Back in my broadcast.com days we had a saying that “bits are bits”. That once content becomes digital, it is naturally going to become available on any and all digital devices. Based on this, we always made the point to be platform and device agnostic. We didn’t care where or how people saw our content, as long as they saw it and we had the chance to monetize it.
We also knew that our core value proposition to consumers was that on broadcast.com they were able to get content that they couldn’t get on TV. We had Yoga channels, we had cricket live and on demand, we had sports , music, movies, tv, comedy and anything else you could think of available. We had a policy that we never tried to create hits. That we were always going to go wide and create a reason for people to start watching video online. 17 years later. Yep, its been 17 years since we started Broadcast.com (as audionet.com first), Youtube and others are still doing the exact same thing.
Good for them ! Except they are making one huge fundamental mistake, they are trying to create hits. They don’t like the idea that beyond a steady stream of 1 hit wonders they haven’t been able to create a sustainable roadmap to content success. In other words, they have no idea how to drive an audience to specific content. Their hits come out of nowhere. (Im excluding music since that has become the domain of VEVO).
TV doesn’t have that problem. TV has a fundamentally different problem. But before we go there, lets talk about the big lie that the internet video folks like to tell in order to pump their products.
The Big Lie = Online video views is the same as number of TV viewers.
1mm views of an online video is not the same as 1mm viewers of a tv show. Nope. Not true. First, we all know that an online view is not a unique viewer. But lets get beyond that. When you look at USA Today and see number of viewers of a tv show, that is the AVERAGE NUMBER OF VIEWERS that watch the show. So when it says that SharkTank on ABC had 4mm viewers for a showing on Friday night (btw, SharkTank returns Jan 20th at 8pm EST !). That means on average 4mm people were watching. If you were to look at the total number of households for that showing, it would probably be 8mm or more. In addition, we all know that by definition a household has a minimum of 1 viewer, but it can be higher, so if you want to compare apples to apples with an online video , the starting point has to be Households that watched multiplied by the average number of viewers per household .
But wait , there is more ! The views of a video on Youtube includes all the showings over an extended period of time. The ratings for SharkTank or any tv show all happened during the 1 hour the show was on the air. Which is exactly why TV is still a much more valuable advertising medium. Would you rather have your ad seen by the audience all within one hour, or over some unknown extended period ? Who knows how long it will take for your online video to reach 8mm unique viewers ? It will certainly be more than 1 hour. That is an advantage that TV has and will not lose for the forseeable future. No matter what happens with wired TVs or mobile devices TV gives you an audience right now. (And yes we could take this further by including DVR usage as well)
So lets get back to traditional TV. Big media is not as stupid as they used to be. Nor are they as stupid as the internet video proponents want them to be. At CES this past week it was popular to hear about the explosion of online content and how people were going to be watching it on TV now that the new TVs have internet connectivity to all the great providers from Boxee, Netflix, Amazon , etc. These content distribution companies are not competitors to TV as a lot of folks would like you to believe, they are CUSTOMERS of TV show producers. They don’t hurt the TV business, they have made the TV business far, far more profitable. In fact, the competition between all the companies that want to provide content over the internet to your wired tv is driving up the price for content produced for TV.
The Challenge that TV has is not in driving an audience that is bigger than an internet source. That is easy. The challenge is in creating hits that are big enough to maximize revenue and return for that show and to create a promotional platform for other shows.
Now some internet video proponents like to tell you that the audience for broadcast tv is declining significantly with the exception of sports and special live programming, in particular the NFL. They are right. Numbers are down. But what they don’t also tell you is that the financial model has changed. All broadcast networks are owned by big conglomerates, or have same ownership as a big conglomerate. Because of this, single shows are no longer make or break. Shows are geared towards specific outlets. So you will see shows on USA Network that in the past might have been on NBC. The result is that viewing for cable networks has skyrocketed and the amount of traditional tv watched has continued to increase.
In addition those over the air broadcast networks are now also getting retransmission fees. That second source of revenue will change how they make programming decisions.
But wait there is more ! It used to be that only movie companies got output deals. An output deal is when a TV network pays a percentage of theatrical revenue for the license to show a movie. Today, TV shows are getting output deals and generating lots of revenue across all the different platforms that show TV shows. Its not just syndication,but those online distributors want to make sure they get the best shows and they are committing up front to buy those shows. An output deal. Found money.
The TV business isn’t dead. It really isn’t even morphing. Sure people will watch video online. They will watch it on phones. They will download it. But the videos that online distributors pay the most for will be those that have done the best on traditional TV. Which in turn means more money for the production of shows.
Think of it like an SAT question. Online video is to TV today like DVDs were to Movies in the past. A great revenue source that correlated to the movie’s boxoffice.
Bottom line is that the better the TV business does, the better Hulu and Netflix will do because their primary content will be in greater demand
That’s not to say the TV business is not going to have challenges. It will. It will become addicted to the money it gets from online sources and when some of these sources and the competition between them dry up, they will be caught not being able to reduce their costs. Expect it.
But the online TV content providers have it worse. Yes, there is a business in delivering content via TVs. It will seem very cool that when you hit a button on your remote a list of distributors like Amazon, Hulu , Netflix and others will pop up for you to watch. Some folks will make good money with it. But it still won’t be the competitor to TV that everyone predicts. Why ? Because just like no one took the time to change the blinking 12:00 on their VCRs back in the day, having to hit the internet button on the remote, or even worse, the input button on the remote will not be the path of least resistance for watching tv. Believe it or not, it will be far too much hassle for most people when compared to just turning on and watching TV the old fashioned way. And on top of that, distributors like Dish, Directv, Charter, Comcast, etc are working hard to improve their guide experiences which will be faster and easier than their online counterparts.
And last but not least, MOCA, DLNA and good old fashioned wi fi is always going to be a hassle. No one has perfect wi fi at their apartment or house. It always screws up. That may be acceptable to a price sensitive market. But when people want to see Tebow Tebow, buffering just wont cut it.
And let me be the first to describe how Twitter will negatively impact online delivered live TV . Compare the latency of twitter to your phone or Ipad or even TV to the latency of online video over the net to your house, through your house and to your TV. The latency of the video because of all the buffering that is done to reduce interruption of the video will mean that your video feed is behind what you are getting on twitter. Not a problem for ondemand,but not good for communal experiences. So if you all want to watch SharkTank and tweet and FB about it with your friends, its only going to work when you watch on a regular tv feed.
