Category Archives: Scripted Entertainment

Post #24 – To bundle or not to bundle, that is the question.

Unbundling is the elephant in the cable MSO room. The recent report by Needham & Company’s Laura Martin that predicted cable networks would lose half their revenue if they were unbundled, makes this a tricky question.
Unbundling, or a la carte choice, refers to the movement by some consumer advocates and legislators, most particularly Senator John McCain, to force cable MSOs to let consumers choose which ad-supported networks they want. Almost all cable networks get a piece of the consumer’s monthly spend, from a few cents per subscriber up to a few dollars a month for ESPN.
So customers are paying for networks even if they don’t watch them, with no ability to opt out. That money, which is generally about half of a network’s revenue, is obviously a big deal. Cable networks and Internet sites are similar – most of them can’t make it without a dual revenue stream, advertising and pay. Unfortunately for the Internet, they don’t get subsidies from anyone.
But cable, particularly in the early days, needed to boost consumer demand by offering programming like CNN that they couldn’t get on broadcast TV. So the habit of paying a per subscriber fee to the networks started.
Having worked for a company that at one point was the largest MSO in the 80’s, I can tell you that one consumer complaint about cable has stayed constant for decades: too many channels. Yes, the wonderful 500 channel (or 1,000 now) bonanza has always been seen by many subscribers as a rip off. When they see channels on their box whether it’s 5 or 50, that they don’t want or watch, they assume that they’re paying for them – and they really are.
On the other hand, this is a delicate question for Reinventing Media, whose goal is more quality programming and fewer commercials in ad supported content. Without these subsidies, cable networks would undoubtedly have to cut back and some would go out of business. That same report predicts we would have about 20 ad supprted channels left.
Just when some of the networks are weaning themselves from off-network reruns with shows like Mad Men and Sharknado (joke), their foray into original programming may be cut brutally short on networks like AMC, TNT and yes, Syfy. We may never get to see Sharknado II where the sharks eat New York! Actually, that should be Sharkicane.
But seriously, ceasing this form of subsidy could be very bad for the overall quality of TV and its commercial load. After all, everybody in Britain has to pay a tax to the BBC if they own a TV set. Why not here?
But of course a compelling case can also be made that consumers shouldn’t be forced to pay for something they don’t want by these near-monopoly MSOs. It will be more than interesting to see how this particular made-for-tv drama plays out.

Post #19 – Reinventing movies – the theaters need to step up to the $50 ticket, among other things.

Motion pictures are at the top of the food chain. They cost more, attract the biggest stars, have the broadest global market – and are about the riskiest investment in entertainment media you can make.

So it’s important to our entertainment ecology that movies get reinvented in a way that produces more good movies, at all levels of cost. It’s unfortunate that the major movie theater chains have become a roadblock in this process.

While the theaters have a perfect right to protect their businesses, they have not held up their end of the bargain in terms of innovation. By and large the movie-going experience is the same today as it was 50 years ago. Not enough parking. Fighting for seating at popular movies. Waiting forever for popcorn and overpriced soda.

While 3D and video projection has been creeping into theaters, those are largely studio driven innovations. However, recently Paramount worked with a few test theaters to offer a $50 ticket to see Brad Pitt’s World War Z two days early. In addition to the early screening, the fans got to bring some friends at regular prices and will get a Blue Ray DVD of the movie when it comes out. This is a step in the right direction.

Every other entertainment ticket guarantees you fixed seating, at differential prices. If the movies really are a social entertainment event, why not allow everyone to sit together where they want, as long as they’re wiling to pay for better seats? Works in sports and Broadway.

Why not have valet parking? How about streamlining the concession process, as one theater I went to in Evanston, Illinois did quite successfully?

The fact is, movie theaters are costing the studios millions in extra expenses and lost income. How? By delaying the release of movies into the wired world for 90 days, they greatly increase the cost of advertising those movies, which needs to be done twice at least. And undoubtedly many people who would pay premium prices to get movies at home while they’re still in the theaters, never get around to it later. The delayed post-theater release also encourages piracy.

It’s inevitable that the studios will chip away at the theaters’ window of exclusivity. The only question is, will the theaters step up and improve the experience and economics of going to the movies enough to offset any real or imagined losses to day-and-date online distribution?

Post #14: What are the goals for reinventing television?

As Lewis Carroll said “if you don’t know where you’re going, any road will get you there.” So where do we want television to go?

The goals in a nutshell are: quality programming, fewer, more valuable ads and a diversity of pay models, all available on demand, on any device.

