On the MiC: JumpTV’s Scott Paterson on IPTV’s biz model
Is the world really ready to watch TV over the Internet?
With subscribers in 85 countries, JumpTV is the world’s leading broadcaster of live ethnic television over the Internet. It allows the more than 200 million people who live outside their birth countries to stay connected. And now it’s adding advertising.
The broadcaster has exclusive worldwide Internet broadcasting and repurposing rights for 270 ethnic television channels, and is adding new content at the rate of about two channels a week. The business is driven mainly by live content – sports and news – but in terms of repurposed content, JumpTV is a few months away from users being able to go back seven days and watch programming they may have missed on demand.
The good news for marketers is that, beginning next week, they will be able to advertise on JumpTV and to target consumers by specific country.
Scott Paterson, former chairman and CEO of Yorkton Securities, has been JumpTV’s chairman since 2002, adding CEO to his title in mid-2005. A speaker at tomorrow’s Canadian Media Directors Council Conference, Pay Attention! New Forms of Engagement, Paterson talked to MiC about why the world is ready for Internet Protocol TV and the new ad component of JumpTV, which until now has been subscription-only.
Is there enough demand to make an IP TV service such as JumpTV viable?
JumpTV is all about this unbelievable intersection: the explosion in desire and demand for people to watch video through a browser-based device – and this massive boom in immigration that’s taking place all over the world.
There are half a million Romanians who live in the UK today. They just got admitted to the EU and all the papers are talking about another half million coming over the next 18 months… They want to stay connected to their home country, and one of the best ways to do so is through broadcast TV, where they can watch sports and news and entertainment from home.
In Toronto, 44% of us (GTA residents) were born outside of Canada. That’s two million people in the GTA, from more than 200 ethnic groups, and the numbers are growing – 242 new immigrants call Toronto home every day. So 44%, or two million of all the people in Toronto today, were born outside of Canada.
JumpTV is in a unique position. We have the exclusive worldwide Internet rights to our channels’ linear feeds and the repurposing of that content. We have 270 channels from 70 countries. Unlike ubiquitous content, a Hollywood movie that you can rent from Rogers, have Netflix send to you, buy from Chapters, or watch on pay TV, if you’re Uruguayan and you want to watch Uruguayan soccer, the only way you can do so is through JumpTV. Therefore you are less sensitive to the (viewing) device. Whether you think the most optimal way to view it is with four guys sitting around a laptop or a computer – you’re going to watch it because you love your soccer. That’s our whole business thesis.
Who is subscribing to JumpTV?
We have subscribers now in about 85 countries – 50% of our customers are in the US, 10% in Canada, 21% in Western Europe, and then the rest are from the rest of the world. Canada is very important, but it’s 10%. Big cities are where the ethnicity is – Vancouver, Toronto and Montreal. We did a demographic survey and 75% of (subscribers) are male in the age group 34-42. That is how the original demographic stacked up for Ebay and Amazon – male, professional, and slightly older.
If you want to get to the younger set, obviously you have to add hipper content. But this a really great place to start because those people have big cheque-books.
Where’s the money?
Jump TV is currently 100% subscription revenue. But starting April 1, we will begin the advertising part of our business as well. We’ve done this in a very phased strategy, which was to get the content first – the best ethnic broadcasters in the world – and then get the best user experience. We spent $20 million on our user experience last year, so the quality of the experience is there – and we’ll be adding one feature after another.
So our strategy was, get momentum, add all this functionality – like instant chat, blogging, social networking – and then bolt on the world’s biggest service providers, and the telcos that are getting into IP TV, and the mobility carriers, all of whom have built pipe and are looking for content.
So we now have three world-class partners: Telefonica, the third-largest telecom company in the world, our partner in Latin America; Comcast in the US; and a company called Orascom, which is the largest telecom company in the Middle East. We hope to name our Canadian partner before the end of March.
In our Telefonica deal, some of our content is premium – in other words subscription – but most of it is going to be free to the consumer and ad-supported. They started selling ads March 1 with a car manufacturer sponsoring channels. So for a whole year, if you go into any of those channels from any of those countries, you will see that company both in banner and pre-roll video ads.
There are two additional ways we think we’re going to do very well vis-à-vis advertising. One is ad insertion (to be distinct from pre-roll or post-roll ads), where we actually insert or overlay an ad already in the domestic feed of the channel with an ad that can be IP-addressable. So a channel in Turkey is running a TV program and when an ad comes up, the server asks were you watching this from Germany, and then sends you the ad for the German market. Therefore you can go to a marketer in Canada and ask them if they want to advertise to just the Canadian market.
Is the world really ready to watch TV over the Internet?
I think we’re moving into a world where there are clearly multiple ways in which to view video – any browser-based device (which up until recently would have meant your computer) and increasingly mobile phones, as we move from a 2.5 Gigabyte world to 3G or even 4G in terms of the speed at which video can be delivered.
There’s another category coming: mobile devices that are being built on the premise that the world is going WiMax. WiFi is short distance, Starbucks or in your home, where you can have a wireless Internet connection. WiMax is much broader, with entire cities slated to sign on. Right now Seoul, Korea is entirely WiMax. So is Dubai. There is no city in North America that is WiMax, but there are many that are planning to. So you can be on a park bench or the tenth floor of a building and pick up a signal that will allow you to connect to the Internet at any time.
There’s a whole series of devices – Intel is behind many of them – that are being launched outside North America that are 3-by-7- inch screens that can be folded in half so they’re compact. They’re like a phone or a computer and they do both (jobs). But the real reason they’ve been built is for video viewing in real time. I highlight that because it’s not self-evident today that it’s a category as an additional area to view things. I predict that five years from now, everyone will have one.