Thats the way I see. Let me know what you think
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I think a lot of the “tv is dead” folks are missing here is that TV is still technology, just because you’re getting content outside of your PC doesn’t mean that it isn’t using a lot of the same “tubes” to get to you.
As Mark mentions in the post it’s all about the “path of least resistance”. When it comes to technology and disruption it’s all about the path of least resistance, people will do what is easiest. People are willing to pay vs getting something for free if it’s sufficiently easier (how far they’ll go depends on their price sensitivity).
Kicking the cable company to the curb won’t work for the vast majority of people. TV is not newspapers, and TV is not the record industry. TV still has a distribution model that is sufficiently easy enough for people to want to use. Newspapers required someone to physically print a bunch of newspapers, and then deliver them all over the city. That model does not scale very well. TV however is a very efficient distribution model. Almost everyone has the infrastructure in place to get TV to their home, and if they don’t they probably don’t have internet either.
What the internet WILL DO for TV viewers is pressure cable companies to offer better choice, including things like a la carte channel picking instead of being stuck with bundles where you only want one of the channels.
Comment by egibney -
oops, this was supposed to go with an earlier blog- the one about wifi programming vs. traditional tv.
Comment by bimbointheburbs -
so this means, there are still economies of scale to be captured. no matter what a business in this industry is, it will behoove them to vertically diversify- idk the terminology but the classic tv people who make blockbuster programs/shows will reap more benefits than tv people who buy programming (this is not an original idea of mine, i heard this). also the people who have programming that you say needs “active” participation to access (not just clicking “on”) need to own regular tv stations or programs (i know, faulty terminology). take away- don’t keep horizontally diversifying in this industry to make money. the antitrust division people do not subscribe to this blog maverick thing so go for it!
Comment by bimbointheburbs -
Hey Adam, excellent call there. it is all about the buffering. There basically is very little buffering on cable tv. Every now and then the picture will drop to 15 frames per second for a brief moment, whereas on its best day, the internet will is very happy with 15 frames per second if I am not mistaken.
Speaking of buffering, Mark, I praised you earlier for your Shark Tank performance when you schooled the sales rep by showing he did not know how to close when he was in a losing situation, but boy, you gave up all that great karma when you helped steal 200,000 from the wine inventor, plus a very modest residual.
Talk about needing a consultant, YOU occasionally need one, but you’re too rich to realize it. And your partner in crime, I think she should be fired from QVC for sullying their reputation with that stunt. Do the right thing and give him back his 200,000 PLUS a small residual.
Comment by alexlogic -
Buffering is the really the killer here — adoption will follow once fast, easy and reliable Internet delivery is available. Mass market acceptance hasn’t happened because people are relying on WiFi that is too weak, too far away, or based on a low-bandwidth solution like repeaters…or they are using a powerline solution…either way the bandwidth is too low, the latency too high and the quality is too poor for HD streaming.
Comment by adamlenio -
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without tv life would be so boring
There are so many channels to watch
Comment by murtaza kanpurwala -
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Comment by yvonnepm -
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newaustralianews, I recognized my own quote up above that you quoted. I clicked on your link but it’s just a generic link. Any chance you might have a direct link to whatever it is you wanted us to see?
Comment by alexlogic -
I just saw an E-surance commercial on television, it’s really well done. But can they stay in business with no local presence anywhere? Seems to me like they are headed for severe cases of insurance fraud at some point.http://www.newmalaysianews.com/tv-business/news
Comment by newaustralianews -
Mr Cuban, Love Shark Tank…. As an Internet Broadcaster I believe that Television will soon follow the trail of radio straight to the Internet. My company for example is an “Internet Television Network” http://www.crazybabytv.com. We are currently building our audience by operating much the same as a celestial broadcaster.
Creating original programming from indie producers who can’t crack the network broadcast wall. Celestial television quite honestly no longer has the diversity or the reach it once had. I have a full cable package with well over 100 channels and too many nights I see major network channels showing nothing but re runs day after day night after night. Where’s the new shows, new content, new anything? The internet has shattered the walls because it allows anyone to broadcast giving a much wider choice in content. And before too long that content quality will far surpasse anything on the networks. And we can do it a lot cheaper………. Food for thought. The record industry thought they would reign supreme but as you can see the Internet has crushed them. Network television is next.
Comment by mekklarmedia1 -
To clarify, I don’t mean pitching your idea on Shark Tank, although that might be an option for you as well.
Comment by alexlogic -
Hey Matt, if you watched Shark Tank the past two weeks, you might have your answer as to how to pitch Mark.
Comment by alexlogic -
Mark,
I’m a public school teacher with an educational idea that I think you, of all people, might bite at. Is there a way to present this idea to you?
Thanks!
Matt
Comment by malanreed -
Life and Technology is changing quickly. Everything will be on demand, eventually. Special Live TV will still hold a place for real time entertainment.
But people, try imagining your life without technology. Then try to imagine it without clean water. WOW, we are spoiled!!
Over 4000 children die each day due to unsafe or no water.
Together We Can Change The World
Comment by titanpowersystems -
However, Internet Advertising offers much more affordable advertising with those on a tight budget!
Comment by Finder411 -
9 OH 2, assuming that you are under the age of 40, is your response the type of “touch” the over 40 crowd will have to endure when you say the over 40’s have “lost” touch?
I’m not directly picking on you, I just can’t stand when a comment insults someone else yet the comment also tells that person to go do the work themselves to find out why they are wrong.
Since you believe you know, share some morsel of your knowledge rather than spewing what amounts to presumably unintentional slander.
Comment by alexlogic -
Mark, with all due respect I must inform you that you are losing touch if you feel that this post is even remotely accurate. I suggest you chat more with people under the age of 40 because they are about to prove you so wrong.
Comment by 9 OH 2 -
I must have multiple avenues to view content on my TV (Xbox, Apple TV, PS3) but end up turning to cable. I have been looking for an excuse to get rid of cable tv (TWC) for a year now and just can’t cut the cable (pun intended) due to the simple reason of convenience. I jailbroke my Apple TV to gain content via XBMC and the plethora of apps that can stream but due to the buffering lose my patience with it. Internet speeds just can’t handle the amount of data that is needed for HD streaming and 5.1 which most of us are used to. Most of the content that I choose to view (especially movies) and worth of my time I want to enjoy at its best form in my living room or better yet on the silver or IMAX screen.
