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Live-streaming: Key To Success Or A Value Trap?

Twitter has Periscope, Facebook launched its live-streaming service a few months ago. There are some doubts in blogosphere that live-streaming could actually make money - bloggers are getting annoyed with this live-streaming for free in most cases. Let's check if there are any options or the ways of monetizing the live-streaming.

Solutions

There are a few solutions in the market right now which provide native video advertising. Take a look at this video:

It actually shows how this native video advertising solution could work. And it actually works great. Mirriad is one of the platforms, they raised $15M in March, 2016, while the total funding amount exceeds $26M. Another company from this field is Ingrain.io. The only issue both projects have right now is implementing their strategy in live-streaming. They have been working on this native video technology for quite a long time - Mirriad for more than 8 years, Ingrain for more than 2 years. We all know a success story of MSQRD, when the face recognition app was bought by Facebook, according to different sources, MSQRD team had worked on this technology for about 3 years before the company was acquired by Facebook.

Face recognition is a great tool, but let's take a look at the real future. Mirriad is making money for different film-makers right now, here is a great overview of a number of films where you can see Mirriad's technology working. So as we can see, the technology exists.

Monetization

YouTube's CPM (cost per thousand impressions) varies from .60c to $2-3, it means that if a particular video has 1 million views and you noticed that there is on ad unit impression in this video, the content creator will make around $1,500 ($1.5 per thousand impressions). Everything depends on the audience the YouTube channel has - Google analyzes everything from the age to average household income and all these factors affect your CPM. But now we are talking about native-video advertising and live-streaming.

As soon as Twitter (or Facebook) starts using the native-video advertising, it won't be really expensive, the efficiency of such ads should be determined first. I assume that at the beginning the average CPM will vary from .50c to $1.2-$1.5. According to Periscope's medium, they had reached 200M overall broadcasts by March, 100M since January. The most important factor here is a number of impressions. It could be higher than just one at the beginning of the video. It could be from 1 to 10, for example. Another important factor is a number of people watching the broadcast. Let's assume that an average number of people watching the broadcast is 20. In this case, Periscope could have around 50M broadcasts a month right now, 1B views a month (10 people watching the broadcast x number of broadcasts), with an average $1 CPM, we'll have around $1M in ad spending.

According to YouTube's stats, they generate several billions of views a day, we assumed that Periscope gets 1B a month. It sounds fair enough. It means that Periscope overall could earn around $300K a month right now (30% from ad budgets), or $3.6M a year. That's not too much, but imagine, if they reach 5B views a month (still nothing compared to youtube which generates almost the same amount within a day), Periscope will start making $1.5M a month and so on.

Summary

If Twitter (or Facebook) decides to implement the native video advertising technology they won't make lots of money right now. The number of videos and views isn't too high. I think Periscope (Twitter) needs to invest a little bit more money into Periscope marketing, start paying its top bloggers (perhaps they do it already). As far as they reach a sufficient amount to put advertising in, it could bring them lots of money. I think that in long-term this live-streaming could be really profitable.