Rogers Communication Inc. launched an online video site on Monday, allowing existing subscribers to access content from channels they subscribe to via the Web.
The subscription-based business model used by Rogers is different than the advertising-supported model used by successful video sites such as Google’s YouTube or Hulu in the U.S.
Rather than offering free content to all Web users and selling advertising, Rogers is offering Web content to customers who’ve already paid to receive it via cable TV.
It’s a model that fits the existing billing relationship Rogers has with its subscribers, says David Purdy, vice-president and general manager television products at Rogers Cable.
“We feel strongly that a big part of the business model is about supporting the existing value chain,” he says. “Why try to start a brand new relationship when you have an existing one?”
Rogers has announced more than 20 broadcast partners so far. Content from recognizable channel brands — such as Showcase, OLN, Citytv, YTV and more– will be streamed via the Rogers On Demand site during its beta phase and beyond.
“My personal goal is to add a new content partner every week,” Purdy says. “I really want to get all the broadcast ownership groups there.”
Purdy spoke with ITBusiness.ca at nextMEDIA’s Toronto conference.
The variety of content currently available on the service is just one of the limitations, says Tony Olvet, vice president of research domains at IDC Canada. The service also lacks HD and content portability.
“Canadian consumers don’t want to be dependent on being connected as they view the content, and want to take it to multiple devices,” he says. “But that would introduce the complexity of DRM.”
Canwest Global Communications Corp. will be providing content to the service for its specialty channels.
But for over-the-air channels, such as Global Television, Rogers will link back to Global’s own Web site, which also streams video.
Canwest feels the deal won’t take eyeballs away from their own content, says Graham Moysey, senior vice-president and general manager of digital media.
“We feel strongly it will be additive, not cannibalistic,” he says. “It’s just an extension in terms of inventory and the number of people that are going to see it that we are going to sell against.”
Rogers users will be authenticated to receive access only to content they subscribe to. There is a base level access to anyone with a Rogers Wireless or Cable subscription. Access to specialty channels content will be given to those who receive them via cable TV.
It’s completely different from YouTube’s ad-driven model.
Since the site was purchased by Google Inc. in 2006 for $1 billion, it has gained 67 per cent penetration in the Canadian market, driving 16 million page views a day. It is also the Internet’s second-most used search engine after Google.
YouTube executives say their company’s model makes both content owners and consumers happy.
“Consumers are willing to accept the fact that advertising needs to be there in order to access that free online content,”says Ian Caminsky, head of business development, YouTube at Google. . “The content owners still get paid.”
YouTube doesn’t see video portals such as Rogers and Hulu as direct competitors, Caminsky adds. The marketplace is a large one and there’s lots of room.
Rogers is more focused on “catch-up” videos — a place where viewers can catch up on TV shows they missed over the last week. YouTube is more of a repository of video content that spans a greater period of time.
Growing popular for its trademark user-generated video content, YouTube has started showcasing professionally produced video content over the past year. This includes deals with Sony Pictures in the U.S. and Channel 4 in Britain. Canadians can view content from Manga Entertainment and HBO Sports.
YouTube will continue to increase the percentage of professional content it offers, compared to user-generated content, Caminsky says.
Broadcasters will be lured to the Rogers’ video portal by its ability to drive traffic as a major aggregator, Purdy says. Specialty channels also won’t need to worry about causing subscribers to cancel their TV connection because the video is accessible online.
Then there’s the bandwidth savings.
“People are spending almost as much to get the content to the end user as they’re making on the access,” he says.
But that’s not the case at Canwest, Moysey says. The broadcaster doesn’t plan to remove any videos from its Web sites after the deal with Rogers.
“We wouldn’t be doing it right now if it weren’t a profitable proposition for us,” he says.
Streaming video over the Web is the most expensive way for Rogers to get content to viewers, Purdy says. Linear television is the cheapest way to push out content, and Rogers On Demand digital cable service is the next most expensive after that.
But he says the hope is viewers will be kept in the value chain, instead of opting to watch the video elsewhere — including through illegal file sharing.
“I’ll make no bones about it,” he says. “My goal is that people will go to this site and not to Limewire, BitTorrent, or one of the peer-to-peer file sharing sites.”
Rogers may be the first broadcast distributor in Canada to offer an online video portal. But it may not be the last. Expect other cable and satellite providers to come to the market with similar offerings in eight to 12 months, Moysey predicts.
As of time of publication, here’s a list of all the broadcasters offering content through Rogers new online service:
- Big 10 Networks
- The Biography Channel
- Food Network Canada
- Galaxie MVOD
- Global Television
- HGTV Canada
- History Television
- Maple Pictures
- National Film Board Canada
- Rogers Sportsnet
- Super Channel
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