Comment by jxp1229 -
TV usage may keep getting stronger, but cable TV is ultimately on its way out. Alternatives like Netflix and Hulu and others are just too strong. People are tired of paying big bucks for standard cable packages where they pay for dozens and dozens of useless channels they never have any interest in watching. I’m really looking forward to Apple’s coming TV offering because if they go the direction I think they’re going to go in (making traditional TV channels into “Apps” and allowing you to pay for certain bits of content that you want to) I think they might have a chance at disrupting that industry as well.
Comment by stacyshelves -
The reason a company like Hulu is successful is because it’s owned in an almost 3-way split between NBC, FOX, and Disney/ABC. That’s why they’re able to keep it profitable for offering it free on your PC or they’re Plus option at only $7.99/month(and they still show advertisements that they make money off of). If any other company tried to compete, those 3 companies could easily just charge higher licensing fees for redistribution to keep you from making a competing service.
The interesting thing about setting up an internet based streaming is being able to get a specific demographic from the information they use to set up the account. There’s also the ever growing trend of linking your account to your Facebook. BAM! They know you’re age, sex, location and interests. This creates the possibility of an internet based company to specify which advertising people see based on you the viewer, which also opens the door for revenue from local advertising. The same way Pandora has advertising for my account feeds me advertisements from local businesses in Austin, TX(because apparently it still thinks I live there). Just because I’m watching Law & Order: SVU at 3:00 in the afternoon doesn’t mean I’m a retired 70 year old looking for a life insurance policy. Those advertising dollars were wasted regardless of it being 1mm viewers or 4mm if it’s not reaching your target audience. This is the reason Facebook is snatching up advertising market share left and right from search engine ads like Google and Yahoo. Specificity is beating up on the mass numbers. No longer do advertisers have to throw mud at the wall and see what sticks.
Sure the buffering causes a slight delay, but with fiber optics reaching far and wide across the US, functional and live streaming IP-TV will be a reality here soon enough. And as far as watching “Shark Tank” or any show for that matter, speaking for myself- most of the time I would just DVR something like that or will comment on it after it’s over. Plus, I’m not going to be a jerk and post what happens on a show like “Dexter” without a spoiler alert either. Maybe something like “The Dexter season finale was insane, I don’t think I can wait 9 months for the next season to start.” The only real-time thing you have to worry about reading comments on is real-time sports. But let’s be honest Mark, we know you’ll never have to worry about you not watching the Mavs in real-time.
-Tim G.
Comment by timg265 -
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never will be as popular as online videos television. Perhaps television broadcasts over the Internet can increase the speed of the Internet, but television still has great popularity. facebook and twitter maybe in the future establish their own televisions.
estetik,estetik cerrahi
Comment by fbmestetik -
I don’t even know how I got to this blog…one minute my 5th grade daughter is scoring 28 points at her basketball game and the next minute I’m reading a blog that shoots meteoroid size holes in my business model. I guess I will have to blame it on basketball since that seems to be the common denominator.
As a former General Manager of a traditional television network and the current President of a IP (internet protocol)television network I would like to say I completely disagree…sad part is that you have some valid points that I haven’t heard anyone else mention yet.
Mr.Cuban the only fair thing to do at this point is meet me in person and tell me more. After all, you are the reason that I am second guessing some things now. I don’t launch until this summer and I know that you just love a good challenge, case in point…you bought the Dallas Mavericks in 2000. What do you think? It can only improve your karma… 🙂
Jacqueline Dorman
Jdorman@jane.tv
http://www.jane.tv
Comment by jacquelinedorman -
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Mr. Cuban. I have a patent on a businss model that can monetize all of the website on the Internet and even monetize their features. It also can be applied to real-life products in a store like Walamrt. I’d like to pitch it to you. Can you email me wightgorilla@yaho.com?
Thanks,
Dwight
Comment by charliekane -
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Right on Mark. The way people view content will change in some ways but certain staples will not change. Look at movies. It was predicted that with the invention of TV that movie theatres would become extinct, yet here we are spending $10 to watch a film we could wait a few months to see on tv. It’s about the experience!
Comment by jaxsilverfox -
Showtime and HBO have some great Television shows, but that is in part because they can focus on having a fraction of the original programming that the networks provide, then rerunning the heck out of the shows. It’s a solid formula and their original programming is usually very good. Showtime shows that I don’t think I would like, I end up liking.
Regular Cable also uses the same strategy, they replay the heck out of their shows, and they replay the heck out of their shows even as that same show continues to make new shows. The networks have finally gotten smart by giving viewers a second chance to watch original programming the same week that the episode originally ran, usually using Friday or Saturday night to do so, especially at the beginning of the season.
The best looking show on television, The Middle, (shot on FILM), has been rerun plenty of times, probably because besides having popular actors, the image is so frickin amazing.
By the way, just saw a promo for Shark Tank airing this Friday on ABC, featuring a certain somebody dangling a cool half mil in front of a prospective guppy.
Comment by alexlogic -
“The challenge is in creating hits that are big enough to maximize revenue and return for that show and to create a promotional platform for other shows.”
I think the pay cable channels are doing a better job than the major networks creating hits and platforms for other shows.
I watched “Homeland” religiously and being “in their space” did give Showtime the opportunity to pitch their other offerings and even lends itself to a certain amount of channel allegiance / brand loyalty. I remember when the Soprano’s was all the rage, I had to have HBO. And watched Big Love.
Lower down on the food chain, shows like Storage Wars or Pawn Stars or Finding Bigfoot(a must see) seem to be doing well. And my guess is that the return on those shows is high since they don’t appear to cost very much to make.
When it comes to tv viewing I say just serve it up the old fashioned way.
Comment by swaghound -
Mark, I agree with the posts except for the wi-fi and buffering. You may recall the sound quality and dail-up technolgy we utilized to have the content we wanted from broadcast.com. Fortunately, neither the sound or limited delivery technology of 17 years ago are known to either of my teenage daughters.
