The Economics of Online Entertainment

make_money_on_computerI’ve been thinking a lot about the economics of online entertainment lately, in part based on a June 15, 2009 LA Times article entitled ‘Hollywood hits the stop button on high-profile Web video efforts.” Despite many failed attempts at monetizing online entertainment content, ranging from DEN, Icebox and POP.com in the late 90s to Stage 9 Digital and 60Frames in recent months, I’m not convinced there isn’t a profitable model for making the studio model of the future a reality.

Whatever the successful combination, it is certain to be as complex and dynamic as the changing media landscape itself. It will include both traditional and yet untested advertising and sponsorship models, but it won’t be fully reliant on them either. It will include brave new brand extensions and cross-platform integration and ways to interact with audiences that result in them eagerly spending their hard earned money on e-commerce and subscriptions and engaging with sponsors.

It will also include strategies with no intent of directly driving revenue, but still being accountable to some other practical revenue stream — offline purchases, participation in events, engagement in online communities, etc. Or for large media carriers to support membership/subscription-based services and any myriad of other business objectives.

Making quality online entertainment content is hard, but building an audience for it from scratch is even harder. This reality has been part of what makes it difficult to monetize the emerging category of web video content with any scale. The model that works will include an innovative way for content producers to attract and retain large new audiences in a way that presents clear value for each of the key stakeholders: content creators, distributors  and consumers.

Many more layers of this oninion to be peeled in the weeks ahead I’m sure.

Speaking of identifying good online entertainment content, as a fan of Weeds, I was interested to learn from Tubefilter about University of Andy, a series of short videos in which Andy Botwin (played by Justin Kirk) lectures on various life skills that are not likely to be offered at the local community college, but are guaranteed to make you laugh.

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