What’s quality programming? By that I mean a diversity of well produced, watchable shows across a broad spectrum of tastes. It doesn’t mean just “PBS” style programs. Scandal has its place, and certainly Downton Abbey does as well as the Housewives of New Jersey. The key word is “balance”. Right now, increasingly desperate, me-too reality programming is crowding out good scripted entertainment for reasons of cost.

Fewer, more valuable ads is a necessity that I’ve touched on before. It’s the most complex part of reinventing television because it requires cooperation across platforms, programmers and advertisers. Currently TV advertising is very wasteful, exposing millions of viewers to ads that have no relevance to them. They don’t like seeing them and the advertiser doesn’t want them to. The result is a crushing commercial load that makes ad-supported TV almost unwatchable without a DVR to skip the commercials.

The solution is a system that allows better targeting of TV ads to demographics or zip codes so that the programs can generate the same, or more, income from fewer, more valuable ads. This does not require any technology breakthroughs but it does require the creation of new systems which can handle the intelligent insertion of ads in program streams in real time, Basically what Doubleclick does for online ads, but done for television.

It also requires that all programming be delivered as on-demand feed, a not insignificant change but one which we’re already moving toward and that consumers want. The cable companies should be embracing any commercial solution that requires streams since they are the best positioned to deliver them over cable or Internet.

The pay model for television is in pretty good shape, with lots of options. However, I would like to see a micropayment solution added to help support short videos like the ones on YouTube.

Platform diversity has also moved pretty quickly in the right direction. I can get different kinds of video on just about everything I own – Vizio TV, LG DVD, Apple TV, iPad, etc.

But ad-supported TV has a long way to go.

Post #9 – We need to reinvent media or the future will be a growing pile of crap.

We wished for a 500+ channel world and we got it, which has led to the popular saying, “500 channels and nothing to watch”. We wanted “always-on”, updated Internet news and got it – along with declining newspapers and Twitter news. And so forth.

The decks are stacked against high quality content in multiple ways that need to be addressed as we reinvent media. Television needs the most work. When a car advertiser buys the cherished 25-54 year old demographic, they’re getting people who will never make a purchase decision, along with those who will buy one someday and a few who will buy tomorrow. There’s a lot of waste – which is one reason there are a lot of commercials.

The onerous commercial load on ad-supported television by itself is enough to turn high quality programming into a low quality experience. Who wants to sit through 9 ads? Not the people with DVRs for one.

So fixing TV – which requires the cooperation of all the parties – is a priority for a quality future. Internet companies have made some targeting progress, but really, who cares? Banners are the direct mail equivalent and will never be a big driver of the economic support needed.

And, judging by my own viewing, no one outside of Hulu has addressed commercial issues for online video. Most sites make you sit through the same 30 second spot over and over as a preroll. Hulu does a good job with its commercials.

As I’ve referenced in earlier posts, turning most video into individual streams is the key to carving up commercial breaks to produce the most revenue from the least possible number of ads. And that’s going to require a lot of reinvention.

Post #2 – Micro-payments

I am relentless in my belief that micro-payments need to play an important role in the future of online media. While I am not alone in this belief, “everyone knows” they’ve been tried and haven’t worked.

Tell that to the cell phone companies, particularly Docomo in Japan. When you use your smartphone to consume mobile content, or just make a phone call to get some highly personalized custom content (i.e. conversation), you are using a very effective and accepted micropayment system.

Your are either paying a bulk monthly amount for a certain number of minutes or maybe an unlimited plan. You may go over your monthly limit for data (most unlimited plans are going away) and you will start paying incremental fees for your content that month. Generally the content owner isn’t getting anything unless they are part of a service offered by your carrier, but the phone company is always making money and you probably never even think about it because the incremental cost is so low.

The same would be true if there were an underlying account charging you for each page you access or for each video you watch (or a per minute charge for video). For prices as low as a fraction of a cent, you are unlikely to avoid content you really want. You wouldn’t really have to think about it as long as the price was reasonable.

The problem of course is that there’s no way currently for content owners to put a micro price tag on their content and get paid. “Everybody knows” that micropayments don’t work. The reason is that a start up can’t get the critical mass. Only a handful of companies could implement such as system, but if they did, they would reap huge rewards.

The big ISP’s, like Comcast and Verizon, could do it, particularly if they co-operated to jointly exchange of customers. Amazon could do it. Google might be able to. Yahoo! has a shot at it, which could revive their growth hopes if successful. Netflix has a chance for a video-only version which could expand into other content.

There is a still a lot of high value content that is locked up because it’s too valuable to give away with only advertising banner support. If there were a viable micropayment system, a lot of owners would switch some portion of their content to it.

There are millions of dollars in fractions of a cent waiting for someone.