The evolution of Internet rebroadcasting: part one of a two-part series

Learning from the lessons of iCraveTV, today’s Internet rebroadcasters are clearing rights with program providers and becoming a force to be reckoned with. In this, the first part of her piece, Norma Reveler looks at JumpTV Inc.’s market strategy. The second part of this story will focus on Planetvu, which – like JumpTV – has hitherto focused on bringing international third-language broadcasters to Canadians via the Internet. Canada’s biggest Internet rebroadcaster is expanding beyond subscription-based services that deliver mostly third-language TV channels to people’s computers to provide competition for conventional broadcasters. That competition is manifesting itself not just in terms of offering a programming alternative, but also in rivalry for advertising and investment dollars. Toronto’s JumpTV Inc. has adopted an aggressive two-pronged strategy for growing beyond its current third-language strategy: go public to raise funds to expand, and tap into the advertising market. The first stage of that was fulfilled this summer when JumpTV went public on the Toronto Stock Exchange and the Alternative Investment Market (AIM) of the London Stock Exchange, raising $66 million. Since then, JumpTV has added new channels including its first Chinese-language network TVB, three Hindi channels and Arabic-language service Al Arabiya News Channel. Today, the Internet rebroadcaster offers mostly third-language services from 180 television broadcasters from 60 countries. No English-language, North American TV channels are available through JumpTV, which in its early days back in 2000 applied for a retransmission tariff (CCR, June 7/02). It argued that under the Copyright Act it had the same right as cable TV distributors to retransmit over-the-air network channels, without the permission of broadcasters, at rates set by the Copyright Board of Canada. The initial plan caused a firestorm of controversy and protests from the Canadian Association of Broadcasters. In 2001, JumpTV droped its bid for automatic retransmission (CCR, Oct. 11/01) and today is only streaming TV channels for which it has agreements with the broadcasters. Included in JumpTV’s offering are the French-language TV5 and the Arabic-language TV channel Al-Jazeera (CCR, May 12/03), the latter of which is still not available on Canadian cable TV, although Rogers tried to introduce it. Perhaps most tellingly, the IPO also states that JumpTV is looking to acquire the Internet rights to radio, sports, music, foreign-language cartoons, animation and other content, and will introduce VOD, pay per-view, time shifting and a product similar to the personal video recorder (PVR). Part of that are new enhanced applications on what the company is dubbing Version 3.0 of www.jumptv.com, including video-on-demand (VOD) and pay-per-view (PPV) for live sporting events, children’s programming, concerts, movies and other TV content. It has also strengthened its digital rights management (DRM) capabilities, standardized its streamed TV offerings on Microsoft Corp.’s Windows Media Platform, and plans to have user-generated blogs and online community forums. JumpTV has also been enlisting some formidable allies to help achieve those ends. It announced it would commercially launch VOD by the end of 2006 with children’s programming from Toronto-based Cookie Jar Entertainment Inc., which owns 20% of the Teletoon specialty channel. Individual series are priced at US$4.95 or a bundle of eight series costs US$12.95. And Mary Frost, CEO of France Telecom subsidiary GlobeCast America, mentioned her company’s GlobeCast WorldTV division was looking at JumpTV for possible partnering opportunities. She made the comment at the recent Canadian Association of Broadcasters’ convention November 7 in Vancouver (see p.1). The second phase of JumpTV’s expansion plans – diversifying its revenue base from subscription only to include advertising – is now getting underway. The company is considering an advertising-supported revenue model under which channels would be provided free on a selective regional basis and would be offered in conjunction with large platform distribution partners, including Internet service provider Terra, a subsidiary of Spain’s Telefónica S.A., according to the IPO. On November 2, JumpTV announced a new video advertising platform that will enable it to deliver Interactive Advertising Bureau (IAB)-standard creative targeted to specific regional programming or user communities. The company’s advertising inventory will initially be available through Advertising.com Inc.’s video network and through direct sales on a limited sponsorship basis. JumpTV’s IPO states advertising will include banners, pre-roll ads and the substitution of existing ads on channels with live linear feeds containing JumpTV-solicited advertisements. "Streaming video advertising is the fastest-growing segment of the online advertising market, and JumpTV’s new service offering and focus on international programming represents a tremendous addition to the fast-growing Advertising.com video network," says JumpTV senior VP of publisher services James Smith. About a third of the money raised through JumpTV’s IPO will be used to solicit new subscribers. The service had just under 24,000 subscribers at the third quarter ended September 30, company officials noted during a November 8 conference call. That’s up slightly from the 16,000 subscribers the company had at March 31 in 80 countries, with 53% of them – mostly immigrants – living in the United States and 22% in Western Europe. However, it hasn’t all been smooth sailing: a $0.99 promotional offer resulted in excessive churn, with people re-subscribing to take advantage of the special again once their first trial had expired, JumpTV officials said during the third-quarter conference call. A system that tracks computer origin has been implemented to prevent the practice, but company officials said they were planning longer-term campaigns in the future. JumpTV reported a net loss of $8.61 million in the fiscal year ended March 31, 2006 on revenues of about $1.42 million. However, the company said revenues had rebounded 25% in the third quarter ended September 30 from the previous quarter. This dire financial position is in sharp contrast to the traditional TV broadcasting world, which continues to post increased revenues and profits, according to CRTC data. Company officials admit subscriber acquisition hasn’t been a focus up until now. Subscribers to JumpTV pay monthly fees as high as $24.95 for bundles of TV channels, and as low as 99 cents per channel for such TV channels as NTV Bangladesh and Rwanda TV. Most of its channel partner agreements give JumpTV the exclusive right to deliver ethnic TV channels through the Internet outside the country of origin. But JumpTV has also been steadily increasing its international presence since control of the company shifted from Farrell Miller to Scott Paterson, the former head of Yorkton Securities, in May 2005. When Paterson took over as CEO of JumpTV, the Toronto-based company opened offices in New York and through its subsidiary JumpTV International in Dubai. JumpTV’s new CEO has also recruited some entertainment household names to his advisory board, including Standard Radio Inc. CEO Gary Slaight, Lions Gate Entertainment Corp. CEO Jon Feltheimer and Sony Pictures Television International’s networks president Andy Kaplan. Given all of these factors, JumpTV’s management claim it’s only a matter of time – particularly given the increased penetration levels of high-speed broadband – before their services become more popular. For any new medium, it takes time to develop the proper business case and acquire customers. But it’s also clear that things happen a lot quicker in the Internet era. Look for part two of this story in the December 4 issue of Canadian Communications Reports.

The evolution of Internet rebroadcasting: part one of a two-part series

Broadcast | November 22, 2006

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