NBC says local TV profoundly affected by downturn

The state of local TV advertising appears to be in trouble. And while the economy may be cited as the main reason, perhaps it is technological change that is affecting its health. National TV advertising, per Jeff Zucker, continues to perform. ""We haven't seen an advertising slowdown on a national level yet in the United States but obviously we're concerned about it, and I think if you're not concerned about it you're in denial," he added."

But the reason for the downturn may not be all an economic fault. Syndicated programming, once the mainstay for local TV, can now be accessed via the web; local news is similarly received the same way. In addition, it is now possible to customize a national ad so that a different message reaches the target audience. Segmented based on geography, age, income, family size, and any number of attributes. Cable sees this as an opportunity and has created Canoe Ventures to organize all the largest cable systems into a "national" group to then be segmented to reach a targeted audience across the cable universe.

But where does that leave the local broadcaster who is geographically limited to what it can sell. And worse, must compete with its own national network for eyeballs as not only on the network itself, but also on web sites, cable nets, and VOD. Specifically, for the local NBC broadcaster such as WNBC in New York, how can they compete for ad dollars, when its shows are also on nbc.com, hulu, and iTunes, as well as on news content cable nets like MSNBC, entertainment content on USA, Bravo, Oxygen, and others plus their respective web sites. When businesses need to target geographically to advertise, they now have the tools to cut up and target these national audiences even more effectively. No it is not just the economy that is hurting the local broadcaster, it is the industry and the technological changes that are occurring that have negatively impacted them.

PTV subscriptions to grow 64 percent in 2008

The growth of IPTV is coming at a fast rate and most interestingly, Western Europe has the most IPTV subscribers while the US brings in the most revenue. Cited as contributing to this growth are platforms like You Tube, Hulu, an the BBC iPlayer. ""The biggest change since 2007 is the rapid advent of new entrants making inroads in consumer video consumption and placing greater demands on IPTV operators to innovate," said Gartner research director Elroy Jopling....Gartner defines IPTV as a managed broadband network which delivers high picture-quality television and video content to a user's TV set via a set-top box. Content delivered over the Internet or only to a computer is not included." This seems like an odd definer these days as You Tube can be accessed via Tivo and Netflix is accessed via Roku and other devices.

Essentially, IPTV opens up new channels of content to consumers. While lowering barriers of entry enables more content to be found, it doesn't necessarily mean that more content equates to better content. Ultimately, content remains king and its perceived value to the consumer is what drives usage. Enabling easy access and gaining awareness through promotion are key tactics to build viewership and ultimately monetize the content created.

Senate to Hear Update on Switch to Digital TV

What is that you say, the switch of analog to digital is not going smoothly. So far, the test in Wilmington has finally caused some to see get concerned. In fact, word is that the Oscar telecast may want to move its award show to March from late February days after the conversion date. "The country will make the transition on Feb. 17, when TV stations will no longer broadcast analog signals. Older TVs will not be able to use the new digital signal, and a person who does not buy a new digital-ready TV or a converter box will not receive TV programs."

This conversion may be the final straw that makes television no longer "free" as consumers may feel "encouraged" to seek out a cable, satellite, or telco provider, rather than convert their set to receive over the air, digital signals. Will this conversion happen as scheduled or will it get delayed. And when it occurs, what will the true impact be and what repercussions will it have. Either way, it is sure to be a bumpy ride.

ISPs: Video Flood Will Drive Tiered Broadband Pricing

It now seems that ISP providers want to put a meter on usage. It certainly starts to make bit streams sound like a utility; your water and electric meter being read every month to determine what your bill is going to be. I still recall the days when your telephone calls were measured by minutes and you needed to be very careful, especially if calling "long distance". But wait, aren't those days over. Telephone bills are an all you can eat model, US and Canada, for one low price. Even some cell carriers allow all the calls you can make to other cell phones, and unlimited nights and weekends.

And now ISPs want to turn back that clock, from one low price for an unlimited, "always on", connection to a usage pricing plan. Is it possible to put the cat back into the bag? In this new competitive world, I say it seems unlikely. The moment your cable ISP changes pricing plans is the moment the consumer takes a serious look at their telco competitor. The provider that keeps their pricing low will see a competitive edge, especially in this current economic state. While they have made the internet connection as important to a household as water and gas, consumers will be proactive to switch providers when pricing plans change. The solution is more efficient technology solutions, not caps or pricing penalties. This issue may just be the turning point in this competitive race.

