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Niche Market for Original Video Programs

Kagan Research reports that Google has made a fortune by simply cataloging content created by others. So could The Next Big Thing be organizing non-professional video programs on demand? Will this be another "disruptive" medium to established media giants that cuts into sales of theatrical films produced at a cost of tens millions of dollars and TV series dramas costing $2 million per episode?

If history is any guide, the answer is probably not. When the home video revolution was just catching stride in the early 1980s, the 60-minute music video The Making of Michael Jackson's Thriller and Jane Fonda's exercise tape Workout became early blockbusters, raising expectations. But only the children's sector developed a meaningful niche for original video programs.

The prime outlets will be Internet Websites, given their huge capacity, which points to delivery via the rapidly expanding Internet protocol TV via broadband. Kagan Research report IP-VOD: Competitive Business Models to Cable-Delivered VOD notes that consumers tend to receive IPTV via their computers and its popularity will rise further once consumers are able to channel video to regular TV sets in their living rooms.

The business model is appealing because programming can be acquired with no up-front costs by offering revenue sharing. In its download offer for movies and network TV shows, Google is splitting revenues 70:30 (with 70 percent to the content producer) and allowing content companies to set their own price.

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