I expect the wi-fi/buffering will be corrected in the next 5 years. As a prelude to seeing that, we are seeing cable subscriptions constant reduction as people are making choices to view content online/off-air. As a reminder kids are gaming via wi-fi in great numbers, engineers will figure out ways to improve on this market because our kids don’t want to sit around the family TV as we did in the 70’s 80’s. The want to watch what they want to watch when they want to watch it.
My daughter politely rejected my offer to pay for her cell service because she was unwilling to adhere to my request not to exceed the monthly bandwidth. She and her pals like V-cast and accept the buffering as part of the deal.
Comment by ms31964 -
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JP, On the Three Stooges once, Curly said, “I smell something awful”, and Moe smacked him across the face and said, “don’t brag about it”.
Consider yourself smacked for not being aware enough to know when you needed your connection inspected and recalibrated to the optimal standard.
Comment by alexlogic -
We do as we currently are for people like you. I wish my supermarket had an army of delivery vans to run milk out whenever I run out, too, but it’s just not economically feasible. We all know the cable companies are dinosaurs when it comes to efficiency. Guess who gets to pay for that.
Comment by joeplace -
and who subsidizes the stupidity some display in thinking things are automatically correct?
Comment by alexlogic -
alexlogic – There is no need for channel adjustments when the only service coming to the house is IP. Service vans are part of this being a utility like gas or electric. Other contractors can be used to handle internal things, but being required to pay for that kind of service is stupid for me as I can handle anything inside my house networking-wise as long as I have ping. Besides, having vans running does not require a local office that customers can go to. Contractors can work where you are required to pay a monthly fee whether you use them or not or they can bill for their time. I prefer the latter as I don’t want to subsidize the people like you who are way more likely to make a difficult service call. If you are more picky about channel signal strength (an antiquated issue) because of your antiquated device then you should be paying for that level of service. I want the cheapest, reliable IP service and I will then choose my service providers for phone, media and other web-based services.
Comment by joeplace -
JoePlace, I’m assuming that in 25 years time service vans came out to your residence. It’s easier to marry together a local office and repair services. If you never had a service truck come to your location then you probably did not have an optimized signal to all of your channels.
I am a fan of CRT and traveled a great distance to purchase someone’s CRT. After viewing their television and doing some quick channel surfing, I realized the signal strength was not the same for all of their channels and told them.
I couldn’t tell from their flat screen that they had a problem, but I could tell from the CRT they were selling me. Hopefully you had service visits, and if you did, then you benefited from pin point adjustments designed to optimize the quality of the image you are supposed to get.
Comment by alexlogic -
Mark,
I teach college advertising classes, I’m going to suggest your blog as reading.
Another interesting phenomenon is that the price of TV spots to advertisers keeps going up while the ratings are trending down. Why?
One reason is that nationally sold, mass market products still need to reach over half of the households(H/H); they are willing to pay a premium for that reach. Imagine the hassle of trying to cobble together enough radio (1-3% reach), web content (2%), Hulu (maybe 1%) to reach 2/3 of all soup eaters.
The big money advertisers are package goods, autos, electronics, etc. They still need reach that builds fast (per your point). That is why the cost of a TV rating point is still going up, and the cost of a Web rating point is about a third of TV.
Comment by carlrossini -
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If I want to watch something that’s on the internet, I can whenever I want. That’s impossible to do on TV without a DVR and an extra fee. That’s why the internet wins.
Comment by hyde -
alexlogic – my point was that I needed service from them where I had to visit them exactly twice in 25 years and I only had to visit them because that is the way they do business. If they had handled it by mail I would have done it that way and it would have cost them much less because they wouldn’t have been paying for an office and a person to sit there in case somebody came in. I should not have to pay for part of an under-utilized office and service person because people like you like to have personal service when it comes to a utility.
Comment by joeplace -
TV is a great reach medium and will always remain that as long as Americans spend 4-6 hours a day actively/passively watching TV. Due to the fragmented nature of the web, there will never be another way to reach 10MM people watching American Idol at the same time online – people simply have too much choice.
However, the argument that TV is thriving because they’re making additional money from online now is flawed: the studio part of the TV businesses is certainly generating more revenue and is thus able to replace some of the syndication $ that are no more. The network businesses are starting to suffer because there are more choices for buyers (e.g. online, mobile, connected TV et al.) that offer better tracking, lower rates and more credible data (digital set top boxes aren’t everywhere). Ultimately mass marketers will use network, cable and digital to reach their audiences but the fragmentation will lead to most non-mass-market advertisers to buy more online; that’s not necessarily Mcdonalds or P&G but thousands of other advertisers – plus the people who cannot afford TV of course.
From MC> a 30min top rated TV comedy is getting more than 2mm an eps in syndication. Network and cable revenue are both up over last year
Comment by christianbusch -
And you think that if there was no local office that your service would have been just as spectacular as it must have been since you had no reason to visit?
Comment by alexlogic -
I had cable TV in some form for 25 years. I have visited a cable office twice. Once was to swap a bad box and the other was to return their box when I cut the cable two years ago. Neither visit would have been required if I had to have their horrible hardware on my end which adds no value as a customer. I would prefer to just deal with their service via the mail. Offices like that are empty or are just a place for people without checking accounts to pay their bills with cash – entirely unnecessary and overly expensive in this day and age as there are other business that can perform and charge for this service on an ad hoc basis.
Comment by joeplace -
Joeplace, alternative answer for you. First the U.S. was manufacturing based, then that was phased out to some degree and replaced with service oriented jobs. Now the younger crowd wants service oriented jobs phased out.
What’s left?
Comment by alexlogic -
joeplace, phone/utility companies that are located nearby and have a shingle one can visit tend to be more customer service oriented than companies that are just online only or located far away. (the exception being banks???)
I just saw an E-surance commercial on television, it’s really well done. But can they stay in business with no local presence anywhere? Seems to me like they are headed for severe cases of insurance fraud at some point.
Comment by alexlogic -
alexlogic – What do you need a local office for? There should not be any special hardware other than a TV and possibly some kind of generic network box (basically a simple computer). We don’t have local offices for music so why should we have one for television content? Manage the network that brings content into our house like a phone/utility company and that is all we need.
Comment by joeplace -
One thing TV “services” are wont to forget (for folks like us) is that TV isn’t all about movies and drama and long-running sports events (all of which may be recorded for replay later). We spend a good deal of time at the TV for *current events*—local and national news. Cable and satellite services do no better than antenna, and beyond what’s available via antenna, cable and satellite and internet services offer precious little that is not burdened by innordinate commercial baggage.
