THE PRICE POINT

The Price Point | The Television Programming Stream Narrows

Everyone who is anyone is now in the streaming business, including the traditional over-the-air networks. Late entrant NBC was so eager for a piece of the pie it was willing to anger its affiliate body by moving some first plays to Peacock. This has damaged an already fragile relationship. Brand is what strong local television stations do best. Whatever the future may bring, their unique relationship with local audiences is an advantage no other form or media can claim.

Wall Street was shocked last week when streaming giant Netflix missed earnings and issued weak third quarter guidance. A brand so dominant that new television remote controls now come with dedicated Netflix buttons, the massive service still dominates over-the-top but, like over-the-air networks of the 1980s, the threat of fragmentation is real and growing. Shame on anyone for being surprised.

Even more shocking was Netflix’s note that Chinese consumer-produced video app Tik Tok is now a major threat.

Think what this means. YouTube has always been about consumer-produced video, but Tik Tok is about consumer-produced entertainment. Consumers want more than choice. They want to play the game.

Netflix’s other problem is that users are becoming provider neutral. My wife’s Amazon Fire Stick allows her to watch PBS’s Inspector Lewis and Amazon Prime Video’s The Marvelous Mrs. Maisel without knowing or caring who provides the product. In the world of program streaming, brand has become secondary. Viewers go to whoever has the current hit.

Still, everyone who is anyone is now in the streaming business, including the traditional over-the-air networks. Late entrant NBC was so eager for a piece of the pie it was willing to anger its affiliate body by moving some first plays to Peacock. This has damaged an already fragile relationship. Since affiliate program payments are now the No. 1 source of network revenue, someone please explain to me why this makes sense?

A friend of mine believes the end game for over-the-air networks is to eliminate affiliates entirely. He uses the term disintermediation. He may be right. If so, I have a simpler word: suicide. Network viewership continues to be heavily dependent on local news strength. Look no further than Boston, Charlotte and Raleigh for recent examples of what happens when a network moves to a weaker station. Without affiliates, the networks would be reduced to the same status as cable channels.

BRAND CONNECTIONS

The crazy thing is that all this obscures the real network/station opportunity of the future. NextGen TV is not just about addressable commercials. It will provide a two-way platform allowing stronger stations to deepen consumer relationships in ways we have not yet thought of.

Understand that NextGen TV will not be driven by networks. It will be under the full control of stations. They will consider their network affiliation to be “one” of their most important products. This will lead to a much broader world than today’s simple linear streaming.

More than anything else, Netflix’s earnings miss reminds us that unless you are Walmart, it is always better to be in the brand business than the commodity one.

Brand is what strong local television stations do best. Whatever the future may bring, their unique relationship with local audiences is an advantage no other form or media can claim.

It is not crazy to think that someday, with network loyalty a thing of the past, some television stations might find new and creative ways to bring first-class programming to their audiences, perhaps from Netflix or even Tik Tok.

Hank Price is a media consultant, author and speaker. He is the author of Leading Local Television, a handbook for general managers. He spent 30 years managing TV stations for Hearst, CBS and Gannett, including WBBM Chicago and KARE Minneapolis. He also served as senior director of Northwestern University’s Media Management Center and is currently director of leadership development for the School of Journalism and New Media at Ole Miss.


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