The TV Business Keeps Getting Stronger !
Jan 14th 2012 7:53PM
Back in my broadcast.com days we had a saying that “bits are bits”. That once content becomes digital, it is naturally going to become available on any and all digital devices. Based on this, we always made the point to be platform and device agnostic. We didn’t care where or how people saw our content, as long as they saw it and we had the chance to monetize it.
We also knew that our core value proposition to consumers was that on broadcast.com they were able to get content that they couldn’t get on TV. We had Yoga channels, we had cricket live and on demand, we had sports , music, movies, tv, comedy and anything else you could think of available. We had a policy that we never tried to create hits. That we were always going to go wide and create a reason for people to start watching video online. 17 years later. Yep, its been 17 years since we started Broadcast.com (as audionet.com first), Youtube and others are still doing the exact same thing.
Good for them ! Except they are making one huge fundamental mistake, they are trying to create hits. They don’t like the idea that beyond a steady stream of 1 hit wonders they haven’t been able to create a sustainable roadmap to content success. In other words, they have no idea how to drive an audience to specific content. Their hits come out of nowhere. (Im excluding music since that has become the domain of VEVO).
TV doesn’t have that problem. TV has a fundamentally different problem. But before we go there, lets talk about the big lie that the internet video folks like to tell in order to pump their products.
The Big Lie = Online video views is the same as number of TV viewers.
1mm views of an online video is not the same as 1mm viewers of a tv show. Nope. Not true. First, we all know that an online view is not a unique viewer. But lets get beyond that. When you look at USA Today and see number of viewers of a tv show, that is the AVERAGE NUMBER OF VIEWERS that watch the show. So when it says that SharkTank on ABC had 4mm viewers for a showing on Friday night (btw, SharkTank returns Jan 20th at 8pm EST !). That means on average 4mm people were watching. If you were to look at the total number of households for that showing, it would probably be 8mm or more. In addition, we all know that by definition a household has a minimum of 1 viewer, but it can be higher, so if you want to compare apples to apples with an online video , the starting point has to be Households that watched multiplied by the average number of viewers per household .
But wait , there is more ! The views of a video on Youtube includes all the showings over an extended period of time. The ratings for SharkTank or any tv show all happened during the 1 hour the show was on the air. Which is exactly why TV is still a much more valuable advertising medium. Would you rather have your ad seen by the audience all within one hour, or over some unknown extended period ? Who knows how long it will take for your online video to reach 8mm unique viewers ? It will certainly be more than 1 hour. That is an advantage that TV has and will not lose for the forseeable future. No matter what happens with wired TVs or mobile devices TV gives you an audience right now. (And yes we could take this further by including DVR usage as well)
So lets get back to traditional TV. Big media is not as stupid as they used to be. Nor are they as stupid as the internet video proponents want them to be. At CES this past week it was popular to hear about the explosion of online content and how people were going to be watching it on TV now that the new TVs have internet connectivity to all the great providers from Boxee, Netflix, Amazon , etc. These content distribution companies are not competitors to TV as a lot of folks would like you to believe, they are CUSTOMERS of TV show producers. They don’t hurt the TV business, they have made the TV business far, far more profitable. In fact, the competition between all the companies that want to provide content over the internet to your wired tv is driving up the price for content produced for TV.
The Challenge that TV has is not in driving an audience that is bigger than an internet source. That is easy. The challenge is in creating hits that are big enough to maximize revenue and return for that show and to create a promotional platform for other shows.
Now some internet video proponents like to tell you that the audience for broadcast tv is declining significantly with the exception of sports and special live programming, in particular the NFL. They are right. Numbers are down. But what they don’t also tell you is that the financial model has changed. All broadcast networks are owned by big conglomerates, or have same ownership as a big conglomerate. Because of this, single shows are no longer make or break. Shows are geared towards specific outlets. So you will see shows on USA Network that in the past might have been on NBC. The result is that viewing for cable networks has skyrocketed and the amount of traditional tv watched has continued to increase.
In addition those over the air broadcast networks are now also getting retransmission fees. That second source of revenue will change how they make programming decisions.
But wait there is more ! It used to be that only movie companies got output deals. An output deal is when a TV network pays a percentage of theatrical revenue for the license to show a movie. Today, TV shows are getting output deals and generating lots of revenue across all the different platforms that show TV shows. Its not just syndication,but those online distributors want to make sure they get the best shows and they are committing up front to buy those shows. An output deal. Found money.