Comment by fjpoblam -
joeplace, one aspect you left out of your 25 to 40 dollar equation is that unlike satellite tv, cable tv actually has brick and mortar locations, and I find that very refreshing when I have to deal with an issue.
I believe Time Warner has a pathological liar / supervisor in their colorado phone center (last time I spoke to the liar was late September of 2011). Fortunately for me, my local cable company is less than 10 minutes away.
I go directly to the cable company now if I have a problem, it’s actually faster and much more efficient for when an infrequent problem does occur.
I wonder if cable tv will will ever be able to provide a customizable channel. They seem to be getting closer with their pretty decent entertainment on demand services.
Comment by alexlogic -
FOLLOW UP. Joeplace logged a comment while I was writing mine. I prefer not to pirate, but have to say that Joeplace’s comment is on the mark re demand.
Comment by hcginsberg -
I hope this is on point, as I am trying to provide the perspective of a content user. I am 58 years old and try to keep up with technological changes. I use Hulu occasionally and have a netflix subscription. The picture quality of both are less than desired. My primary goal is to engage a service that will allow me to “pay per play” at a reasonable cost, primarily on my television, ie watch events or channels that I want when I want to without subscribing to an entire cable package. I currently use Comcast’s internet and cable service . The issue then is whether the better value is 1) the cost “per view” of each event/channel that I want using an alternative content provider w/o a cable subscription or 2) get a ppv/channel service from my current cable provider w/o a general cable subscription. #2 doesn’t look very promising or likely, (b34st893ds). I don’t care whether the service is streamed, stored, or live. Going forward whatever provides CURRENT (most recent broadcast) content, the best quality picture (preferable non-jitter HD, ease of use, and most reasonable price per view will get my dollar(s). Can’t wait for the day it happens or any suggestions you folks have. Thanks
Comment by hcginsberg -
newmediarules> But why are also intrigued by a startup like makerstudios? it seems like you would be more bearish on a firm like theirs considering what you’ve written here.
Are they still alive? The last news post on their site is from August, 2011
Comment by joeplace -
From HappyTVGuy> Sounds like the wishful thinking of someone who has a lot to lose and not much to gain by the inevitable transition… couldn’t find your blog post on CD’s and the music business
From MC> if you even think they are comparable you have zero clue
It’s a business that forces you to buy more than you want to get the one thing you actually want. Somebody found a way to offer it a la carte after the pirates forced their hand and the industry caved. How is that different?
If you haven’t tried the pirated HD versions of shows that are available from myriad sources (not just torrents) you haven’t lived. There is plenty of software that will work as a personal DVR picking up all of the shows you can get from your cable company (and many you can’t) within an hour of the show’s airing. Sure it’s illegal, but the demand is there for a service like this and many people would be willing to pay a fair price for it. The problem is that the cable company is convinced that the price is in the neighborhood of $80/household/month which is insane if you’re not watching 40 hours/week.
I stopped watching live TV other than sports when I got my first Tivo in 1999 which is pretty much when I stopped watching commercials. I cut the cable in 2010 and put up an antenna for sports. Occasionally I am forced to watch a TV show because my son wants to watch the Simpsons right away. We did this last night and I was blown away by how many commercials there were and how many we saw three times in that 30 minutes and how few were not on during the football game that preceded it.
If $25-40/month is not enough for households to pay for unlimited video content which can then be distributed to content providers (TV shows, movies in the post-theater distro, and sports) based purely on ratings then there is something wrong with the system. Sports can still be subsidized by advertising in which case they want to be available to everybody to boost ratings. When I say content providers I am not talking about cable networks or traditional TV networks. I am talking about production companies. There are way too many middle men that provide next to no value as they did in the music industry.
Comment by joeplace -
Why are we focusing on relative shares of a shrinking market? The market is shrinking! Does anyone think it was wise for the music industry to fight so hard to maintain CD sales over the last ten years?
Comment by jayhollenkamp -
I like this post. One point however that is not exactly accurate is one you have in bold, re: the amount of time an advertiser must wait to get reach. If a big advertiser like Coke wants to purchase 10million impressions, they can reach 10million in less than a few minutes on YouTube because YT will spread the ad out to multiple channels and distribute it in whatever breakdown you want.
Also, the reason why it’s prolly a better deal for the onlive advertiser (ie more valuable) has to do with: 1. Targeting which channels they want to reach (age group, subject, locale, niche topic, etc) which they can do much better 2. A much lower CPM on YT (maybe $1 or $2 dollars per 1000 sometimes compared to $25 per 1000 on TV, 3. the ability for the audience to click and go deeper into advertisers message.
Comment by andrewbaron -
Great points! Had to laugh here when you mentioned buffering which rarely happens here on my dsl wifi/Roku/netflix/super basic cable tv combo. Guess tired of paying for commercials and trying to budget more towards mobile needs and live entertainment. Using Samsung S2 and Sam Galaxy TAB 10.0. We recently started watching Sons of Anarchy on Netflix commercial free and moved through episodes with a quickness. To be quite frank rather spend money at the Rave imax theatre as recently did watching Mission Impossible where there was a whole lot of product placement and few adverts. It is no longer the look but the feel that is important too. IE. 15,000 watts of power going through the imax dolby surround system.
Comment by saltnsand -
Pingback: The TV Business Keeps Getting Stronger ! ? blog maverick | Oc Hotel
Interesting insights about the fundamental differences in how we interpret viewership metrics: the average vs total uniques, the # of people per household, and the number of viewers in the next hour, vs spread out over forever.
Personally, I have shifted all of my TV consumption to (a) league pass for the Mavs & Rangers, and (b) watching full TV series through Netflix, either streaming or DVD.
TV Shows – I’m curious, if I watch 4 seasons of MadMen on Netflix streaming, how does the revenue to AMC & LionsGate compare with their revenue were I to have watched it live over those 4 years?
League Pass – I’m also curious, if I subscribe to NBA league pass to watch the Mavs, how much do the sports teams receive, compared with what you’d have gotten if I got cable TV and watched the commercials?
