Challenges Loom for New Content Delivery Platforms

With the explosion of emerging content delivery services, a range of providers must figure out effective ways to market new formats to customers and advertisers. At a gathering of industry experts, ideas abound in addressing those challenges.

NEW YORK—If you listen to the people tasked with building new ways to market and deliver digital content to consumers, theyll tell you that were on the cusp of a multimedia revolution.

With Apple Computer Inc. selling network TV shows on iTunes, Verizon Communications Inc. launching its fiber optic television service, and Microsoft Corp. partnering with MTV Networks Co. to push music video downloads to Xbox gamers, theres no question that media convergence is entering a formative era. But even the most optimistic experts gathered at the DigitalLife conference here this week conceded that many questions remain regarding the delivery and business models needed to make these services user friendly and profitable.

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Despite the many promising flavors of these digital content services, which offer to deliver on the long-held vision of entertainment available to consumers nearly anywhere they choose to look for it, executives from companies providing the infrastructure, hardware and broadcast networks on which the materials will be programmed said theres still a lot of ground to be covered.

If theres a sensible place to begin examining the issues digital content providers must address, the physical bandwidth needed to beam all these various services into peoples homes seems to be a logical jumping off point. According to Nick Lehman, senior vice president of strategy and operations for MTV Networks Digital and Music Media Group, the more bandwidth that becomes available, the more opportunities companies such as his will have to create sophisticated multimedia offerings.

"Really what we need is unlimited broadband access, but for now, programs will expand to fit the available networks," said Lehman. "You cant put a 30-minute television program on a cell phone yet, so we have to play to the available platforms and tailor services to the bandwidth and devices that make the most sense."

Jeff Klugman, senior vice president at digital video recorder maker TiVo Inc., agreed that content providers must focus on tapping into the network capabilities currently available to large numbers of consumers, and not get too caught up in building futuristic delivery services.

"Consumers want to think about their favorite shows, not whether theyre delivered via a broadcast network or broadband," he said. "Given the constraints of bandwidth today, [the challenge is] really just about making these new services available."

Marilyn OConnell, senior vice president of the Video Solutions Group at Verizon, said that there will be a demand for many different types of content delivery models that exercise the latest capabilities provided by carriers such as her firm. By tapping into the available networks, service providers will give themselves a better shot at succeeding, she said.

"No one is saying that niche content and network TV cant coexist," said OConnell. "We just need to figure out ways to provide a variety of multimedia offerings that suit all the facets of delivery that are already available."

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Another significant obstacle that programmers will have to tackle, said experts, will be in creating advertising applications that allow consumers to purchase and view digital content at their leisure, while creating an attractive enough value proposition to persuade companies to buy those ads.

According to Jim Funk, vice president of marketing for streaming media software provider Akimbo Systems Inc., content programmers should look to the development of successful online advertising models by companies such as search giant Google Inc. to get their cues for creating new ways to package content with ads.

Googles AdWords program, which encourages companies to bid on ad placement by purchasing particular search engine keywords, is widely considered an innovative leader in the online advertising space. The contextual ads generated by the companys Gmail online e-mail client is another groundbreaking, yet controversial, platform.

Next Page: Directing ads to the right users.