The TV business isn’t dead. It really isn’t even morphing. Sure people will watch video online. They will watch it on phones. They will download it. But the videos that online distributors pay the most for will be those that have done the best on traditional TV. Which in turn means more money for the production of shows.
Think of it like an SAT question. Online video is to TV today like DVDs were to Movies in the past. A great revenue source that correlated to the movie’s boxoffice.
Bottom line is that the better the TV business does, the better Hulu and Netflix will do because their primary content will be in greater demand
That’s not to say the TV business is not going to have challenges. It will. It will become addicted to the money it gets from online sources and when some of these sources and the competition between them dry up, they will be caught not being able to reduce their costs. Expect it.
But the online TV content providers have it worse. Yes, there is a business in delivering content via TVs. It will seem very cool that when you hit a button on your remote a list of distributors like Amazon, Hulu , Netflix and others will pop up for you to watch. Some folks will make good money with it. But it still won’t be the competitor to TV that everyone predicts. Why ? Because just like no one took the time to change the blinking 12:00 on their VCRs back in the day, having to hit the internet button on the remote, or even worse, the input button on the remote will not be the path of least resistance for watching tv. Believe it or not, it will be far too much hassle for most people when compared to just turning on and watching TV the old fashioned way. And on top of that, distributors like Dish, Directv, Charter, Comcast, etc are working hard to improve their guide experiences which will be faster and easier than their online counterparts.
And last but not least, MOCA, DLNA and good old fashioned wi fi is always going to be a hassle. No one has perfect wi fi at their apartment or house. It always screws up. That may be acceptable to a price sensitive market. But when people want to see Tebow Tebow, buffering just wont cut it.
And let me be the first to describe how Twitter will negatively impact online delivered live TV . Compare the latency of twitter to your phone or Ipad or even TV to the latency of online video over the net to your house, through your house and to your TV. The latency of the video because of all the buffering that is done to reduce interruption of the video will mean that your video feed is behind what you are getting on twitter. Not a problem for ondemand,but not good for communal experiences. So if you all want to watch SharkTank and tweet and FB about it with your friends, its only going to work when you watch on a regular tv feed.
Thats the way I see. Let me know what you think
36 Comments »
I think the CEO of Blockbuster wrote a similar letter about Netflix….
Comment by eastsidescott — January 14, 2012 @ 9:41 pm
Sounds like the wishful thinking of someone who has a lot to lose and not much to gain by the inevitable transition… couldn’t find your blog post on CD’s and the music business
From MC> if you even think they are comparable you have zero clue
Comment by happytvguy — January 14, 2012 @ 10:10 pm
So, in other words, by sites like Hulu, Netflix etc payin top dollar for content they are putting themselves out of business? If they pay a premium for premium content then won’t they out punt thei coverage?
From MC> Not putting themselves out business. THey have a good business, but its complementary to traditional TV and they will be the first to tell you. Actually, the better TV does, the better Netflix and Hulu do
One fairly large difference in what we do as opposed to TV, is that we are only talking about the ads and their views. We are not talking about content having a rating and then parsing out your ad amongst the 4 commercial pod, as in TV.
It’s a big difference; especially when an advertiser can just pay when a consumer physically engages with your ad.
~J. Krebs, CMO, TremorFrom MC> thats a fair point, but it also means that you have to serve the video in far more content in order to fulfill. Hence the networks. And because the video ad is typically served in a tabbed browser, its far from unusual to jump to another tab while the ad, which the advertiser pays for runs but is not seen. Or the ad is an autoload and runs but the consumer has no interest. Its just as annoying as a horrible tv ad. And of course TV ad buyers are pushing for more discrete data and slowly but surely they are getting it. Particularly with sec by sec data from set top boxes. Still the same issue if you walk away from the TV, but its comparable data.
Fortunately for online video, not all buyers have figured it out, but its getting there. But that doesnt defeat the premise that the TV Business is only getting stronger and if online video ads sell more, there is a very, very good chance that those ads are being sold in a traditional TV show or movieComment by jasonkrebs — January 14, 2012 @ 10:18 pm
Interesting analogy, eastsidescott. I suppose the difference is each view on netflix is basically a rental, so the income stream for netflix is fine since netflix can keep adding content even as older content keeps getting re-rented.