Netflix announces deals with CBS and Disney

Netflix continues to cast a wider net. Realizing that DVDs alone does not a business make, Netflix is working hard to expand its brand in online content. Its deal with CBS and Disney allows consumers to get it's content delivered to their PCs. The advantage of the Netflix subscription is that this content is made available without commercials. So you can put up with ads on Hulu or watch without ads on Netflix. Both new and older series will be featured. There is definitely something appealing about a subscription service that enables the user to get content without advertising; but one must wonder how long that can last. It certainly makes the existing Netflix subscription more valued, but is it a stop-gap to subscriber erosion, or will it lead to fee increases to pay for these new content deals. I suspect that advertising-free content will be short term as the need to monetize becomes too great. Still I like the approach and think it will do well for Netflix.

Sirius XM Is in a Serious Bind

Sirius XM stock is hovering below $1 and their growth prognosis is limited; so why did it take so long for the FCC to approve the Sirius XM merger. Clearly the time it took has hurt their ability to be competitive in a quickly changing world. Perhaps the shareholders should sue the FCC for this delay because surely it has hurt them. The push toward HD radio, itunes, and even internet radio makes it hard to build and maintain a subscription radio model.

How compelling is Howard Stern, Martha Stewart, and now Chris "Mad Dog" Russo to the equation. In the past, I've argued that content is king; at the same time, the content has to be regarded as differentiated and valuable. With these personalities and other "exclusive" sports programming, Sirius XM should be fine. Still it would have been nice to have approved this merger a year ago so they could compete effectively.

DVDs Account For 81% of Video Spending

So DVD sales still represents a solid majority of sales verse the internet. It breaks down like this, "41% of the amount consumers pay for movies and video is spent on DVD movie purchases; 11% for purchases of TV programs on DVD; 29% on DVD rentals (including from Netflix)." And of the total, only 0.5% are paid downloads. The research also says that over the last three months, most consumers watched a DVD they purchased or rented, while only 18% watched a VOD movie, and even less watched a downloaded movie.

But does this research paint an accurate picture and where are the trends? In my household, VOD movie surpasses DVD movies 9 out of 10 times. In fact, we are more likely to check out VOD titles before going back into our DVD library. And VOD usage as well as internet usage continues to increase. So where are the trends/ Is my household leading the trend or are we behind it? I believe the DVD, while a great device, is fading. While DVDs already fill a number of bookcase shelves, (and more can fit as they are smaller than their predecessor, the VHS tape), it is time to replace them with an even smaller device. Is it a flash drive or smaller. Will all my movies fit on an iPod to be connected to the TV or PC when I need a bigger screen? Try taking a portable DVD player with you on a trip and try to fit all the DVDs that you might like to watch with you.

People are still watching their DVDs, but are they purchasing them at the same rate as last year or the year before. Their DVD libraries aren't going away, but are they getting any larger. Maybe that is the real trend to watch.

No Reissuing of Digital to Analog Coupons?

Will the transition of Digital to Analog happen on February 17, 2009? Are consumers ready for the conversion or will the government need to delay the date. As a cable customer, I have done nothing. Two of my sets are on a converter box, the rest are not; we get our unscrambled signal through the wire directly into the TV set. And while we aren't getting every channel on those sets, we get enough of the ones we watch to satisfy us. And I like the remote that came with the set far more than I like the one that works with the cable box. And the one set has a Tivo to record the broadcast shows we watch.

As long as the cable company leaves well enough alone, I will remain loyal. But once they force me to put a box on every set, I will revisit my decision and may find that the impetus to switch from Comcast to Fios.

And for those poor souls with an antennae still on their roof, well let's just say that the NCTA is not making it easier or you. "The head of the National Telecommunications and Information Administration told Congress the NTIA still does not have the inclination or authority to reissue digital-TV-to-analog converter-box-subsidy coupons to households that did not or could not redeem them before the 90-day expiration date." How nice. This conversion will not be easy and the NCTA is not helping.

