Will YouTube save the old tube?

On GigaOM, Robert Young makes some bold predictions. According to his post Back to the Future… for Broadcast TV, from the disruptive forces of the Internet, the TV landscape is about to experience another tectonic shift. Just like multichannel cable drove viewers from the big networks to the cable channels, netbased on demand services will take their slice out of the multichannel viewing time. In just about five years, it is likely that most of the hundreds of channels we get today via our cable & satellite subscriptions will disappear and there will be only 10 to 20 “broadcast channels” left standing. Because niche cable networks, many of which are barely treading water now, cannot afford to lose viewers for their linear/broadcast channels.

Really? Here’s why not. Cable is not broadcast. If you look at the balance sheets of those tiny cable channels, it really depends on when they did launch. As a rule of thumb: the older the network, the higher it’s share from the subscriber fees. Which means: real viewership is important. But not that important. As ad revenues are dwarfed by the fees you get from the program packages the MSOs are selling.

And even for the MSOs, the real viewership of those channels is not the top priority. As they differentiate between reasons to subscribe (does anybody watch The Learning Channel?) and reasons to stay (the stuff people watch but would never tell theirs mothers about it).

And, not to forget: watching tv is about generation La-Z-Boy. It took about 20 years to convert network-tv viewers into multichannel zappers. So give me a good reason why they should convert completely in a snap from Seinfeld-rerun watching masses (all expenses covered) into proud decision makers, plowing through the abysses of a plethora of on demand programming, they might even have to pay for (yikes)?#

Of course, all networks, big and small, have to make their decisions on how to thrive and survive in an on demand world. What kind of rights to acquire, what kind of supplementary distribution platforms to choose.

But for smaller cable networks, the imminent threat isn’t the stuff on the Veohs, YouTubes, and the likes. The real threat ist à la carte programming. And the marketing invests which would come with it. That’s why an everything’s-on-demand-over-the-net-tv with a gazillion channels is a no go business district.
And mind that. Right now, YouTube et al mean great business – if you run Akamai or Limelight. But not, if you run a content comapny (not counting free promotion). And not even, if you run YouTube.

Via Digitaler Film

TV – all Ad-Free, A-La-Carte?

There’s a new (?) meme on the block: ad-based tv is/should be dead. The future of tv is ad-free, no-tier, and totally à la carte. Listen to Steve Rubel of Micro Persuasion fame: As the technology gets more sophisticated and the generation that grew up with the Internet , iPods and always on connections become adults, I see a day coming when a lot of TV content will a) be paid for and b) consumed ad-free. Nice try. But, guess what: a) is already here and b) is highly unlikely to happen.

The fundamental misunderstanding starts with the words as the technology gets more sophisticated. Of course, technology is crucial. But at this point, usage patterns and applied business models are more important.
a) is easy. It’s called pay per tier, and is basically the pretty successful formula which has propelled US-based cable networks from MTV to CNN to Discovery into the global top position regarding multichannel tv. The basic math behind it: a multichannel operator sells easy to understand program packages to the consumer. The programmer gets a certain portion of the subscriber fee and decides by gut and market research in what programs to invest. So why not breaking it down into selling separate pieces of content?
Let’s make a sidestep. In the Boston Globe, Alex Beam toots almost the same horn (at least, according to Steve). Remind me again: Why am I paying $50 a month for services I don’t want? Oh, that’s right. Because the cable TV monopolists say I have to.

The basic principle of a successful multichannel tv environment is simple. Networks are packaging shows into a channel. Cable operators are packaging channels into tiers. According to Beam, selling tiers is just a greedy, oversimplistic one size fits all approach. According to Rubel, selling ad space is just an annoying habit of channels inc., to be broken by the powers of technology. Vivat, à la carte.

Beam proposes. I pay to get 80 channels, about 20 of which I actually want to watch. Hey, Mr. Comcast, let’s make a deal. I’ll pay you, say, $25 a month, and you beam me the 20 stations that I want to watch. Makes a fiver for the connection and one Dollar per channel each. Sounds good, true and populistic. But, unfortunately, not feasible. Ask Mark Cuban. He did the math (trust him, not me: I’m just running my micro tv network somewhere in old Europe – he’s a selfmade billionaire). The big difference is, that in an à la carte world, the cost of reaching an audience is outrageous.

And it’s not just the price tag. Because of the cost of reaching an audience, à la carte  programming favors inherently the big, the established, the incumbents. Mark’s example is the movie market. Look at which content rises to the top in terms of revenues from consumers and visibility. The content from the biggest companies who have spent the most money to market.

