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Ooyala Tests Out Its Micropayments System

Ooyala has rolled out the first known test of its micropayment capabilities, with a system that allows media companies to charge viewers who wish to pay for the latest episodes of certain shows. As pointed out on TechCrunch yesterday, ABC Family (s DIS) is testing out a pay-per-view system in which viewers can buy access to streams of new episodes of 10 Things I Hate About You for 99 cents. When a user clicks on the “Buy Latest Episode” button, he is taken to a PayPal processing page with payments being made to Ooyala.

Ooyala announced the micropayment functionality in March, as part of an upgrade to its video distribution platform that would enable TV Everywhere-like services. The pay-per-view offering could provide an alternative for media companies that want to get paid from the user directly for streaming video that they make available, as opposed to trying to recoup streaming costs through the still-nascent online video ad market.

While Ooyala’s Backlot TV Everywhere (TV-E) offering enables micropayments, it doesn’t yet give media companies the ability to hook into service providers’ billing systems. That could be a stumbling block for some major media companies that, like HBO, want to use authentication with their cable distribution partners to give paying subscribers access to some additional on-demand content online.

Also of note is the 99 cent price point for the streaming episodes. Today, most online services — including Apple’s (s AAPL) iTunes and Amazon’s (s AMZN) On-Demand — sell downloadable or streaming TV shows for $1.99 an episode. In the months before the launch of its iPad tablet, Apple reportedly tried to get programmers to lower their pricing for TV episodes to 99 cents a piece, but was unable to get any broadcast or cable networks on board. The sale of an ABC Family show for 99 cents might be the first indication that some cable programmers could adopt the lower price point for digital sales of their TV episodes.

Related content on GigaOM Pro: Benchmarking Digital Delivery (subscription required)

4 Responses to “Ooyala Tests Out Its Micropayments System”

  1. Rebecca

    The show they TESTED it on was canceled due to a dramatic decrease in viewers. I know this was only one of many factors that contributed to the ratings taking a nosedive, but one still wonders how charging young viewers for a show they can watch FREE, factored in.