Comment by mikedorsey -
Broadcast may be desirable for ad buyers, but unicast content has a bigger future with viewers. Let’s imagine a logical in between step: what if you could multicast a show to my social graph from Facebook? What if you could release the episodes in a season as a certain percentage of us watch it, rather than weekly? In some offices nobody talks at the water cooler about last night’s television show – we don’t even work in the same office, and when we do we’re not influenced the most by the people sitting next to us.
I think there is room for a full 50% of viewing hours to be unicast. Viewers pick the content (microinterestation) and start it when they want. Lowest common denominator programming isn’t going to cut it when people have more choices on their remote. The implications for politics are the most interesting to me – I don’t expect we’ll debates like these in 15 years. With all the work Docusign has done in alleviating the need for wet signatures on contracts, I don’t think voting from mobile devices is far off. This is the advertising challenge of this century – how do you help people get their message other people they need to influence? Hint: you can’t get them all in one room.
Comment by westwest888 -
To quote two sentences from herblair, “The use of behavioral marketing and targeted ads will help offset the content costs which will no longer be passed on with impunity.” …and…
yes and no. Cable is bundling services now as a way to stay competitive. Phone, Internet and digital cable channels that also include showtime for free. All three bundled together is not that bad of a deal for under 150 bucks a month.
“Cable must incorporate a targeted ad strategy along with reducing subscription rates to absorb future content increases.”
On the other hand, Cable TV is targeted for local businesses. Local businesses that can make the cost per commercial work for their business can instantly hit people that live in their area without having to pay for those too far away.
However, local channels with a network affiliate can also work since the excessive reach may also mean more true viewers than what local cable ads can deliver.
There is a professional edge to television broadcasting in general that viewers still appreciate over pop up ads, adus interruptus, voices that jolt us out of our chair, LYING ADS, Ads that offer something for nothing but only if you give up your phone number and email address so that 5 different companies can contact you, and so on.
Comment by alexlogic -
Time shifted programming will allow targeted ads – reason for facebook having IPO value of $100 billion or $100 per friend and Google 100% ad supported – search analytics and connecting houshold behavioal data is being done – TV is late to party – other thoughts
Cable TV has a flawed “Field of Dreams” business model built on arrogance. Cable MSOs have had no incentive to control content costs, since many receive dual direct revenue benefits from selling and collecting content costs. De facto ala carte will happen due to the subscribers’ extreme dislike of cable. Apple advocates understand the strategy of paying more for their devices and getting specific aps (e.g. music). Google advocates understand the benefits of targeted ads covering the cost of content. Amazon advocates understand the value of tracking interests and economically facilitating products of interest. Siri-powered voice activation via the Cloud will circumvent the obsolete cable set top box. The use of behavioral marketing and targeted ads will help offset the content costs which will no longer be passed on with impunity. The alternatives have a great chance of succeeding; since they are supported by extremely well financed,creative zealots.
Cable MSOs have had no incentive to control content costs, since many receive dual direct revenue benefits from selling and collecting content costs. De facto ala carte will happen due to the subscribers’ extreme dislike of cable. Apple advocates understand the strategy of paying more for their devices and getting specific aps (e.g. music). Google advocates understand the benefits of targeted ads covering the cost of content. Amazon advocates understand the value of tracking interests and economically facilitating products of interest. Siri-powered voice activation via the Cloud will circumvent the obsolete cable set top box. The use of behavioral marketing and targeted ads will help offset the content costs which will no longer be passed on with impunity. The alternatives have a great chance of succeeding; since they are supported by extremely well financed,creative zealots.
Cable TV has always been able to raise subscriber rates with impunity (Craig Moffett term). For that reason they have adopted a flawed revenue model that has reached the tipping point. Not only is the poverty level a problem, there are over 60% of the Gen Y’s at risk.To quote Pogo, we have met the enemy and he is us. Netflix has more subscribers than Comcast; and satellite has 30% of the market, for a reason. Subscribers are creating a de facto ala carte. Unfortunately as long as cable owns the content and sells it, as well, there appears no way to circumvent the continued rate increases to their suicidal final demise. But there are some ways for cable to survive .Cable has to eliminate its “Field of Dreams” mentality. Cable can become a positive influencer by changing their revenue model. Internet has proven there are targeted ad models that work. Cable must incorporate a targeted ad strategy along with reducing subscription rates to absorb future content increases. The hybrid model would be based on social media interests and preferences, starting with direct ads on all time shifted programming. Groupon like infomercials, with word of mouth on steroids, group buying, and urgency to buy. Amazon like preferences and alerts. Cable is currently using data from demographics and set-top boxes, a flawed strategy, with privacy issues. They could be using analytics from behavioral marketing data.
Not sure they are interested in constructive suggestions?
Read more: http://blogmaverick.com/2012/01/14/the-tv-business-keeps-getting-stronger/#ixzz1jYn02Rb7
Comment by herblair -
As Mark Cuban suggested the views are there and the need is to monetize it via targeted ads
Behavioral Based Social Media System for the Cable TV Market
Cable has long history of failing to develop 1-1 target marketing. Canoe Ventures (latest MSO venture) was touted as the Holy Grail of targeted advertising and is reportedly less than a success at this stage.
http://tech.fortune.cnn.com/2011/01/03/the-56-billion-ad-question/
Excerpt from above link on January, 2011 Fortune.com –
“Advertisers will spend $56 billion putting ads on TV this year,…The cable industry thought it would be a big opportunity too, but its efforts have fallen short. Canoe Ventures, a two-year-old project of the six biggest operators, has launched just one notable product…”
http://www.businessinsider.com/jason-kilar-here-are-my-thoughts-on-hulu-and-the-future-of-tv-2011-2
Excerpt from above link on February, 2011 Business Insider
Identifies advertising market being missed by Cable TV operators
“Advertisers have weighed in heavily on the future of TV, with both their thoughts and their considerable wallets. Advertisers are increasingly expecting to present their advertising messages to just their desired audience…and not to anyone else. For over 60 years, video advertising could only be bought via a TV show’s projected audience, which served as a blunt proxy for a certain target audience. The result has been many wasted impressions and an often irrelevant experience for consumers. In the near future, advertisers will demand the ability to target their messages to people rather than targeting their messages to TV shows as proxies for people.”
