STRATEGIES FOR LAUNCHING NEW CHANNELS IN 2006

If special-interest tiers are expanded beyond family-friendly tiers, an opportunity may exist for new channels that would embellish the value of a tier. But the economic model will be far different from the past. The new channel will have much a greater dependence on advertising revenues, sponsorships and non-traditional revenue streams.

VOD is both an opportunity and problem for new channels. This new platform enables new program suppliers to get carriage much more easily than previously. It even enables the creation of “virtual channels,” but the economics are difficult.

Operators are taking the position that they are providing a valuable service to new program suppliers and, therefore, they will not pay subscriber fees. Thus the program supplier has to find a way to get sponsorship and ad revenue. It becomes even more difficult when one realizes that in this brave new world, the small niche product is in competition with the latest big series’ episodes from the entertainment conglomerates. Effective navigation systems similar to the internet will have to be developed, but in the meantime, size matters on the VOD platform.

The time has come for truly special-interest programming, but it will have a different business and programming model from traditional channels. With the popularity of the internet, the cat is out of the bag … “top-down” authoritative programming won’t work for viewers accustomed to having control over their media experiences. Whether television platform or internet, these channels need to create a community in which the members of the community are empowered to participate in the creation of content. (See my essay: Media Convergence.)

With an “activist” community of involved members, the channel attains greater ability to grow from the effects of “viral marketing.” Additionally, with the pro-active participation of community members, the “heavy lifting” of creating fresh content is divided among a large group of people with a vested interest in the outcome.

This model has enormous implications. Whereas the costs for launching a new traditional television channel has recently been north of $60 million, the potential now exists to launch a virtual channel on the internet at a very low cost and, as critical mass is achieved, extend it organically and with little incremental cost to other media platforms such as television and portable electronic devices.