E-Media Sees Future in Interactive Ads, Pay-Per-View

E-Media Inc., an Internet broadcast company in New Canaan, CT, sees a bright future in Internet pay-per-view events and interactive advertising. The company, which uses streaming technology to send on-demand audio and video through the Internet, Webcasts events that are an example of how programming and merchandising will be merged in the future.

Its major client, the World Wrestling Federation, uses streaming technology not only to Webcast wrestling matches, but to promote its upcoming events.

“The World Wrestling Federation is very good at delivering offers for merchandising along with its streams,” said John Engel, president/CEO of E-Media. “It also delivers millions of ad banners on the site, making it one of the largest sports sites.”

While wrestling consistently earns the highest ratings on cable television, it also is driving the adoption of streaming video technology. Engel said Microsoft Corp. recently observed that the WWF’s Web site is the No. 1 source of requests for downloads for its Windows Media Player software, which allows computer users to receive audio and video streams through the Internet.

“We’re getting all the teenagers,” Engel said. “We ask them a series of questions about their interests before sending them a signal.”

Engel foresees a day when streaming technology advances to the point when consumers will be able to click on products that appear in a stream and order them directly through the Internet

“The goal is to be able to insert a link underneath the video image,” Engel said. “Nobody is doing that yet.”

The WWF was unavailable for comment about its future plans for Internet broadcasts. At press time, its holding company was undergoing an initial public offering of stock and was in a “quiet period” required by the Securities and Exchange Commission.

Internet Pay-Per-View

One area of Internet broadcasting that is expected to be a major market segment is pay-per-view.

Paul Kagan Associates, a market research firm in Carmel, CA, projected in a recent study that the total market for streamed content will be $21.4 billion by 2008. The largest market category will be Internet pay-per-view services, totaling $9.7 billion, followed by Internet TV, whose market will consist of $7.1 billion in affiliate fees, streamed program ads, banners and sponsorships.

Right now, the World Wresting Federation does not charge viewers for the streams the same way it charges viewers for cable pay-per-view, which delivers high-quality video. Streaming video is a relatively new technology and requires more bandwidth to increase its quality. When the quality does improve, more Internet broadcasters are expected to charge a fee for video content.

While motion pictures on television run at 30 frames a second and low-quality cartoon animation runs at 15 frames a second, streaming video can achieve 20 frames a second maximum through a 56.6 kbps modem, which is standard equipment in most personal computers shipped today. Adding a broadband connection allows for quality that is similar to that of television.

Because of limited bandwidth on today’s Internet, Engel said it’s most important to establish FM stereo quality sound first, then send a video signal that may run at five to 12 frames a second.

Another factor that affects the use of bandwidth is whether an event is multicast or unicast. While multicasting means sending the same video signal to many different users, unicast sends one signal to one viewer.

The advantage of a unicast strategy is that it allows Internet broadcasters and advertisers to monitor the viewing habits of individual viewers.

“Unicast is important as a direct marketing application because it’s important to measure to response to advertisements on a one-to-one basis,” Engel said. “We use unicast to measure customer behavior one at a time.”

The technical requirements for unicast are more demanding, requiring one video server for every 1,000 viewers, compared with a multicast broadcast in which one video server can handle tens of thousands of viewers on the same network, Engel said.

Unicast technology is also important in monitoring the length of viewing time in case viewers ask for their money back for an unwatched stream.

Woodstock Rocks Broadband

The music festival Woodstock ’99 attracted an estimated live attendance of 500,000 people, but that audience was almost equaled by its virtual audience. About 400,000 Internet users tuned into E-Media’s free live Webcast of the event, without facing the risk of injury from the rioting that climaxed the three-day concert.

That number of viewers made the festival one of the most watched events carried through streaming media, a ranking that includes a fashion show for Victoria’s Secret lingerie and videotaped testimony of Monica Lewinsky, according to MediaMetrix, a tracking service in New York.

The event was offered for free to Internet viewers with no attempt by its promoters to sell commercial inserts into the video streams.

“They [Woodstock’s promoters] chose not to add advertising to the streams because they already had sponsorship in place,” Engle said. Viewers of the streams were asked to register at the site, which generated a database of potential customers for future streamed events.

Another significant statistic about the viewership of Woodstock is that 30 percent of viewers watched it through a broadband connection, which is 100 kbps or more. About 20 percent had a connection of 300 kbps or more, which would mean the stream was delivered through a digital subscriber line (DSL), cable modem or T1 line.

The quality of the video varied by shot. Engel said it is more difficult to send pictures that have a lot of motion, such as audience shots of thousands of people. The Woodstock broadcast included a “blimp cam” of the audience, whose high level of action caused the frame rate of the stream to decline.

But the Webcast of Woodstock also had its own production crew to shoot the event specifically for Internet delivery.

“It’s hard to do a lot of fancy cutting and editing in a stream, because a lot of that is lost,” Engel said. “Internet broadcasting is much more straightforward and less subtle. When the bandwidth improves, we will be able to deliver other fancy things that you see today on TV.”

He said that when those quality improvements are made, more advertisers will be willing to embrace streaming media as a marketing tool.

“You can’t just throw old TV content on the Web and hope it will be successful,” Engel said.

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