The obvious alternative, with the least cost to implement is an independent Cloud CRM solution designed to cross index cable subscriber households with their corresponding social network interests. The current regulatory and privacy issues experienced by cable TV operators gathering unauthorized data from set-top boxes could be minimized, by validating subscriber and even eliminated by essentially having an opt-in plan (provided conveniently by the social media). Access along with profile and interests of households would be controlled by the subscriber’s social media platform of choice. Facebook has high consumer acceptance and could be used for household profiles, product interests, social interests, and viewing entertainment interests. There would be incentives to the subscribers to opt-in including notification and reminder of viewing favorites, Groupon type ads, and specific ads matching interests with infomercial type group discounts and urgency to buy.
The current design of target marketing advertising ventures is fundamentally flawed. They focus on demographics, and fail to identify the individual behavioral current and future household interests.
I would propose using a data cross indexing similar to a data warehouse project I was involved with at iN Demand. http://www.indemand.com/ .
Project would involve developing a bidirectional Cloud interface program using a CRM application between the social media and MSO subscriber records and communicating behavioral marketing – business advertising, discounts, specific videos/groups, family albums – providing subscriber awareness of TV programming — movies, products, etc. similar to Amazon and Groupon. This would make subscriber stickier and substantially reduce turnover.
To paraphrase a comment I made in the CED 1999 publication about the Internet, cable TV operators need to become the new best friends with the 600 million members of social media.
Read more: http://blogmaverick.com/2012/01/14/the-tv-business-keeps-getting-stronger/#ixzz1jYmM79Jk
Comment by herblair -
The easy way to make the guide better for cable/dish/… is to eliminate the channels I don’t get. Why should I have to scan through channels I haven’t paid for and can’t watch?
I know the answer – supposedly I’ll see what I’m missing and order those extra channels. Maybe that works for some, but not me.
Comment by Ray Charbonneau -
Pingback: Recommended Reading 1/15/2012 | Transmythology.com
I agree with a lot of things here including online content distribution companies not being a competitor to TV networks. But what I want to say is TV viewers have more options today than before, in how they want to view live and on-demand content, including what device to use to watch the content.
As the war lingers on in TV and Video land, traditional vs. online, or whatever, TV viewers have their own war and shortcomings with all of them. Many viewers may want to push a button to watch TV while others prefer to watch online when away from home. Still, whatever new thing comes along in video or digital device, broadcast TV will always be here.
Comment by PBSumpter -
(Followup). Anything reporting to the Net will be able to stalker-track, sure. Though it wasn’t clear enough in the “1mm” paragraph if you were including those systems or referring just to broadcast/cable. Maybe explain what you mean by “TV”? Hulu can better track my viewing than Nielson can at my DTV viewing. Shouldn’t be a problem of keeping up with technology, I develop for it.
A few more thoughts since I’m close to this topic (if you don’t mind), enough that after the 2 or so years I’ve been following, this one finally force the WordPress signup process.
The NEA posted a study a year or so ago about the effect of online media vs concert attendance, and found web content (youtube…etc) helps fuel interest and people go to more concerts. If I miss an episode of my favorite show, I can watch online and keep up. Likewise if I’m on out edge of DFW and barely get DTV I can watch all of it online. I think you’re dead-on there. However the problem is cord-cutters; doing DTV + internet and no cable/sat/paid TV. Is the cost in online ads and premium services [hulu+, Netflix] making up for loss from cord cutters?
Here’s 4 just off of Broadcastengineering.com
http://broadcastengineering.com/news/nielsen_tv_ownership_declines_12082011/index.html
http://broadcastengineering.com/news/cord_cutting_accelerates_10202011/index.html
http://broadcastengineering.com/news/comcast_channel_bundling_drop_cable_10132011/index.htmlhttp://broadcastengineering.com/ott/cord-cutting-centris-pay-tv-08242011/index.html
Regarding TV’s live advantage: ustream, live stream, justin.tv, google live… As was said in the comments, this is really for the younger generation. Something to watch for though.
Comment by skookie000 -
I don’t understand all of this rating stuff and most Americans don’t and most of the people that read your blog don’t need to understand it ether you might. Ratings are all about wealthy people trying to figure out how to get their hands on more of your money.
But your right about most Americans, I can only turn my television on and change the channel if anything else is required I get my son. I have never even seen hulu nor do I know how or even care to know how to watch it. When Netfix was mechanical meaning you would received a disc in the mail I subscribed for a while but we got tired of watching moves. Even if I bought a television that could hook up to the Wi Fi I probably wouldn’t or couldn’t hook it up. The other night I went to bed before my wife and when she came to bed the TV was still on. I ask her why she left the TV on and her reply was I don’t know how to turn it off.
We pay way too much for entertainment when Comcast can buy control of GE and pay cash Americans need to wake up duh! that was our money they used and then they change their name to Xfinity why so we forget that Comcast spent our money to buy GE and now what do they control and how much is it going to cost us. Money for nothing! No one wants to earn it anymore they just want to take it out of your wallet.
As much as I pay of television you think I could have watched the Jazz game last night I probably could have watch a Mav’s game but oh right I live in Utah. Lol
Well I guess this isn’t what your post was about Mark so I will get out of here. I started reading your blog a while back and have enjoyed it very much it is one of the only two I read. I have a different opinion of you now then the one I had when you first bought the Mav’s I now think you are a good person. I wasn’t referring to you when I was speaking of the wealthy above that was some other people.
Comment by Rocky -
The “Live Stream” of TV Channels has always been an interesting piece of comparing Cable with Cloud Libraries and I certainly can respect Mark’s view on this. But to say that the button on the remote will not be used just like the time on a VCR I hope is dead wrong, but he may be right in some aspects in between the lines of his point.
Many people don’t wait until exactly 7PM to watch their show, they DVR it and ironically “buffer it” so they can go to the bathroom, answer the phone AND skip commercials. The captive uninterrupted live stream audience is a myth outside of maybe a sport or big news events. In most other cases, the live stream channel flipper is just flipping for entertainment mostly without a destination goal. That said, most will watch content they really like on Cable within a 48 hour window of when it was broadcasted. Price and generational culture shifts are creating a tipping point, the user experience is evolving. Maybe one day in the near future I can “flip channels” like live.twit.tv, Revision3, YouTube Leanback and Hulu right next to CBS and NBS; merging and blurring the experience into truly one natural channel lineup set so we don’t need to change our brainwashed behavior.
Comment by manielse -
sounds like a legitimate analysis. time will tell. But why are also intrigued by a startup like makerstudios? it seems like you would be more bearish on a firm like theirs considering what you’ve written here.
