one key element that is missing from the Channel 4 website is community. There is some, but it is weak and, with the kind of risks that Channel 4 is taking, must be better. The only company that has made live broadcasting work in a big way (AOL with Live 8 and its US showings of television episodes) is a master of community (and also one of Channel4.com's biggest advertisers). Some of Channel 4's efforts are ideal for community - the company recently spent £2 million on a website for promoting new and unsigned bands, and content from music bloggers (which shows Channel 4 is aware of the concept - but the execution leaves something to be desired). Community needs to be a part of this in a big way - real user generated media and interaction. Channel4's success will come when it moves from broadcasting online to creating an interactive community.
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