[opendtv] Re: How Television Won the Internet
- From: Craig Birkmaier <craig@xxxxxxxxxxxxx>
- To: "opendtv@xxxxxxxxxxxxx" <opendtv@xxxxxxxxxxxxx>
- Date: Thu, 2 Jul 2015 11:17:19 -0400
On Jun 30, 2015, at 9:35 AM, Monty Solomon <monty@xxxxxxxxxx> wrote:
How Television Won the Internet
http://www.nytimes.com/2015/06/29/opinion/how-television-won-the-internet.html
Digital media has rediscovered a very old business model. Make your customers
pay.
Monty, thanks for providing this link.
Some interesting stuff in here that should drive Bert nuts...
Rather than becoming irrelevant, this article suggests that the TV industry is
mastering the transition to Internet distribution. Clearly there are some major
shifts happening, but in the end, the core business models are evolving in ways
that are making the industry even more profitable.
A few excerpts and comments:
Meanwhile, the television industry has been steadily weaning itself off
advertising — like an addict in recovery, starting a new life built on fees
from cable providers and all those monthly credit-card debits from consumers.
Today, half of broadcast and cable’s income is non-advertising based. And
since adult household members pay the cable bills, TV content has to be
grown-up content: “The Sopranos,” “Mad Men,” “Breaking Bad,” “The Wire,” “The
Good Wife.”
I have been harping on this reality for some time now. Viewers avoid ads when
they can. With new ad free options like Netflix et al, the ability to attract
audiences with ad filled episodic programming, especially older library
content, is in decline. Advertisers are responding by looking for more live
content for which viewers will make an appointment. While more than half of the
industry revenue now comes from sources other than ads, it is worth noting that
most of the subscriber fees we pay to the MVPDs are for ad supported networks.
Far more important for the long term, is the trend for subscribers to authorize
monthly credit card debits for TV content. This is the major reason why so many
industry pundits are looking toward Apple getting deeper into the TV game -
with more than 700 MILLION cards on file, the pump is primed.
Television, not digital media, is mastering the model of the future: Make ’em
pay. And the corollary: Make a product that they’ll pay for. BuzzFeed has
only its traffic to sell — and can only sell it once. Television shows can be
sold again and again, with streaming now a third leg to broadcast and cable,
offering a vast new market for licensing and syndication. Television is
colonizing the Internet.
The TV content owners are thriving on what Bert likes to call "competition."
You've gotta love when your "competitors" are paying billions for "last year's
model."
Clearly this author does not buy into the notion that broadcasting and cable
are dying. Rather, the third leg is adding some stability to the TV industry
business model. The industry is not just colonizing the Internet, they are
maintains a high degree of control over the colonies.
The fundamental recipe for media success, in other words, is the same as it
used to be: a premium product that people pay attention to and pay money for.
Credit cards, not eyeballs.
Perhaps this is the crux of matter - what is really happening to TV?
Free ad supported content is widely available, but not the growth vector.
People are voting with their credit cards - except Bert - and adding more paid
choices atop the MVPD services they continue to support.
Even more important, the consumer is providing real data to drive the industry
forward, and to enable new forms of monetization of content. No longer is the
TV industry dependent on "polls," aka Neilsen Ratings to estimate what people
are watching. With unicasts and IP Multicasts - yes Bert I do mean RFC 1112 -
the operator of the service knows exactly who is paying and watching, at least
to the level of the home served, if not individuals in that home.
As we have seen with Google search, this will lead to new forms of data mining
and advertising.
Clearly the trend is towards more paid content without ads, not more ads in
free content.
Regards
Craig
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