One area where I think Network and first run TV is getting a big fail is the relentless pressure for ratings without forecasting how well a show might do in syndication reruns. Shows like Seinfeld and Everybody Loves Raymond were almost cancelled after their first season, yet both are still big hits in syndication reruns and have probably generated over a billion dollars in ad revenue.
Why did the actors from Everybody Love Raymond have their new shows after ELR get prematurely axed? Till Death Do Us Part (starring Brad Garret) lasted four seasons, and then was axed? Really? How insane is that. Syndication deals can hit it big once a show lasts 5 or 6 seasons, or even longer. So to kill a show after four seasons seems ludicrous to me when main cast member (Brad Garret) is seen everyday by millions of americans on Everbody Loves Raymond syndication reruns.
I believe Men of a Certain Age (starring Ray Romano, Emmy winning Andre Braugher and Scott Bakula) also has huge syndication viewing potential, but it was canceled after its second season. Once again, a huge syndication mistake. Five or Six seasons of MOACA would have made a perpetual mint in syndication, but because the show had no gunplay or overly dramatic trailers, TNT dropped the show simply because for first run television on their own channel it could not bring high enough ratings.
You’d think TNT would have aligned with another channel like TVLAND and let the first two seasons of MOACA generate significant enough revenue to help pay for the next season of MOACA. TVLAND has no problem repeating a show over and over, and a show like MOACA plays well even with repeated viewings.
So the pressure to deliver an immediate hit is hurting the potential of some shows that would do better in syndication. For an industry that is used to measuring everything, it sure seems like first run television places much more value on a shows ratings the first time out of the gate rather than how a show may do in syndication, where the real money is made.
Yeah… great blog but this one is missing the point. Nielson rating’s glorified guess vs Google Analytics? Really man? And noting about the Net’s ability to provide an infinite long tail?
I have no idea what you mean by unique views…. all stats define new vs. returning. You have GA….
Winds are changing…..accept it or don’t.
From MC> You should at least keep up with the technology. Rentrak, Kantar and others use digital set top box data. So you know the sec by sec numbers for each set top box. You can run analytics on it anytime, any way.
But you would only know that if you paid attentionComment by skookie000 — January 14, 2012 @ 10:48 pm
skookie, M.C. did mention the net’s ability to provide an infinite long tail, but that that doesn’t necessarily help with upfront production costs.
There are a lot of shenanigans that go on with internet viewing stats. I’m not convinced that returning visitors vs new are clearly defined, especially when users get bumped off and are forced to re-sign in every few hours, plus obnoxious internet ads that lie. Most internet ads lie, and people hate that.
I have yet to click on an ad that promised something for free, that then did not demand I do something interactive before I got the free thing. Ef you, you lying internet advertisers.
“working hard to improve their guide experiences which will be faster and easier than their online counterparts”
I have never seen a guide that was faster, easier or nicer to look at than Hulu or Netflix interfaces in a set top box. I have little faith in this statement.
Comment by chasefarmer — January 15, 2012 @ 12:12 am
What’s your take on Netflix getting into the business of delivering original content, i.e. House of Cards and the revival of Arrested Development? From what I understand, they won’t be paying for the production, only licensing it, nor will they be spending anything to market it. How much of a game changer do you think this might be?
Comment by anigodda — January 15, 2012 @ 12:36 am
[...] Mark Cuban explains to all the kids on the internet why the TV business isn’t in as much trouble as we think: These content distribution companies are not competitors to TV as a lot of folks would like you to believe, they are CUSTOMERS of TV show producers. They don’t hurt the TV business, they have made the TV business far, far more profitable. In fact, the competition between all the companies that want to provide content over the internet to your wired tv is driving up the price for content produced for TV. [...]
Pingback by TV Isn’t In Trouble — January 15, 2012 @ 12:45 am
I don’t really want to, but I do agree with this article/blog. A lot of people I know that own a lot of new smart phones can’t bet bothered even finding out a tenth of what they can do. They really just want to press one button and be entertained. Until an EASIER form of tv entertainment comes along, traditional broadcasting will carry on business as usual.
Comment by jasontoheal — January 15, 2012 @ 12:45 am
This business about the value of the “infinite long tail” as it relates to TV is somewhat optimistic, IMO.
