Since You Can’t Stop New Media, Exploit It

While we can’t stop the clock on the accelerating pace of changes affecting traditional media, we can develop business models that harness their potential to benefit the bottom line. 

I think most of us sympathized with TVNewsCheck Editor Harry Jessell’s New Year’s Eve call for a moratorium on new media. As Harry noted, it’s very hard at the onset to distinguish the winners from the losers. Those of us on the leading edge of these innovations can also find ourselves on the bleeding edge, spending valuable time and money before we’re certain about a return on the investment.

Despite Harry’s clarion call, the 2011 International CES went on as planned, with over 2,700 technology companies displaying their latest to more than 140,000 industry professionals. Fortunately, the show’s agenda also included some insights for media businesses that must sort through the mind boggling array of emerging CE devices and applications and separate the wheat from the chaff.

One of those resources was the Media Money Makers Conference at CES organized by Gary Arlen, president of Arlen Communications, and Arthur Greenwald, president of Greenwald Media, and a TVNewsCheck contributing editor .     

Appropriate for a conference being held in Las Vegas, Bob Chapek, president of distribution for The Walt Disney Studios and one of the conference presenters, described the challenge as “knowing where to place your bets.” 

Shelly Palmer, managing director of the Advanced Media Ventures Group, viewed it as a “tale of two realities.” For Palmer, knowing where to place your bets needs to begin with recognizing the “real world” realities resulting from new technology that has had a significant effect on consumer behavior. The other reality encompasses the “it’s coming” developments, which have yet to materialize and may ultimately be preempted by innovations that consumers adopt in the meantime.

In addition, Palmer noted, the way technology affects behavior may not be how we initially expected. For example, when mobile devices became the third screen for video, it was assumed that consumers would only use them for short video clips. As it turned out, mobile viewing expanded to television episodes and movies once they became available via portable devices, especially once the iPad arrived on the scene. As a result, Palmer says the real-world impact of portable media devices is more about their role within a “best available screen” ecosystem rather than serving as the third screen. 

However, Palmer warned that while TV as an art form is growing, television as a platform is in peril. “Valuations like 60 cents per watchable hour for primetime and 40 cents for latenight are gone. We’re not in the content business, we’re in the business of moving bits and the challenge becomes how to makes these bits more valuable,” he noted.

Disney’s Chapek views the trend as television’s transformation from serving as a mass medium to serving as a gateway to greater choices for viewers. Thomas Gewecke, president of digital distribution for Warner Bros agreed. Gewecke noted that movies aren’t a mass medium. Studios deliver tens of thousands of titles that are consumed by smaller segments of the mass media market. The challenge lies in meeting the viewer’s need for finding the content suited to personal interests, something the music industry has addressed more successfully.

The session’s studio panelists agreed that finding the right business model will be driven by identifying the right windows for the availability of content through media venues. As we’ve seen with the earlier forms of content distribution, the models will also identify the right mix of transactional, subscription and ad-supported payments that achieve the per-unit economics required for profitability. 

Commenting on the increasing audience fragmentation resulting from greater choice, David Cohen, associate editor of Variety, observed that we could theoretically expand the number of channels until there’s one for every viewer. While we’re still seeing the launch of linear television channels, emerging media is also providing solutions that create virtual channels of content programmed by the consumer.

George Schweitzer, president, CBS Marketing Group, views these developments as overcoming another challenge: while the choices for what to watch have increased dramatically, leisure time hasn’t, making the business of attracting viewers more competitive.

For Schweitzer, interactive program guides represent the best way to ensure that a great TV show doesn’t become like the tree falling in the woods without anyone in earshot. Electronic program guides (EPGs) are replacing our use of print guides. However, their potential for driving viewership is underutilized. The reason? Rather than being marketing-driven, EPG’s are meta-data driven. Imagine how much more effective the on-screen guides would be if we were applying the creativity that goes into writing tweets to developing the listing descriptions.

Another CE innovation that has helped the television medium has been the DVR. Alan Wurtzel, president of research, NBC Universal, gave the example of DVRs’ role in adding as much as much as 12% to the viewership of TV shows like 30 Rock with on demand, mostly via online, delivering another 10%. In fact, Scott Brown, SVP of media strategy & digital platforms for the Nielsen Co., reported that as much as 21% of all viewing in the country’s 41 million DVR homes is via DVR playback. Moreover, 45% of all recorded ads are being viewed, according to the Nielsen data.     

The convergence of online and traditional television in our TV everywhere ecosystem is also providing new ways for both testing concepts for a TV series and for providing an aftermarket for shows canceled by the networks. Kevin Pollak, host and executive producer of the Kevin Pollak Chat Show likens his experiences with an online show to his career as a stand-up comedian. In both situations, monetization will follow only if you are successful in earning an audience. 

Pollack and Shawn Ryan, executive producer of Terriers and The Chicago Code, agreed that the prospects for online television shows will get a major lift from connected TVs. According to Pollack, “As soon as the Internet is on the remote, it changes everything.” 

Illustrating the ability of an online venture to provide proof of concept is Justin Halpern, writer/producer for the Warner Bros. show S#!* My Dad Says. The show originated when Halpern, who had moved back in with his parents at the age of 28, began using Twitter to repeat the things his father would say to him. The tweets attracted more than 200,000 users and subsequently led to a book deal and the TV show, which airs on CBS.

Actress Amy Aquino, who currently serves as secretary-treasurer of the Screen Actors Guild, described the organization’s support for allowing emerging digital media formats to grow as balancing how much revenue is expected from new ventures with demands for compensation that its members should receive for the additional work that’s required.

A good example of how demanding an online presence can become was provided by executive producers of ABC’s Lost series Carlton Cuse and Damon Lindelof. Recalling the hours of podcasts and the work that went into projects like the Oceanic World Air website, the producers said the actual on-air content represented just a small portion of the work performed by the show’s cast and crew.

These are just a few insights from the two-day seminar that included numerous other media industry executives. If you are interested in learning more, the CES has put all of the sessions online. 

MFM will also be taking a closer look at the business models that are emerging in response to new media’s impact on our viewers — and our businesses — at Media Finance Focus 2011.

Themed Empowering Progress … Inspiring Growth, the annual conference for MFM and our BCCA subsidiary will be held May 15-17 at the Westin Peachtree Plaza in Atlanta. It is the only event in the media industry that’s fully devoted to financial decision makers from media and communications companies nationwide, and will include keynotes from Cox Media Group President Sanford “Sandy” Schwartz; Sen. Michael B. Enzi of Wyoming; Dennis Lockhart, president-CEO of the Federal Reserve Bank of Atlanta; and Jason Bazinet, a senior analyst covering entertainment, cable and satellite equities at Citigroup.

With the help of these keynoters along with more than 150 industry experts, our conference participants will explore the specific requirements for transforming the latest set of disruptive technologies into the “best bets” for driving new revenues and new growth for our industry. 

We may not be able to put a moratorium on new media, but we can incorporate it into the time-shifting and TV everywhere solutions that capitalize on the changes in consumer behavior they are creating.

Mary M. Collins is president & CEO of the Media Financial Management Association and its BCCA subsidiary. Her column appears in TVNewsCheck every other week.You can read her earlier columns here.