OK, you might say. Unbundling tiers might not be that great an idea. But the unbundling of channels into separately sold pieces of content is a technological given. Everybody builds it. So it has to come, it’s already happening.

According to Steve, in the future – as technology progresses – you will have to pay for the best programming, even if it’s carried by ABC, NBC, Fox or CBS. These shows will be sold a-la-carte, as subscriptions or in packages and they will all be delivered over the Internet protocol. Nice try. But technology’s just one (important) piece of the puzzle.

To quote myself (sometimes, I like that): can $1.99 downloads substitute broadcast tv? Only if you’re a Hollywood producer. Or could you imagine every tv household shelling out $200 a month at least just for watching tv content (and that number’s not even based upon the real tv usage hours)? So even in a virtually broadcast-free world, we’ll have to look for ad support. Otherwise, people will have to find themselves some new (and cheap) hobbies pretty soon.

So one thing is the business model applied to usage patterns. You can’t beat free beer with almost free beer. But free beer and premium imported Pilsener can peacefully coexist. Because they’re catering to different markets.

Would you pay for a download of Jerry Springer? Nobody would. Those who watch, can’t afford. Those who could afford, don’t watch. Would you pay for a download of Desperate Housewifes – if it would have never been aired on network tv? Most likely: not. Because you would never ever heard about it (if somebody didn’t spend some gazillions on marketing). Because it would never ever had been produced (if somebody didn’t wager some gazillions on production).

Pubcasting

Time to re-learn some French. Ina, the French Institut National de l’Audiovisuel, is following the lead of the Beeb and opening up their archives. You’ll find about 10.000 hours of programming, either for free or some rather modest fees in the 1 EUR range (so the French are topping the Brits here on a massive scale).

What’s happening here is the re-definition of pubcasting. Way back, they started with black and white transmissions to funny looking wooden tv furniture. Now they’re reinventing themselves into public service content and asset players.

Still missing in this game are unfortunately the players with the deepest pockets. ARD and ZDF, the German pubcasters, prefer to sponsor digital terrestrial TV. Pubcasting on VHF and UHF? That’s the future (of 1963).

Via Gugelproductions

Is IPTV TV or … ?

Is IPTV real TV or something else? If you think, that’s a highly hypothetical question, you’re not following in the recent dealings and wheelings of Deutsche Telekom and DFL, the German Soccer League.

The dry facts. DFL sold the Pay TV and Free TV rights to the German Soccer League for a whopping 220 Million Euros per season to Arena, a subsidiary of a larger German MSO. Pay TV provider Premiere, for the last umpteenth years the single source of major league live soccer, got snubbed (and a decent rubbing on the stock market).

Meanwhile, Deutsche Telekom got an other asset from DFL. The Internet rights. So far, so good. But now it seems, DFL oversold a bit. Arena is claiming to have some IPTV rights, too – as long as they just stream their productions. And at the same time, Deutsche Telekom seems to have some plans with Premiere. Which, depending on the exegesis of the contracts, might reach pretty far. Just imagine something like an encrypted IP datastream, broadcasted via satellite to a tv settop box.
Seems like, DFL underestimated the power of the IP protocol. Obviously, DT wasn’t interested in paying 45 Million Euros for some PC based geek TV. What they’re already selling is a 49 Euro settop box for bringing IP-based VoD movies onto your tv set. The next step (coming this fall and this soccer season) is some real IPTV, based upon Microsoft’s tv foundation. Essentially, it’s a virtual overbuild (if you’re a cable MSO). Essentially, its tv++ (if you’re interested in the tv dimension of the technology). Essentially, it’s a heavyweight’s muscle play. In Europe, for defending the voice and high speed data access market. (For US carriers, it’s about securing voice and gaining on data.)

For rights holders, this means interesting times. Because new money is flooding into the market. But be aware. First thing: For the telco giants, premium content is merely a marketing expense, not a crucial business affair. A couple of years ago, the music industry saw mobile operators as the digital white knight. Until they realized something quite frightening: the EBITDA of a carrier like Vodafone equals the annual turnover of the wole global music industry. Ooops.
And as the DFL example shows: going digital means, that your traditional licensing models are going down the drain. Selling tv and online rights doesn’t make any sense anymore, if your tv has online access. We’ll have to find different ways to differentiate. Screen resolution might be a way to go here.

Via FTD Bundesliga schürt Ärger der Telekom