Consumers now have a large number of options to communicate and consumemedia, largely facilitated by the growth of the Internet. Time spent on media andcommunications has almost doubled over the past decade. Addictive experienceson the Internet have attracted audience attention at the expense of traditionalmedia such as television and radio. With usage increasingly moving online, thevalue of consumption has declined due to the proliferation of free services, as wellas the ability to consume content selectively on the Internet. Moreover, music andvideo piracy offer free alternatives to online users. As a result, consumer spendand advertising revenues have not kept pace with the growth in usage, resultingin what we refer to as the “monetization gap” estimated to be worth £4.1bn in theUK for the past two years. Closing the monetization gap is a key issue for mediaplayers, who arelooking at new ways of generating revenues from their existingcontent, as well as diversifying into new online services to capture consumer interest.Two distinct models for monetization of online content have emerged. Somemedia players have successfully executed a “volume strategy”, which generates ad-revenues by leveraging existing content, unique demographic and large audienceto attract advertisers. On the other hand, some companies such as ‘World of Warcraft’ have started to see success with a “value strategy”, focused on offeringpremium content and creating a compelling user experience to consumers willingto pay. Media companies, through their ownership of valued content, relationshipswith advertisers and existing audience loyalties, already have some of the assetsnecessary for success. Players will have to build expertise in online advertising,adapt their revenue models for the new platform and attract audiences to theirportals. Media companies can build, buy or partner to obtain these capabilities.
The Monetization Conundrum
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Telecom, Media & Entertainmentthe way we see it
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