Friday, September 24, 2010

New Content Challenging Old Content

It must be thirty years when the cry of "I want my MTV" first began as the battle cry for consumers pushing cable TV over broadcast. The rise of cable programming has deeply affected broadcast operations and ratings. Finally, the only thing left for broadcast to do was to buy out these cable networks. Why is NBC and ABC healthy - their sister programming and cable channels.

Well nothing lasts forever and the evolution continues with the rise of non cable, online programming. Now we have an upstart going after a cable channel directly. "Vevo, the Web music-video service backed by major labels Universal, Sony and EMI, is moving onto MTV's television turf. As part of a plan to make its music-themed content as widely viewed as possible, Vevo is working to launch a regular TV network that would compete with MTV's music-video network, MTV Hits." And here is the key distribution move. "While Vevo has no deals with the cable or satellite-TV firms at this stage, it is working closely with Web-enabled TV manufacturers, set-top boxes and other devices."

As TV manufacturers are bypassing the set top box, they are incorporating web enable technology into their screens. Programming without a cable cord. Broadband access yes, cable no. Will Vevo and other succeed. The beauty of cable channels is that they discovered a two-tiered revenue stream that broadcast did not till recently. Subscription license fees and ad revenue. That capital enables expenditure in more expensive and hopefully more desirable programming. Internet programming has yet to capture a license fee model although Hulu is trying with its premium level of service. Vevo may not have high programming costs to start but as they grow, new revenue streams will be a necessity.

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