The fact is that to produce the kinds of television shows that most people watch, you have to have network kind of money. YouTube sensations will always be just that. But Soldja Boy isn’t going to be competing with Axe Men anytime soon.
That said, I don’t think the two are mutually exclusive, or really the same form of entertainment for that matter. No more than home videos are comparable to blockbuster movies.
People will always pay a premium for premium tv and movie content. Not so with music or writing, where artists can pretty easily self-produce and distribute. Of course people want stuff for free, but just because a television show can be viewed digitally does not mean the markets will allow them to be given away.
Comment by dkrich — January 15, 2012 @ 1:54 am
sounds like a legitimate analysis. time will tell. But why are also intrigued by a startup like makerstudios? it seems like you would be more bearish on a firm like theirs considering what you’ve written here.
Comment by newmediarules — January 15, 2012 @ 7:59 am
The “Live Stream” of TV Channels has always been an interesting piece of comparing Cable with Cloud Libraries and I certainly can respect Mark’s view on this. But to say that the button on the remote will not be used just like the time on a VCR I hope is dead wrong, but he may be right in some aspects in between the lines of his point.
Many people don’t wait until exactly 7PM to watch their show, they DVR it and ironically “buffer it” so they can go to the bathroom, answer the phone AND skip commercials. The captive uninterrupted live stream audience is a myth outside of maybe a sport or big news events. In most other cases, the live stream channel flipper is just flipping for entertainment mostly without a destination goal. That said, most will watch content they really like on Cable within a 48 hour window of when it was broadcasted. Price and generational culture shifts are creating a tipping point, the user experience is evolving. Maybe one day in the near future I can “flip channels” like live.twit.tv, Revision3, YouTube Leanback and Hulu right next to CBS and NBS; merging and blurring the experience into truly one natural channel lineup set so we don’t need to change our brainwashed behavior.
Comment by manielse — January 15, 2012 @ 10:54 am
I don’t understand all of this rating stuff and most Americans don’t and most of the people that read your blog don’t need to understand it ether you might. Ratings are all about wealthy people trying to figure out how to get their hands on more of your money.
But your right about most Americans, I can only turn my television on and change the channel if anything else is required I get my son. I have never even seen hulu nor do I know how or even care to know how to watch it. When Netfix was mechanical meaning you would received a disc in the mail I subscribed for a while but we got tired of watching moves. Even if I bought a television that could hook up to the Wi Fi I probably wouldn’t or couldn’t hook it up. The other night I went to bed before my wife and when she came to bed the TV was still on. I ask her why she left the TV on and her reply was I don’t know how to turn it off.
We pay way too much for entertainment when Comcast can buy control of GE and pay cash Americans need to wake up duh! that was our money they used and then they change their name to Xfinity why so we forget that Comcast spent our money to buy GE and now what do they control and how much is it going to cost us. Money for nothing! No one wants to earn it anymore they just want to take it out of your wallet.
As much as I pay of television you think I could have watched the Jazz game last night I probably could have watch a Mav’s game but oh right I live in Utah. Lol
Well I guess this isn’t what your post was about Mark so I will get out of here. I started reading your blog a while back and have enjoyed it very much it is one of the only two I read. I have a different opinion of you now then the one I had when you first bought the Mav’s I now think you are a good person. I wasn’t referring to you when I was speaking of the wealthy above that was some other people.
Comment by Rocky — January 15, 2012 @ 11:33 am
(Followup). Anything reporting to the Net will be able to stalker-track, sure. Though it wasn’t clear enough in the “1mm” paragraph if you were including those systems or referring just to broadcast/cable. Maybe explain what you mean by “TV”? Hulu can better track my viewing than Nielson can at my DTV viewing. Shouldn’t be a problem of keeping up with technology, I develop for it.
A few more thoughts since I’m close to this topic (if you don’t mind), enough that after the 2 or so years I’ve been following, this one finally force the WordPress signup process.
The NEA posted a study a year or so ago about the effect of online media vs concert attendance, and found web content (youtube…etc) helps fuel interest and people go to more concerts. If I miss an episode of my favorite show, I can watch online and keep up. Likewise if I’m on out edge of DFW and barely get DTV I can watch all of it online. I think you’re dead-on there. However the problem is cord-cutters; doing DTV internet and no cable/sat/paid TV. Is the cost in online ads and premium services [hulu , Netflix] making up for loss from cord cutters?
