A TV is a TV is a TV, and web video shouldn't be viewed on your TV set. As companies like Boxee, Apple, and others are building devices to connect web video content to your TV screen, NBC is pushing back. For one simple reason, money. Too much of it, spent by cable, telco, and satellite distributors to NBC for placement on cable lineups. And that revenue stream is in addition to the advertising dollars for placement on their shows that NBC receives. The web hasn't built a subscription model to offset the one they have built with cable.
A direct connection of Hulu to the TV means that USA programming like Monk can be watched by viewers without buying a cable subscription. The bottom line, "NBC and Fox only get paid when you watch the TV shows on TV or cable, which gets them Nielsen ratings and subscriber fees. Internet revenues from the likes of Hulu are puny. So they can't afford to lose viewers to Web video shows on TV when they need them to be watching TV shows on TV."
But does a consumer really need Boxee to watch Hulu on their big screen TV. The answer is no. Savvy viewers are already connecting their TV screen to their PC and treating it as a monitor. As long as NBC enables Hulu, they will not be able to stop viewers from moving web content to the TV.
One might ask, but broadcast networks are free and over the air; they don't get a subscription so why care which platform a cosumer uses to watch 30 Rock. True, but each broadcaster also owns a number of cable nets, so it does still affect their bottom line. Also, web eyeballs aren't measured with Nielsen so they are not sold the same way. And they are presented with less advertising interruptions so less advertising dollars; Hulu might have some advertising, but it can't provide the same return as the linear network. Web videos are most valuable as promotional vehicles bringing new viewers to taste shows and hopefully move over to the TV to watch more. By themselves, they provide much less revenue to the bottom line.
So the NBC - Boxee feud may simply be about slowing down the inevitable. Companies are already coming up with more ways to easily access internet video content on TV. It is a slippery slope for NBC and Hulu and the subscription model they are trying to protect.
Wednesday, March 18, 2009
Building the Road to Broadband Video Profitability
Last night's Broadband Video Leadership panel brought big networks, big distributor, and big advertiser together to assure us that big media was making money and all is right with the world. Sponsored by VideoNuze and NATPE, the evening was well attended and attentive. And the company line was well represented.
Digital is making money, more than the pennies, but still less than dollars, and for both the content distributor and content creators on the panel, additive to the bottom line. Most interesting, digital was not taking eyeballs away from TV, simply enhancing it, and profitable when packaged to advertisers as a multi-platform solution.
Nor do they see consumers switching off their cable subscription to rely primarily on broadband. "Today cable, satellite and telco TV providers pay an estimated $22 billion per year in programming fees, Karin Gilford noted. 'It's pretty hard to imagine that revenue stream going away,' she said. Asked about 'cord-cutting' -- the notion that cable customers would cancel their pay-TV service and obtain all their video content online -- Gilford said that remains a theoretical idea rather than a real trend."
Also asked was the effect of competition from Netflix, You Tube, and others on the cable business. Cable's variety and depth of content far exceeds what others might offer and user generated content will not surplant the premium content that cable serves. None of the panelists seemed concern about these video aggregators. But while they may not be taking huge bites, they may be nibbling away and shouldn't be ignored. TVs are now connecting directly to the web, bypassing the settop box to access online content.
The most interesting comment was about search. Currently, You Tube appears to be the choice for the initial search for video content. And cable has done little to provide an application that easily searches for video programs, movies, VOD, or clips through its platform. It seems that search, navigation, and recommendation may be the ultimate decider for the consumer on which platform, broadband or cable, best serves a viewer's need. Missed a Daily Show, click a button watch a clip, click another button, watch the full show, click another button, watch a preview of the guest's clip that they are hyping. Will Fancast be the site that does that first, will Hulu, will Facebook, or someone else? Search, navigation, recommendation seem to be the drivers that will shape who wins the race.
Digital is making money, more than the pennies, but still less than dollars, and for both the content distributor and content creators on the panel, additive to the bottom line. Most interesting, digital was not taking eyeballs away from TV, simply enhancing it, and profitable when packaged to advertisers as a multi-platform solution.
Nor do they see consumers switching off their cable subscription to rely primarily on broadband. "Today cable, satellite and telco TV providers pay an estimated $22 billion per year in programming fees, Karin Gilford noted. 'It's pretty hard to imagine that revenue stream going away,' she said. Asked about 'cord-cutting' -- the notion that cable customers would cancel their pay-TV service and obtain all their video content online -- Gilford said that remains a theoretical idea rather than a real trend."
Also asked was the effect of competition from Netflix, You Tube, and others on the cable business. Cable's variety and depth of content far exceeds what others might offer and user generated content will not surplant the premium content that cable serves. None of the panelists seemed concern about these video aggregators. But while they may not be taking huge bites, they may be nibbling away and shouldn't be ignored. TVs are now connecting directly to the web, bypassing the settop box to access online content.
The most interesting comment was about search. Currently, You Tube appears to be the choice for the initial search for video content. And cable has done little to provide an application that easily searches for video programs, movies, VOD, or clips through its platform. It seems that search, navigation, and recommendation may be the ultimate decider for the consumer on which platform, broadband or cable, best serves a viewer's need. Missed a Daily Show, click a button watch a clip, click another button, watch the full show, click another button, watch a preview of the guest's clip that they are hyping. Will Fancast be the site that does that first, will Hulu, will Facebook, or someone else? Search, navigation, recommendation seem to be the drivers that will shape who wins the race.
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