Best Buy To Acquire Napster

Best Buy sees the future and it is not limiting itself as an electronic retailer. Acquiring Napster allows it to diversify into web based applications. "The acquisition, set to close in the fourth quarter, includes Napster's 700,000 digital entertainment subscribers, Web-based customer-service platform and mobile capabilities." In general, consumer electronic companies have had a hard time staying in business. As electronic prices fall, it becomes harder and harder to grow sales revenue. Watch how the price of TV sets have decreased. And while new products emerge, it takes more sales to make up for lower prices. If a 40" TV cost $500 a year ago, today it costs $400. The list is long with defunct electronic stores: The Wiz, The Good Guys, Silos, Highland Appliances, Crazy Eddie, Comp USA, Lechmere, and many others.

While Napster may not be the ideal acquisition, strategically it seems right. Best Buy and others need diversification to offset equipment sales. It is about the content on those machines and Best Buy could use this acquisition to build a valuable synergy. Buy a mp3 player from Best Buy and get a unique deal from Napster. Free downloads to Best Buy customers. Build loyalty, build a separate advertising model; it could be a winning formula.

Plugging away at world with no wires

How many power cords do you own? Too many to count I bet. Chargers for the cell phone and telephone, digital camera and video camera, game boy and DS, portable dvds, ipods and the rest; old ones to old devices that are still in a basket wrapped around new ones in a tangled jumbled pile. Well it seems someone might just be listening. "Hoping to usher in a new era of communications freedom, researchers at MIT, Intel and elsewhere believe they can do for charging your cell phone or laptop what WiFi did for information delivery -- that is, get rid of those annoying wires."

Now don't get too excited, change is not coming in the next few months, but it is being discussed and I bet consumers might choose a device with a wireless power back up over a wired one. Just ask yourself, would you rather have a bluetooth headset or a wired ear plug for your cell phone? How it is done, I'll leave to the scientists; but I certainly would prefer a wireless charger to a wired one.

But the question I ask is how do you charge for power consumption. And how can you prevent unauthorized users of your power source from stealing from you. Will power consumption revenue models emulate the wiFi model? Will power be advertising supported? Change is in the air, so to speak; how it is effectively delivered and paid for remains the challenge.

YouTube vs. Everyone Else: No Contest

While online viewing is still a nascent business, trying to find a revenue model to support its growth, trends are already appearing. And over the last year, You Tube continues to increase usage, while the rest of the market is flat. Year over year, You Tube has doubled in size, and moving from 26% market share to 44%. The rest of the market "declined from 6.8 billion monthly views a year ago to 6.4 billion in July. And that includes Hulu.com, which started at nothing in March and grew to more than 100 million monthly views in four months."

To me, it seems to indicate the viewer prefers the web for shorter form content. While it may be interesting to catch up on full length episodes of shows, the web makes it easier to search for titles, but most prefer to watch these longer shows on their bigger TVs. There is still a growth market on the web and ad dollars will follow. "Google is making money from a tiny fraction of YouTube's videos, while sites like ABC.com or Hulu.com earn advertising revenue from every video streamed." Web viewing remains a fraction of total TV viewing. And over the last year, the web viewing trend remains flat.

The Future of TV Remains Bright

While the buzz remains on how to successfully converge the web and TV, the financial state of television today remains healthy. The growth of large HDTV screens, the consumer preference for a "sit-back" experience for longer content, and the social elements of families viewing together, means that the ad dollars continue to be effectively spent on TV viewing, live as well as on-demand. And as Reuters suggests, "TV advertising sales are weathering the current economic storm better than media categories like radio and publishing, and perhaps even the Internet."

The writers strike may have hurt broadcast TV today, but once they get their machines running effectively again, good content should return. In the meantime, cable TV continues to offer a diverse listing of content appealing to unique audience segments. Clip viewing may be ideal for the computer, but most viewers would rather watch a half hour or longer program on a big screen. As web shows are easily downloaded to the big screen, the viewer will only have more choice to confuse them. It will then take a great on-screen navigation device and an expert or list of recommendations to help find relevant and targeted content based on the individuals likes and dislikes.

TV uniquely brings a multimedia experience to the consumer that other media do not. "For advertisers, the big advantage that TV holds over other media is that it still allows them to reach the biggest audiences at any given moment in time. It's also familiar to advertisers, who have decades of experience with 30-second spots and vast research about audience behavior." Its no secret that newspaper and magazines have seen advertising and subscription revenue fall. "Other traditional media have not held up as well, with radio and publishing both hard hit by the downturn, continuing trends that were evident even in a healthier economy. Local advertising has been the culprit, deteriorating faster than national advertising across media, even TV."