Here’s 4 just off of Broadcastengineering.com
http://broadcastengineering.com/news/nielsen_tv_ownership_declines_12082011/index.html
http://broadcastengineering.com/news/cord_cutting_accelerates_10202011/index.html
http://broadcastengineering.com/news/comcast_channel_bundling_drop_cable_10132011/index.htmlhttp://broadcastengineering.com/ott/cord-cutting-centris-pay-tv-08242011/index.htmlRegarding TV’s live advantage: ustream, live stream, justin.tv, google live… As was said in the comments, this is really for the younger generation. Something to watch for though.
Comment by skookie000 — January 15, 2012 @ 1:08 pm
I agree with a lot of things here including online content distribution companies not being a competitor to TV networks. But what I want to say is TV viewers have more options today than before, in how they want to view live and on-demand content, including what device to use to watch the content.
As the war lingers on in TV and Video land, traditional vs. online, or whatever, TV viewers have their own war and shortcomings with all of them. Many viewers may want to push a button to watch TV while others prefer to watch online when away from home. Still, whatever new thing comes along in video or digital device, broadcast TV will always be here.
[...] The TV Business Keeps Getting Stronger (Mark Cuban, Blog Maverick) [...]
Pingback by Recommended Reading 1/15/2012 | Transmythology.com — January 15, 2012 @ 2:29 pm
The easy way to make the guide better for cable/dish/… is to eliminate the channels I don’t get. Why should I have to scan through channels I haven’t paid for and can’t watch?
I know the answer – supposedly I’ll see what I’m missing and order those extra channels. Maybe that works for some, but not me.
Comment by Ray Charbonneau — January 15, 2012 @ 2:51 pm
As Mark Cuban suggested the views are there and the need is to monetize it via targeted ads
Behavioral Based Social Media System for the Cable TV MarketCable has long history of failing to develop 1-1 target marketing. Canoe Ventures (latest MSO venture) was touted as the Holy Grail of targeted advertising and is reportedly less than a success at this stage.
http://tech.fortune.cnn.com/2011/01/03/the-56-billion-ad-question/
Excerpt from above link on January, 2011 Fortune.com –
“Advertisers will spend $56 billion putting ads on TV this year,…The cable industry thought it would be a big opportunity too, but its efforts have fallen short. Canoe Ventures, a two-year-old project of the six biggest operators, has launched just one notable product…”http://www.businessinsider.com/jason-kilar-here-are-my-thoughts-on-hulu-and-the-future-of-tv-2011-2
Excerpt from above link on February, 2011 Business Insider
Identifies advertising market being missed by Cable TV operators
“Advertisers have weighed in heavily on the future of TV, with both their thoughts and their considerable wallets. Advertisers are increasingly expecting to present their advertising messages to just their desired audience…and not to anyone else. For over 60 years, video advertising could only be bought via a TV show’s projected audience, which served as a blunt proxy for a certain target audience. The result has been many wasted impressions and an often irrelevant experience for consumers. In the near future, advertisers will demand the ability to target their messages to people rather than targeting their messages to TV shows as proxies for people.”The obvious alternative, with the least cost to implement is an independent Cloud CRM solution designed to cross index cable subscriber households with their corresponding social network interests. The current regulatory and privacy issues experienced by cable TV operators gathering unauthorized data from set-top boxes could be minimized, by validating subscriber and even eliminated by essentially having an opt-in plan (provided conveniently by the social media). Access along with profile and interests of households would be controlled by the subscriber’s social media platform of choice. Facebook has high consumer acceptance and could be used for household profiles, product interests, social interests, and viewing entertainment interests. There would be incentives to the subscribers to opt-in including notification and reminder of viewing favorites, Groupon type ads, and specific ads matching interests with infomercial type group discounts and urgency to buy.
The current design of target marketing advertising ventures is fundamentally flawed. They focus on demographics, and fail to identify the individual behavioral current and future household interests.
I would propose using a data cross indexing similar to a data warehouse project I was involved with at iN Demand. http://www.indemand.com/ .
