Light Reading

Cable Networks Warn of TV Everywhere Failure

Light Reading
LR Cable News Analysis
Light Reading
8/2/2010
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BALTIMORE -- The Independent Show -- Complaining that video on demand (VoD) has failed to deliver advertising revenue to programmers, executives from MTV Networks and Discovery Communications Inc. (Nasdaq: DISCA, DISCB, DISCK) warned that "TV Everywhere" Websites will fail unless networks can monetize content through ad revenue.

"The one thing we are not as satisfied with as we could be is monetization. I think the promise of VoD would be that we would be able to monetize this content and there would be a business there, but it really hasn’t evolved yet," MTV Networks senior vice president of content distribution Joey Molko said here at a panel last week. (See Major MSOs on Cusp of TV Everywhere Era .)

While Molko noted that The Nielsen Co. 's move to measure on-demand usage through its C3 ratings reports is beginning to help programmers generate revenue through VoD, but expressed concerns that networks would not be able to make much from content supplied to TV Everywhere sites such as Comcast Corp. (Nasdaq: CMCSA, CMCSK)'s Fancast Xfinity TV.

MTV Networks, which distributes popular shows ranging from Comedy Central's South Park to MTV's Jersey Shore, would be reluctant to supply content to TV Everywhere sites unless the industry can come up with an advertising platform that can scale, Molko suggested.

"The extent to which we can monetize it will really drive the extent to which we can embrace it. If we monetize it the exact same way as linear [TV], I think people will be excited about it. If it remains like VoD, I don’t think people will put a large amount of content out there," Molko said.

Discovery Communications SVP of digital media distribution Rebecca Glashow echoed that VoD has been a good product for cable operators and subscribers, but that MSOs haven’t widely deployed dynamic ad insertion platforms that could allow programmers to pay the freight on content they offer on-demand.

"There has not been enough effort into really getting dynamic ad insertion out there in a scalable way so we can all take advantage of what the advertisers find to be a very interesting place to play, and have been disappointed in [during] the last eight years that we’ve been there," Glashow said. Discovery has used VoD primarily to market programming on its linear channels, she added. (See Canoe Boots Up Interactive Ad Campaign and Comcast Gets Dynamic With VoD Ads .) [Ed. note: Canoe Ventures LLC , the cross-MSO advanced ad joint venture has been experimenting with ways to achieve scale with VoD ad-insertion.]

Additional challenges TV Everywhere sites face include finding a simple authentication solution for subscribers and ensuring that the sites are ubiquitous, and contain enough content to satisfy viewers, Malko said. Cracking down on piracy is also important, he added.

If subscribers are able to obtain pirated copies of programs such as South Park, "why would they bother with authentication?" Malko asked.

— Steve Donohue, Special to Light Reading Cable

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shygye75
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shygye75,
User Rank: Light Beer
12/5/2012 | 4:28:14 PM
re: Cable Networks Warn of TV Everywhere Failure


The flip side of "everything everywhere" is "anything anywhere" -- which means large-scale devaluation of any single asset, since there's a wide and deep pool of alternatives to choose from. (For a case study, see the music industry.) Advertising revenues -- the default setting for any shaky business model on the content side -- probably can't support all this... stuff. Wishing won't make it so.

shygye75
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shygye75,
User Rank: Light Beer
12/5/2012 | 4:28:13 PM
re: Cable Networks Warn of TV Everywhere Failure


I double-checked my post -- and didn't see anything about printing presses. But for the record, the per-unit price for a copy of The Taming of the Shrew has dropped considerably since its first edition, though sales volumes have increased by orders of magnitude.


Digital content is plentiful. Unmet or underserved demand is minuscule compared with print in the 15th century -- as well as with earlier forms of pre-digital content (records, movies, and TV shows, none of which were easily reproduced). The issue with the story in question is continued reliance on a revenue source -- advertising -- that is not growing as much as it's being stretched thin. If you know of a new business model that can be made to work, there are dozens of content providers who'd love to hear about it.

paolo.franzoi
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paolo.franzoi,
User Rank: Light Beer
12/5/2012 | 4:28:13 PM
re: Cable Networks Warn of TV Everywhere Failure


 


So what your saying is that the printing press devalued books.


 


seven


PS - If you don't get my meaning, I would argue that it has no bearing on the value of "Premium" content (Shakespeare).  What does happen is effective business models for the new distribution channel needs to occur.  The fact that the old one does not work does not imply that a new one can not be made to work.


 


 

paolo.franzoi
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paolo.franzoi,
User Rank: Light Beer
12/5/2012 | 4:28:12 PM
re: Cable Networks Warn of TV Everywhere Failure


As far as I can tell, iTunes has not really impacted the big artists at all.  I think many record labels and lesser artists have had trouble.


Which is what I have been driving at.  Your initial comment was that this devalues content.  I disagree with that strongly.  It definitely changes the value chain involved.  The problem that I have seen here, there and everywhere is that the various players are now in the process of redefining the business relationships.


Let's use the music things as an example.  A digital download costs less money to distribute than a CD.  So, for equivalent sales dollars there is actually more profit available.  BUT, now we have the ability to only download the hot single.  In the past (say the 50s), the music business was dominated by singles.  The album as the primary purchasing concept came later.  So, as an artist and value chain - do you want to publish albums or singles?  What is the best way to capture the value of the asset?  How much is live versus recorded distribution?  What is the role of the label and radio now? 


In the end, if the business model for music dies (and I would have to say based on iTunes downloads alone that this is not obvious) then people will stop making/distributing content on a large scale.  What I think is going on in the record business (and the movie business) is that value chains are shifting (from theatres to DVDs for example).  Organizations that are adept to the changes are going to do well.


Let me use my classic example here.  A very well done video game, lets say the First Dragonage game by Bioware, is a big deal.  Gaming is taking a big chunk of revenue away from traditonal media.  Ever notice that Sony has a foot in both camps?  Is that style of video entertainment the new mode?  Or is it "The Guild" (or Dr. Horrible?)?  Change from Status Quo does not mean death of an industry per se.  It means things are moving.  Now the biggest issue is that this combination of technology and content are unlikely bedfellows.


seven


 

shygye75
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shygye75,
User Rank: Light Beer
12/5/2012 | 4:28:12 PM
re: Cable Networks Warn of TV Everywhere Failure


That's nice for Apple, although digital distribution hasn't exactly done wonders for the music business. But we're off point here -- if "TV everywhere" is going to rely on ad revenues for sustainability, as Steve's story suggests, there's less to this model than meets the eye.

paolo.franzoi
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paolo.franzoi,
User Rank: Light Beer
12/5/2012 | 4:28:12 PM
re: Cable Networks Warn of TV Everywhere Failure


 


iTunes seems to work quite well...and no ads!


 


seven


 

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