How content reaches the TV screen, from the cable company or directly from the web, may matter to the technologists. The average viewer seeks a plug and play device that simply delivers the content to their ideal screen, simply and in a straight forward way. That convergence will also enable a more accurate measurement of usage. The content that attracts the largest audience, relevant to a target demo, will appeal to advertisers, regardless of the device they view it on. And advertisers will embrace a more targeted approach to effectively reach its core demos.

Synergies or Spin offs

What's a major corporation to do - get larger or slim down. Find vertical or horizontal collaborations and build cost efficiencies or sell or spin off assets into separate and distinct entities. And is either strategy good for the goose or for the gander; that is, does it benefit the health of the company or the shareholder. And are the two beneficiaries on the same page or at odds with one another.

That seems to be the question as more companies are choosing to shed assets or being pushed by shareholders to do so. From Time Warner to Liberty, the move is on to split. For Cablevision, investors are grabbing stock with the hope that by spinning off Rainbow, the stock price will rise. For GE, shareholders believe that NBC should be spun off as it is unrelated to its other business ventures. But maybe it is being done for another reason. As Business Week speculates, "some of the world's top media companies may just be shedding noncore or incompatible businesses to give themselves leeway to nab new assets in growing areas, such as the Web and digital television." But does that mean that distribution and content are incompatible while staying a pure content company is more strategic.

At the end of the day, it is about unlocking value and companies may see the spin off of one entity to acquire another better aligned with its future endeavors. "Time Warner's cable unit, which officially spins off later this year, could become an acquisition machine if its stock—separated from Time Warner's advertising-intensive businesses—takes off. Maybe the new company makes a bid to buy Cablevision, the New York-area cable system it has long coveted." At any rate the entertainment landscape seems to be changing rapidly.

NBC Teams Up With Google

NBC is testing letting other companies sell its advertising by enabling Google time on some of its smaller cable channels. No you can't buy an ad through Google on NBC or even on USA, but you will be able to buy through Google on MSNBC, Sci Fi, Sleuth, Chiller, and Oxygen. For Google, it is a "desire to sell ads in different places besides next to its search engine, and NBC's efforts to get access to advertisers who currently advertise online through Google but don't place any ads on TV."

How long this "test" will last, only NBC will know. Will they decide to take back this inventory once they realize that they have the ad team in place to handle TV or because of the large number of cable channels they own and the even larger number of spots needed to fill, they have more than enough supply and it represents a chance to eke out a bit more revenue. Will NBC release more supply from some of its bigger properties or not? Time will tell. Once Project Canoe is fully functioning, this partnership may not be necessary.

Google is also using data from its partnership with Dish to gain more insight into targeting the ad to the viewer. Whether the Dish sample is enough to claim reliable, statistically relevant data, I wonder, but it is what they have available at the moment. For the time being though, Google can measure what ads are working and who may be watching.

I give credit to NBC for trying new ways to bridge the gap between internet and TV. They are clearly thinking about the future of TV.

New E-Newspaper Reader Echoes Look of the Paper

Seems like there is new competition for the Amazon Kindle. Plastic Logic has come up with a similar device utilizing the same E-ink technology to create an alternative to paper. It differentiates itself from the Sony Reader and Kindle with a larger screen size. While it has not been released just yet, it demonstrates the direction newspaper and magazine reading is taking. Once the public becomes more comfortable with a different tactile experience when reading their daily paper, this type of technology might just take off.

While I applaud the larger size, what is even more important will be the flexibility of a device to fold and bend to fit into a pocket for easy mobility. " The ideal format, a flexible display that could be rolled or folded like a newspaper, is still years off, says E Ink. But it foresees color displays with moving images and interactive clickable advertising coming in only a few more years, according to Sriram K. Peruvemba, vice president for marketing for E Ink."

Wireless downloads, long battery life, perhaps even the ability to self recharge, and color pictures and fonts would make this a must have product and an ecological game changer. "The big question for newspaper companies is how much people will pay for a device and the newspaper subscription for it."

Unbox Now Amazon Video on Demand

Hulu, Netflix, and iTunes have another competitor in the digital download arena. Unbox is new and improved with a revised name that more accurately describes what it is. While some have applauded the new look, others have found the Amazon viewing experience less than enjoyable. "Amazon bridges current offerings from iTunes, Hulu, and Netflix, though it’s important to note that, like iTunes, none of its content is ad-supported. It beats iTunes on TV because it has NBC, and it beats Hulu on movies because it has far more of them. Netflix’s movie service, meanwhile, only provides streaming for PCs." We are clearly in a learning mode with rapid change of these players. The average viewer is still trying to get the hang out of VOD and DVR on their cable box, but internet viewing will surely grow extremely quickly as more players emerge and more marketing reaches the masses.