Project would involve developing a bidirectional Cloud interface program using a CRM application between the social media and MSO subscriber records and communicating behavioral marketing – business advertising, discounts, specific videos/groups, family albums – providing subscriber awareness of TV programming — movies, products, etc. similar to Amazon and Groupon. This would make subscriber stickier and substantially reduce turnover.
To paraphrase a comment I made in the CED 1999 publication about the Internet, cable TV operators need to become the new best friends with the 600 million members of social media.
Read more: http://blogmaverick.com/2012/01/14/the-tv-business-keeps-getting-stronger/#ixzz1jYmM79Jk
Time shifted programming will allow targeted ads – reason for facebook having IPO value of $100 billion or $100 per friend and Google 100% ad supported – search analytics and connecting houshold behavioal data is being done – TV is late to party – other thoughts
Cable TV has a flawed “Field of Dreams” business model built on arrogance. Cable MSOs have had no incentive to control content costs, since many receive dual direct revenue benefits from selling and collecting content costs. De facto ala carte will happen due to the subscribers’ extreme dislike of cable. Apple advocates understand the strategy of paying more for their devices and getting specific aps (e.g. music). Google advocates understand the benefits of targeted ads covering the cost of content. Amazon advocates understand the value of tracking interests and economically facilitating products of interest. Siri-powered voice activation via the Cloud will circumvent the obsolete cable set top box. The use of behavioral marketing and targeted ads will help offset the content costs which will no longer be passed on with impunity. The alternatives have a great chance of succeeding; since they are supported by extremely well financed,creative zealots.Cable MSOs have had no incentive to control content costs, since many receive dual direct revenue benefits from selling and collecting content costs. De facto ala carte will happen due to the subscribers’ extreme dislike of cable. Apple advocates understand the strategy of paying more for their devices and getting specific aps (e.g. music). Google advocates understand the benefits of targeted ads covering the cost of content. Amazon advocates understand the value of tracking interests and economically facilitating products of interest. Siri-powered voice activation via the Cloud will circumvent the obsolete cable set top box. The use of behavioral marketing and targeted ads will help offset the content costs which will no longer be passed on with impunity. The alternatives have a great chance of succeeding; since they are supported by extremely well financed,creative zealots.
Cable TV has always been able to raise subscriber rates with impunity (Craig Moffett term). For that reason they have adopted a flawed revenue model that has reached the tipping point. Not only is the poverty level a problem, there are over 60% of the Gen Y’s at risk.To quote Pogo, we have met the enemy and he is us. Netflix has more subscribers than Comcast; and satellite has 30% of the market, for a reason. Subscribers are creating a de facto ala carte. Unfortunately as long as cable owns the content and sells it, as well, there appears no way to circumvent the continued rate increases to their suicidal final demise. But there are some ways for cable to survive .Cable has to eliminate its “Field of Dreams” mentality. Cable can become a positive influencer by changing their revenue model. Internet has proven there are targeted ad models that work. Cable must incorporate a targeted ad strategy along with reducing subscription rates to absorb future content increases. The hybrid model would be based on social media interests and preferences, starting with direct ads on all time shifted programming. Groupon like infomercials, with word of mouth on steroids, group buying, and urgency to buy. Amazon like preferences and alerts. Cable is currently using data from demographics and set-top boxes, a flawed strategy, with privacy issues. They could be using analytics from behavioral marketing data.
Not sure they are interested in constructive suggestions?Read more: http://blogmaverick.com/2012/01/14/the-tv-business-keeps-getting-stronger/#ixzz1jYn02Rb7
Interesting insights about the fundamental differences in how we interpret viewership metrics: the average vs total uniques, the # of people per household, and the number of viewers in the next hour, vs spread out over forever.
Personally, I have shifted all of my TV consumption to (a) league pass for the Mavs & Rangers, and (b) watching full TV series through Netflix, either streaming or DVD.
TV Shows – I’m curious, if I watch 4 seasons of MadMen on Netflix streaming, how does the revenue to AMC & LionsGate compare with their revenue were I to have watched it live over those 4 years?
League Pass – I’m also curious, if I subscribe to NBA league pass to watch the Mavs, how much do the sports teams receive, compared with what you’d have gotten if I got cable TV and watched the commercials?
Comment by mikedorsey — January 15, 2012 @ 8:47 pm
[...] Source: http://blogmaverick.com/2012/01/14/the-tv-business-keeps-getting-stronger/ [...]
