When filmmaker Ben Rekhi turned down the traditional theater and DVD distribution deal for his film, “Waterborne,†and instead forayed into the emerging realm of digital distribution by signing with Google Video, the future was clear. Filmmakers would now be able to circumvent traditional distribution channels, still reach a wide audience and avoid handing over the bulk of their profits to those in the distribution system chain. Filmmakers charging whatever they wanted would reap the majority of the profits themselves. Close to 80,000 people streamed Waterborne when it was available free, but when it was offered for $3.99 per download, only about 300 actually purchased it by the time it was pulled by the filmmaker in July 2006.
In all my thinking about the technological upheaval that is taking place right now in digital distribution, I always thought of the old established constructs being the ones who would take the blows. But Google, the mega search engine, having decided to pull the plug on it’s 19 month old video marketplace proves that this landscape isn’t settled and forward thinking companies can misread the tea leaves too.
Google Video was giving unknown filmmakers the same platform and access to sell their films to Google’s huge audience along side traditional major players like CBS and the NBA. Any filmmaker could upload his or her films and distribute it for free or for a price with no minimum or maximum selling price. Filmmakers could also choose whether to add copy protection or not. As much as I love Apple, the i-Tunes store isn’t allowing indie films access to their platform.
Although touting their video marketplace, Google was certainly hedging bets when they purchased YouTube in November of 2006 for $1.76 billion and for good reason. The zeitgeist of free video on the web made it uncertain if online viewers would tolerate other business models including ads. CBS, who offered their shows at Google Video for a price, found out online viewers were willing to watch some ads. “It was no comparison,” said Larry Kramer, former president of CBS Digital Media. “It was just clear the audience was more interested in free. But they were also willing to watch ads. Nobody knew that was going to be the case.”
According to Adams Media Research, Consumers spent about $29 million to buy or rent downloaded movies and shows in 2006. Yet in-stream advertising, generated a revenue of $402 million for that same year and is projected to reach $700 million in 2007. Many companies seeking to monetize web video are still pursuing pay-to-own downloads but also searching a variety of other business models, including subscription services, online rentals and ad-supported streaming. Right now, all roads are leading to ad-supported content. “Many online video revenue models are emerging, but the growth of an ad-revenue model for online video will be critical to the health of the industry,†says Paul Verna, eMarketer.com Senior Analyst.
If big companies are seeing ad-supported video as the new model in the foreseeable future, it’s up to us filmmakers to usurp it to our own advantage. The sponsors and the filmmaker have the same goal, to get as many people as possible to see your film. You build an audience. They get exposure. Why not get paid by the advertiser, if not the viewer. Aggregate enough of an audience and you’ll be able to approach sponsors to fund the next project.