Comment by newmediarules -
This business about the value of the “infinite long tail” as it relates to TV is somewhat optimistic, IMO.
The fact is that to produce the kinds of television shows that most people watch, you have to have network kind of money. YouTube sensations will always be just that. But Soldja Boy isn’t going to be competing with Axe Men anytime soon.
That said, I don’t think the two are mutually exclusive, or really the same form of entertainment for that matter. No more than home videos are comparable to blockbuster movies.
People will always pay a premium for premium tv and movie content. Not so with music or writing, where artists can pretty easily self-produce and distribute. Of course people want stuff for free, but just because a television show can be viewed digitally does not mean the markets will allow them to be given away.
Comment by dkrich -
I don’t really want to, but I do agree with this article/blog. A lot of people I know that own a lot of new smart phones can’t bet bothered even finding out a tenth of what they can do. They really just want to press one button and be entertained. Until an EASIER form of tv entertainment comes along, traditional broadcasting will carry on business as usual.
Comment by jasontoheal -
Pingback: TV Isn’t In Trouble
What’s your take on Netflix getting into the business of delivering original content, i.e. House of Cards and the revival of Arrested Development? From what I understand, they won’t be paying for the production, only licensing it, nor will they be spending anything to market it. How much of a game changer do you think this might be?
Comment by anigodda -
“working hard to improve their guide experiences which will be faster and easier than their online counterparts”
I have never seen a guide that was faster, easier or nicer to look at than Hulu or Netflix interfaces in a set top box. I have little faith in this statement.
Comment by chasefarmer -
skookie, M.C. did mention the net’s ability to provide an infinite long tail, but that that doesn’t necessarily help with upfront production costs.
There are a lot of shenanigans that go on with internet viewing stats. I’m not convinced that returning visitors vs new are clearly defined, especially when users get bumped off and are forced to re-sign in every few hours, plus obnoxious internet ads that lie. Most internet ads lie, and people hate that.
I have yet to click on an ad that promised something for free, that then did not demand I do something interactive before I got the free thing. Ef you, you lying internet advertisers.
Comment by alexlogic -
Yeah… great blog but this one is missing the point. Nielson rating’s glorified guess vs Google Analytics? Really man? And noting about the Net’s ability to provide an infinite long tail?
I have no idea what you mean by unique views…. all stats define new vs. returning. You have GA….
Winds are changing…..accept it or don’t.
From MC> You should at least keep up with the technology. Rentrak, Kantar and others use digital set top box data. So you know the sec by sec numbers for each set top box. You can run analytics on it anytime, any way.
But you would only know that if you paid attention
Comment by skookie000 -
Interesting analogy, eastsidescott. I suppose the difference is each view on netflix is basically a rental, so the income stream for netflix is fine since netflix can keep adding content even as older content keeps getting re-rented.
One area where I think Network and first run TV is getting a big fail is the relentless pressure for ratings without forecasting how well a show might do in syndication reruns. Shows like Seinfeld and Everybody Loves Raymond were almost cancelled after their first season, yet both are still big hits in syndication reruns and have probably generated over a billion dollars in ad revenue.
Why did the actors from Everybody Love Raymond have their new shows after ELR get prematurely axed? Till Death Do Us Part (starring Brad Garret) lasted four seasons, and then was axed? Really? How insane is that. Syndication deals can hit it big once a show lasts 5 or 6 seasons, or even longer. So to kill a show after four seasons seems ludicrous to me when main cast member (Brad Garret) is seen everyday by millions of americans on Everbody Loves Raymond syndication reruns.
I believe Men of a Certain Age (starring Ray Romano, Emmy winning Andre Braugher and Scott Bakula) also has huge syndication viewing potential, but it was canceled after its second season. Once again, a huge syndication mistake. Five or Six seasons of MOACA would have made a perpetual mint in syndication, but because the show had no gunplay or overly dramatic trailers, TNT dropped the show simply because for first run television on their own channel it could not bring high enough ratings.
You’d think TNT would have aligned with another channel like TVLAND and let the first two seasons of MOACA generate significant enough revenue to help pay for the next season of MOACA. TVLAND has no problem repeating a show over and over, and a show like MOACA plays well even with repeated viewings.
So the pressure to deliver an immediate hit is hurting the potential of some shows that would do better in syndication. For an industry that is used to measuring everything, it sure seems like first run television places much more value on a shows ratings the first time out of the gate rather than how a show may do in syndication, where the real money is made.
Comment by alexlogic -
One fairly large difference in what we do as opposed to TV, is that we are only talking about the ads and their views. We are not talking about content having a rating and then parsing out your ad amongst the 4 commercial pod, as in TV.
It’s a big difference; especially when an advertiser can just pay when a consumer physically engages with your ad.
~J. Krebs, CMO, Tremor
From MC> thats a fair point, but it also means that you have to serve the video in far more content in order to fulfill. Hence the networks. And because the video ad is typically served in a tabbed browser, its far from unusual to jump to another tab while the ad, which the advertiser pays for runs but is not seen. Or the ad is an autoload and runs but the consumer has no interest. Its just as annoying as a horrible tv ad. And of course TV ad buyers are pushing for more discrete data and slowly but surely they are getting it. Particularly with sec by sec data from set top boxes. Still the same issue if you walk away from the TV, but its comparable data.
Fortunately for online video, not all buyers have figured it out, but its getting there. But that doesnt defeat the premise that the TV Business is only getting stronger and if online video ads sell more, there is a very, very good chance that those ads are being sold in a traditional TV show or movie
Comment by jasonkrebs -
So, in other words, by sites like Hulu, Netflix etc payin top dollar for content they are putting themselves out of business? If they pay a premium for premium content then won’t they out punt thei coverage?
From MC> Not putting themselves out business. THey have a good business, but its complementary to traditional TV and they will be the first to tell you. Actually, the better TV does, the better Netflix and Hulu do
Comment by jzaba23 -
Sounds like the wishful thinking of someone who has a lot to lose and not much to gain by the inevitable transition… couldn’t find your blog post on CD’s and the music business
From MC> if you even think they are comparable you have zero clue
Comment by happytvguy -
I think the CEO of Blockbuster wrote a similar letter about Netflix….
Comment by eastsidescott -