Tuesday, March 3, 2009

Thomson Reuters Builds A Web-Only TV Network

Why are TV broadcasters losing money? As the internet opens up distribution and lowers the barriers to enable more content to be created and disbursed, revenue growth has not kept pace. Clearly cable advertising growth has come at the expense of broadcasters, but now web shows provide an alternative to cable. Plainly, the result is that our viewing choices have gone from a few to infinite.

Where the few UHF stations once offered an alternative to the big broadcasters, today cable and web programming has truly fragmented the market. But for how long? Marketing theory indicates that eventually fragmentation must return to segmentation. Want some examples, just look at the accounting industry, the airline industry, and even with cable operators. Where once there were many, now there are few. How quickly will content distribution consolidation occur is anyone's guess. But for the health of the marketplace, given a recessionary climate where fewer advertising dollars are available, sooner may be better than later.

Not to pick on any particular genre or network, but let's look at the abundance of choices. With Thomson Reuters Web Network now competing in a business news space currently occupied by CNBC, Bloomberg, and Fox Business News. How long can that last? Looking for a movie on TV, there is ABC Family, AMC, Bravo, Disney, FMC, FX, Hallmark, Lifetime, TBS, TNT,TCM, WE, and broadcast and premium networks like HBO and Showtime, and others. And now we can access movies on the web through Amazon and Netflix. The same holds true for sports, kids, cultural, lifestyle, and every other niche. Niche networks become general interest in an attempt to capture more advertising dollars, and new niche networks arise attempting to reach the purer interest feeling abandoned as their previous network becomes too general. A network once considered the place for culture and fine arts must broaden its appeal to grow its viewership base. How many do we really need?

The problem remains, not enough advertising dollars to support these fragments. Already magazines are beginning to shutter, some newspapers are going bankrupt, others are closing. Web content may see the loss of some of these cable channels or some consolidation must occur. This fragmentation of content cannot survive. Those managing their bottom line may win out, some others will not.