[opendtv] Re: How Television Won the Internet
- From: Craig Birkmaier <craig@xxxxxxxxxxxxx>
- To: "opendtv@xxxxxxxxxxxxx" <opendtv@xxxxxxxxxxxxx>
- Date: Thu, 2 Jul 2015 22:24:18 -0400
Before I moved to California and went to work with the Grass Valley Group, I
interviewed for two positions; the product marketing job I accepted in Grass
Valley and a sales position in Southern California, the heart of the television
industry in 1981. The sales manager that interviewed me said the job was like
shooting fish in a barrel...
I was looking for more of a challenge.
When I start threads like this one I love to throw out some bait for Bert. It's
easier than shooting fish in a barrel.
On Jul 2, 2015, at 7:34 PM, Manfredi, Albert E <albert.e.manfredi@xxxxxxxxxx>
wrote:
Not really. The TV industry trained people, such as Craig, to pay for TV,
through years of indoctrination with their monthly MVPD fees. So now the
industry is able to carry this over to Internet distribution too. A lot of
the older generations are totally flummoxed at the thought that TV content
can actually be had only ad-supported.
The folks in Hollywood I would have been selling Grass Valley products to, have
been selling us stuff since I was born. It was all based on the ability of the
technology at any given time to support sales versus selling ads to pay for the
entertainment content.
The movie theater predates TV by decades, as does radio. The first required a
direct payment. The later was "free," and served as the promotional engine to
sell music. My parents had a Hi-Fi and bought LP albums. As a teenager I
subscribed to the RCA Record of the Month Club, buying my own music. My
grandkids will use Wi-Fi to buy subscription music from Apple or Spotify, or
Google, or...
The VCR threatened the theater and broadcast TV. Hollywood first tried to block
it, then embraced it and made more money. This story has many sequels...
The third sequel to Jurassic Park is well on its way to becoming the most
profitable movie in history.
Bert thinks we have been indoctrinated into paying for MVPD services. Some
people would say that technology enabled competition and the market embraced a
superior technology. Now Bert tells us that the Internet is providing REAL
competition, even as these new competitors are making the Hollywood content
conglomerates more profitable than EVER...
As the article I posted tells us.
However, as we know, the younger generation, reared on mostly ad-supported
Internet, is not so easily swayed. That's why OTT sites are more successful
with the younger set than are ponderous MVPD subscriptions. Even if for pay,
you're not beholden to that one large commitment.
The Internet has ads, but it would be highly inaccurate to say it is ad
supported. Consumers are paying hundred of billions to connect to the Internet.
Companies that host Internet servers are paying billions to provide services,
most of which are not ad supported, although many sites help companies market
and support their products.
The article goes to great lengths to inform us that the Internet has decimated
the advertising market. Ads are cheap and mostly ignored. It also tells us that
the AtV business is weaning itself from dependency on selling ads. The industry
prefers credit cards...
The fact remains that the vast majority of U.S. homes subscribe to both a MVPD
service AND at least one OTT service. Only a small minority still use antennas,
although almost everyone still watches the broadcast networks on occasion, via
their MVPD subscription.
And it is important to note that many Millennials don't pay for stuff they can
steal using borrowed authentication passwords.
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.
It is not surprising that linear streams, especially those which show mostly
recycled content, are in decline.
The linear consumption of episodic content is on the decline, as this and many
other articles point out. But the audience for episodic TV is growing, not
declining, as consumption shifts from linear appointment streams to VOD.
I have been making this point for quite some time now.
I haven't seen anything to show that same effect is taking place with on
demand streams, ad supported or otherwise. I think you'll see a decline in
any number of linear channel viewership, with the exception of sports, as we
have discussed many times.
As the article points out, the audience is shifting from ad supported linear
streams to ad-free VOD. The numbers speak for themselves; people are paying for
Netflix and other ad free services to view both library content and new
original programming - the higher class stuff the article discussed.
Craig puts all his emphasis on ad-supported vs ad-free. I'd like to see that
verified. This article does not.
The article is sell about the shift from ad supported to paid entertainment
Bert.
"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."
So here too, Craig changes the article to fit his long-term narrative. Let's
look at what the article is saying:
"The latest pseudo-crisis is the flight from the box - cord-cutting - but
more people than ever are consuming television, and paying for it as they
please on whatever screen. Well-produced, highly structured narrative video
entertainment is so profitable that everybody in digital media - frustrated
by tumbling ad rates and rising traffic demands - wants to be streaming
premium video (i.e., television)."
Sounds like this re-enforces my argument?
Pseudo crisis...
Everybody in digital media wants to be streaming premium video...
In case you do not understand the term Bert, "premium" video is the stuff you
pay for without ads, although the term "premium" was also used to describe the
free toys we got as kids in the boxes of cereal the TV told us to tell mom to
buy.
So, the main point the article is making is that good TV content is very
successful, packaged in any number of ways, for any number of screens. Which
is exactly the opposite of what Craig has claimed for years and years. This
is the same old TV content, but offered up in non-traditional ways. And
online ads have been shown to be much more successful than linear stream ads,
retained better by viewers, and better measured. We have seen ad completion
rates recently, for example.
What a bunch of crock.
Yes TV content has been, and will continue to be packaged in any number of
ways, and now for any number of screens. As the article told us, however, more
than half of industry revenues now come from paid sources, not the ads.
Not sure where you came up with the idea that online ads are more effective -
the article seemed to say just the opposite.
Online-media revolutionaries once figured they could eat TV’s lunch by
stealing TV’s business model — more free content, more advertising. Online
media is now drowning in free. Google and Facebook, the universal
aggregators, control the traffic stream and effectively set advertising
rates. Their phenomenal traffic growth has glutted the ad market, forcing
down rates. Digital publishers, from The Guardian to BuzzFeed, can stay ahead
only by chasing more traffic — not loyal readers, but millions of passing
eyeballs, so fleeting that advertisers naturally pay less and less for them.
The author says that the digital revolutionaries thought they could steal the
ad supported business model, but that didn't work: "online media us now
drowning in free."
"Millions of passing eyeballs, so fleeting that advertisers naturally pay less
and less for them."
Certainly does not sound like a strong endorsement for Internet advertising
effectiveness.
It's clear to me that the congloms are trying to keep viewers well
indoctrinated in the notion of paying for material that may or may not also
be ad-supported. It's also clear to me that TV content, not just sports by
any means, is still very much in demand. But it's also really clear that the
younger set are not so easily corralled as the older generations, brought up
on the monopolistic MVPD model. If this article is saying anything at all, it
is that traditional TV content is very much in demand, but delivred
differently. The last sentence: "Look around you man, it's the television
revolution!"
Said by one the heir and new leader of one of the most successful content
conglomerates in the world.
That's why Murdoch was used to set up the analysis which concludes:
The technology is changing and the television guys are winning.
Regards
Craig
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