Comcast and Fancast better watch out. As a Comcast user I wonder, how many shows can I watch before I hit my limit. Competition in streaming will only get more intense and your customers will not put up with slow downloads and jerky pictures, especially if it is determined that the cause is their ISP and not the web page.

Direct TV Learns its Lesson, Re-ups With Tivo

Tivo was once the DVR for Direct TV, but ended that relationship 3 years ago to bring consumers a generic DVR device. Echostar tried to copy the Tivo software but ended up losing its case in court. And Comcast sees the opportunity to offer Tivo as a choice of DVRs to its users and is expanding its rollout.

So as the on demand and viewer controlled world continues to gain traction, Direct TV has gone back to its former partner to once again offer the Tivo DVR to its consumers. "Under the nonexclusive pact, DirecTV and TiVo will work together to develop a broadband-enabled HD DVR service, slated to launch in the second half of 2009. The product will support the latest TiVo and DirecTV features and services, including TiVo's Universal Swivel Search and TiVo KidZone."

It seems a good deal for both Direct TV and Tivo, bringing an exceptional product in front of the consumer and offering them the choice of which DVR to take for their home. But is it too little, too late? Now that the Network DVR approach that Cablevision has pushed and was recently okayed by the courts, the next iteration of the DVR. Can the box in the home simply become a dumb device while the brains and content are centralized at the server? Perhaps Tivo is already thinking about how best to convert its decentralized software approach to a N-DVR device. In the meantime, this deal wants again puts Tivo in front of more customers and that sounds like a good deal.

Will The Web Become the New Testing Ground For Pilots?

Would you rather watch an old episode of Lou Grant on Hulu or a new episode or webisode of Gemini Division? If either shows huge interest will it lead to a show on broadcast or cable TV? It seems renewed interest in Lou Grant might just lead to a remake. Heck NBC is giving us Knight Rider AGAIN. But it could also be the place to try out concepts, test characters, gain consumer insights and build interests in brand new series like Gemini Division, N, Sorority Forever, and many others.

What sounds familiar is that shows are being built around sponsors. "Over at cbs.com the product placement is the product in “Stephen King’s N.,” a 25-episode series that serves as a teaser for a new short-story collection from Mr. King. (A combined effort of CBS, Simon & Schuster and Marvel Entertainment". And Gemini Division promotes a series of ads for Microsoft’s Windows Mobile operating system. In the Golden Age of Television, those shows had sponsors, too. And they were just as blatant. It is the ad dollars that pay the bills/

So will we see these shows pop up on network TV later in the year. Quarterlife tried but failed miserable. Still a good concept, well executed, with marketing promotion around it could prove successful. Only time and money behind it will tell.

For Web TV, a Handful of Hits but No Formula for Success

So which TV shows are you watching on the web? These "webisodes", from both amateur and professionals have filled the distribution pipe with more and more choice. And with all this glut, it becomes increasingly harder to know what to watch. Certainly the writers strike limited the choices from the established TV networks, allowing viewers to seek more alternatives. The problem is that the average viewer relies on the expertise of the TV network and their promotional skills to educate and inform us of new programs. In a web world, that promotion seems to be more viral.

Most seek out known web channels - You Tube, Hulu, Nextnewnetworks, My Damn Channel, Funny or Die, and others. But as these choices continue to multiply, the possible audience continues to fragment. And that fragmentation makes it hard to aggregate viewers into a meaningful number to advertise against. In the short run, they can get meaningful hits; but in the long run, it is hard to maintain those numbers on a consistent basis. The big networks have felt that firsthand.

So what is the viewer to do. I believe it spells opportunity for the big networks to once again use the power of the TV medium to distribute on its main channels and promote its associated web channels as the place to watch more. Tying these web channels back to a bigger network can create a more segmented approach. Those we channels without a meaningful partner must either get larger to compete or will soon fade away. It may be challenging and fun to create shows without big budgets or unions to control labor costs, but once the business model is determined, this gratis programming cannot continue to function. Goodwill will work for only so long.