Pingback by The TV Business Keeps Getting Stronger ! ? blog maverick | Oc Hotel — January 15, 2012 @ 9:04 pm
Great points! Had to laugh here when you mentioned buffering which rarely happens here on my dsl wifi/Roku/netflix/super basic cable tv combo. Guess tired of paying for commercials and trying to budget more towards mobile needs and live entertainment. Using Samsung S2 and Sam Galaxy TAB 10.0. We recently started watching Sons of Anarchy on Netflix commercial free and moved through episodes with a quickness. To be quite frank rather spend money at the Rave imax theatre as recently did watching Mission Impossible where there was a whole lot of product placement and few adverts. It is no longer the look but the feel that is important too. IE. 15,000 watts of power going through the imax dolby surround system.
I like this post. One point however that is not exactly accurate is one you have in bold, re: the amount of time an advertiser must wait to get reach. If a big advertiser like Coke wants to purchase 10million impressions, they can reach 10million in less than a few minutes on YouTube because YT will spread the ad out to multiple channels and distribute it in whatever breakdown you want.
Also, the reason why it’s prolly a better deal for the onlive advertiser (ie more valuable) has to do with: 1. Targeting which channels they want to reach (age group, subject, locale, niche topic, etc) which they can do much better 2. A much lower CPM on YT (maybe $1 or $2 dollars per 1000 sometimes compared to $25 per 1000 on TV, 3. the ability for the audience to click and go deeper into advertisers message.
Comment by andrewbaron — January 16, 2012 @ 8:55 am
Why are we focusing on relative shares of a shrinking market? The market is shrinking! Does anyone think it was wise for the music industry to fight so hard to maintain CD sales over the last ten years?
Comment by jayhollenkamp — January 16, 2012 @ 10:32 am
From HappyTVGuy> Sounds like the wishful thinking of someone who has a lot to lose and not much to gain by the inevitable transition… couldn’t find your blog post on CD’s and the music business
From MC> if you even think they are comparable you have zero clue
It’s a business that forces you to buy more than you want to get the one thing you actually want. Somebody found a way to offer it a la carte after the pirates forced their hand and the industry caved. How is that different?
If you haven’t tried the pirated HD versions of shows that are available from myriad sources (not just torrents) you haven’t lived. There is plenty of software that will work as a personal DVR picking up all of the shows you can get from your cable company (and many you can’t) within an hour of the show’s airing. Sure it’s illegal, but the demand is there for a service like this and many people would be willing to pay a fair price for it. The problem is that the cable company is convinced that the price is in the neighborhood of $80/household/month which is insane if you’re not watching 40 hours/week.
I stopped watching live TV other than sports when I got my first Tivo in 1999 which is pretty much when I stopped watching commercials. I cut the cable in 2010 and put up an antenna for sports. Occasionally I am forced to watch a TV show because my son wants to watch the Simpsons right away. We did this last night and I was blown away by how many commercials there were and how many we saw three times in that 30 minutes and how few were not on during the football game that preceded it.
If $25-40/month is not enough for households to pay for unlimited video content which can then be distributed to content providers (TV shows, movies in the post-theater distro, and sports) based purely on ratings then there is something wrong with the system. Sports can still be subsidized by advertising in which case they want to be available to everybody to boost ratings. When I say content providers I am not talking about cable networks or traditional TV networks. I am talking about production companies. There are way too many middle men that provide next to no value as they did in the music industry.
Comment by joeplace — January 16, 2012 @ 11:58 am
newmediarules> But why are also intrigued by a startup like makerstudios? it seems like you would be more bearish on a firm like theirs considering what you’ve written here.
Are they still alive? The last news post on their site is from August, 2011
Comment by joeplace — January 16, 2012 @ 12:13 pm
joeplace, one aspect you left out of your 25 to 40 dollar equation is that unlike satellite tv, cable tv actually has brick and mortar locations, and I find that very refreshing when I have to deal with an issue.
I believe Time Warner has a pathological liar / supervisor in their colorado phone center (last time I spoke to the liar was late September of 2011). Fortunately for me, my local cable company is less than 10 minutes away.
I go directly to the cable company now if I have a problem, it’s actually faster and much more efficient for when an infrequent problem does occur.
I wonder if cable tv will will ever be able to provide a customizable channel. They seem to be getting closer with their pretty decent entertainment on demand services.
