One of the fallacies of online video that I’ve touched upon before is that online video cheap to produce. However, another common fallacy is that you can only monetize online video by selling ads. I took some time to compile the following flow-chart that presents various factors that can help you determine the profit/loss potential for an online video venture:
(you may download the PDF by clicking here)
Expenses:
Web-hosting: This refers to a platform where you’re hosting your site. Many companies use web servers with load balancers to host their web software platforms.
Video streaming: Refers to a platform to host audio and video files. Often times, these files are stored on a CDN.
On-camera talent: While in-experienced talent is easy to find, experienced talent is required for any show. And, experience costs money.
Web development: Whether you hire a full-time developer or recruit an outside firm, it is necessary to build a comprehensive platform for your viewers.
Marketing and PR: Just because your content is on the web, it doesn’t mean that people will be able to find it. You need to invest in a marketing/PR firm to promote your business and your content.
Office management: For most small companies, this is not a requirement. However, for medium-large businesses, this is absolutely necessary.
Production staff: Similar to on-camera talent, in order to produce good content, you need an experienced production personnel.
IP / Licenses: Whether you’re purchasing software or licensing music, this is a big expense and something that companies often tend to overlook.
Income:
Ad sales: Many video companies are doing ad-sales via a CPM method, even though it costs more to produce video.
Pay-per-view: On the web, people want content to be free. However, content costs money to produce and only a small subset of companies have experimented with paid content.
Registration wall: This is a way to collect user information and then use this information to deliver marketing messages.
Sponsorship: A sponsorship package could include multiple components, such as banner ads and video ads.
Product placement: While the scale of this is limited on the small-screen (computer and mobile), it has been a popular method of paid promotion for television and movies.
If you’re a web producer, download this chart and make sure that you use it to ensure that your projections are accurate.
