Not that long ago digital video was little more than a flickering postage stamp-sized image on a web page. Fast-forward to the present and every company is a media company on a road to digital video maturity. From retailers to pharmaceuticals companies to financial services firms, video is an essential business tool.

But where are the video big guns – the media and entertainment companies?

There is a certain irony in the fact that many of them are searching for new revenue models. The next frontier is looming large: real-time media, dynamically served to a specific person when it matters, and on the right device.

In the newly egalitarian world of video distribution, media companies need to convert broad anonymous audiences to known users using new revenue models. It’s becoming increasingly about matching intelligent content to the desires of individuals, via smart recommendations and personalisation, to create contextual relevance.


This need to connect directly with users is critically important for media and entertainment companies as they struggle to stay relevant in a highly atomised and cacophonous media world. The age of the TV industrial complex, as Seth Godin has called it, where brands produced a product/service and told an audience about it via advertising/sponsorship, dominated the first 50 years of the television age. In this world media companies thrived.

But the dominance of paid media is fading fast.

We are moving from an age of interruptive, paid media to one of interactive owned and earned media. While the industry has been discussing the interrelating paid/owned/earned models for years, some forecasts anticipate that owned and earned channels will grow 3.5 times faster than paid media during 2015, for example.

The transition to a future dominated by an owned media model is unstoppable.

Consider the BBC and its eagerly awaited BBC Store, its ‘download to own’ service. The commercial web service competes with iTunes and allows consumers to buy digital content such as Sherlock and Dr Who episodes directly from the broadcaster for the first time.


Focusing on mass-market paid models no longer works because the mass is vanishing and replaced by more specialist audiences. Companies realise that to effectively monetise in this new era of fragmented eyeballs they must make the most of channels they create and control for direct to consumer (D2C) communications.

In parallel, earned media will continue to thrive – and to drive the owned media relationship. From its roots in ‘word of mouth’, PR and product placement, earned media today increasingly involves the distribution of owned media via social and other third-party channels – Facebook, YouTube, Google search etc. – where a video is viewed and shared and ultimately helps to boost the owned media model.

The recent announcement that Facebook has followed YouTube by supporting the immersive 360 video format is a case in point. Facebook has announced partnerships with a range of brands, including Star Wars, Discovery, GoPro, and VICE to bring 360 videos to their followers.

For the owned media model to be successful long term, media companies have to go the extra mile and focus on delivering personalised content. They need to develop a relationship with each individual viewer, understanding their wants and needs. This is done by improving discovery and providing personalised recommendations. By analysing multiple data points – including metadata, social data, user and household data, contextual data and financial data – media owners can deliver highly relevant and financially valuable experiences in near-real time.

The Amazon-style ‘people who like this will like that’ approach to recommendations is relatively standard practice today, but there are some additional emerging technologies that use social networks to help fuel personalised content recommendations and discovery.

Examples of content that can be embedded include: trending/popular content on social networks; personalised, real-time feeds of content that has been liked, watched or rated by friends; Facebook links and Twitter hashtags; the addition of a buzz meter on the UI that shows trending content as it moves up and down in popularity; and using crowd sourcing to track hot and trending content in real time and promote it to others.

The fundamental point in all this is that the world has radically shifted.

Media and entertainment companies need to take control of their valuable video and derive greater value from it. This is best done by connecting directly to consumers and monetising content using a mix of advertising, pay-per-view, subscriptions, merchandising and licensing.

These smart, hybrid monetisation models are upsetting the traditional balance of payments between paid, owned and earned media, placing a greater emphasis on owned video initiatives.

This newly balanced payments model will rapidly become the new normal and those companies that do not manage this transition face the prospect of losing their audience. And in the process becoming the equivalent of a black and white TV – irrelevant.

Daniel Webster

Daniel Webster


Daniel Webster, Managing Director, Strategic Solutions, Kaltura.