One thing TV “services” are wont to forget (for folks like us) is that TV isn’t all about movies and drama and long-running sports events (all of which may be recorded for replay later). We spend a good deal of time at the TV for *current events*—local and national news. Cable and satellite services do no better than antenna, and beyond what’s available via antenna, cable and satellite and internet services offer precious little that is not burdened by innordinate commercial baggage.
alexlogic – What do you need a local office for? There should not be any special hardware other than a TV and possibly some kind of generic network box (basically a simple computer). We don’t have local offices for music so why should we have one for television content? Manage the network that brings content into our house like a phone/utility company and that is all we need.
Comment by joeplace — January 16, 2012 @ 1:53 pm
joeplace, phone/utility companies that are located nearby and have a shingle one can visit tend to be more customer service oriented than companies that are just online only or located far away. (the exception being banks???)
I just saw an E-surance commercial on television, it’s really well done. But can they stay in business with no local presence anywhere? Seems to me like they are headed for severe cases of insurance fraud at some point.
Joeplace, alternative answer for you. First the U.S. was manufacturing based, then that was phased out to some degree and replaced with service oriented jobs. Now the younger crowd wants service oriented jobs phased out.
What’s left?
I had cable TV in some form for 25 years. I have visited a cable office twice. Once was to swap a bad box and the other was to return their box when I cut the cable two years ago. Neither visit would have been required if I had to have their horrible hardware on my end which adds no value as a customer. I would prefer to just deal with their service via the mail. Offices like that are empty or are just a place for people without checking accounts to pay their bills with cash – entirely unnecessary and overly expensive in this day and age as there are other business that can perform and charge for this service on an ad hoc basis.
Comment by joeplace — January 16, 2012 @ 2:24 pm
And you think that if there was no local office that your service would have been just as spectacular as it must have been since you had no reason to visit?
TV is a great reach medium and will always remain that as long as Americans spend 4-6 hours a day actively/passively watching TV. Due to the fragmented nature of the web, there will never be another way to reach 10MM people watching American Idol at the same time online – people simply have too much choice.
However, the argument that TV is thriving because they’re making additional money from online now is flawed: the studio part of the TV businesses is certainly generating more revenue and is thus able to replace some of the syndication $ that are no more. The network businesses are starting to suffer because there are more choices for buyers (e.g. online, mobile, connected TV et al.) that offer better tracking, lower rates and more credible data (digital set top boxes aren’t everywhere). Ultimately mass marketers will use network, cable and digital to reach their audiences but the fragmentation will lead to most non-mass-market advertisers to buy more online; that’s not necessarily Mcdonalds or P&G but thousands of other advertisers – plus the people who cannot afford TV of course.
Comment by christianbusch — January 16, 2012 @ 4:10 pm
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TV is a great reach medium and will always remain so as long as Americans spend 4-6 hours a day actively/passively watching TV. Due to the fragmented nature of the web, there will never be another way to reach 10MM people watching American Idol at the same time online – people simply have too much choice.
However, the argument that TV is thriving because they’re making additional money from online now is flawed: the studio part of the TV businesses is certainly generating more revenue and is thus able to replace some of the syndication $ that are no more. The network businesses are starting to suffer because there are more choices for buyers (e.g. online, mobile, connected TV et al.) that offer better tracking, lower rates and more credible data (digital set top boxes aren’t everywhere). Ultimately mass marketers will use network, cable and digital to reach their audiences but the fragmentation will lead to most non-mass-market advertisers to buy more online; that’s not necessarily Mcdonalds or P&G but thousands of other advertisers – plus the people who cannot afford TV of course.
Wow that was fast. I saw 
f the same targeting infrastructure, buying platforms, data processing and metrics, and consumer data collectors can just as easily enhance audience targeting in television as they do the Internet. Television, in short, is no longer an “idiot box.” The rapid adoption of connected devices like Xbox, Roku and Boxee, combine with on-demand viewing services like Netflix, Amazon and Hulu to form what Morgan calls “virtual MSOs.”
When Matthew Weiner, creator of Mad Men, finished the script for the pilot episode, he said it was the best thing he’d written – a big boast, considering his record on The Sopranos. But as soon as Weiner’s seductive portrait of the 1960s ad world aired, it enthralled audiences. 
