The incursion of Internet-based TV otherwise known as over-the-top TV or OTT is the latest threat to local TV broadcasting. Today, you can walk out of a big box retailer like Best Buy or Costco carrying a flat screen TV equipped with WiFi, QWERTY keyboard remote control, entree to app stores and one-button access to such streaming TV services as Netflix.
Broadcasting can choose to ignore it or to be a part of it. If you are not ready to roll over and die quite yet, my advice is to be part of it.
Without a strong OTT presence, stations will be locked into a death spiral of lower ratings, leading to lower revenue, leading to cost cutting, leading to lower ratings, leading to lower revenue….
But how? Many stations are still struggling with the costs of upgrading to HD and file-based workflows for news and other local production; with maintaining attractive websites; and with exploiting mobile opportunities in its many variations.
How? Cooperation.
In each market, TV stations must band together and share master control and other technical facilities. It’s the key to operating in the traditional broadcasting business most efficiently, and to entering the new worlds of mobile and OTT.
This local hub, or Media Processing Center as I call it, would be a mash-up of master control post house and telco data center. It would have everything needed for content aggregation; file hosting, sharing and distribution; ad creation; and management. Stations would continue to maintain and operate their own newsrooms, traffic and billing.
Locally outsourced and cooperatively operated on a centralcasting model, the MPC empowers TV stations to become right-sized and more profitable while implementing new services. For the participating stations, it would replace heavy capital and uncertain maintenance costs with steady monthly payments.
Outsourcing the MPC to an independent company would insure that it is even handed in dealing with the participating stations and that the proprietary interests of each station are safeguarded.
The MPC proposal is a survival manual and road map to prevent the mass extinction of local broadcasters. It will improve economies of scale and encourage innovation that the stations need to compete against rival TV media that continue to grab for broadcast market share.
TV stations cannot stop the competition, but they can become better competitors by wringing all the money they can out of infrastructure and reallocating the savings to programming, new services and marketing. TV anywhere and anytime tools and widgets will empower viewers to interact with the local stations and increase on-air ratings.
TV stations have clear advantages over their new media competitors. They have local programming that outsiders cannot easily duplicate. They have local account executives and long-established personal relationship with the heaviest local advertisers. They have an unrivaled ability to promote new services.
All of these assets can be leveraged in the new media world — if the infrastructure in there.
How can you help the MPC proposal become reality? Spread the word and send me feedback. Talk with other stations in your DMA. MPC is the best hope for providing the resources and infrastructure needed for growth in the rich media space.
Richard Lyons is a principal in MPC Concepts, a startup dedicated to developing MPCs in the top 40 TV markets. A more detailed description of the proposal is available by clicking here. Lyons can be reached at lyons.rich.pvp@gmail or 818-516-0544. His partners is the effort are Ken Fuller, former director of engineering, Azcar; and Randy Hoffner, the former manager of technology and quality control, ABC operations and engineering, West Coast.
Comments (11)
charles spencer says:
April 7, 2011 at 12:05 pm
Couple of questions, couple of comments:
Some groups have established group-wide MPCs, and these have the advantage of being able to record one syndicated show and feeding it out to many of the stations, as many companies do group-wide deals for syndicated shows. That model reduces capital cost over the DMA-wide MPC, as that one has to record every single show out there and play it back to only one station, because of market exclusivity for a show. True, the DMA-based MPC would only have to record 1 copy of local spots, but at 120 local spots vs. a single one-hour syndie show, that’s a reasonable trade-off.
The higher capital investment in storage capacity of the DMA-based MPC is offset by the higher transmission costs on the group-wide MPC. That’s a call for Corporate to decide on.
But, group-wide MPCs benefit from having a single, consistent Traffic/Sales/Billing infrastructure to talk to the MPC. Competitive concerns between the various stations in a DMA-wide MPC would seem really almost insurmountable, not to mention the pains of integrating diverse Traffic/Sales/Billing systems to one automation system.
Hans Schoonover says:
April 7, 2011 at 12:31 pm
Master Control including digital and transcoding product savings could be about 30% of realized MPC savings – or maybe none (0%) – if a TV station partner only recently rebuilt or is already connected to a group owner’s Centralcasting infrastructure. We offer “Three solutions and one important mandate” Please email me for a complete answer, Rich Lyons
Hans Schoonover says:
April 7, 2011 at 12:35 pm
Resistance to change and the adversarial nature of in-market competition presents an enormous emotional obstacle. Professional and college sports teams work together by forming leagues which promote good business practices and industry well-being within the context of survival of the fittest competition. To foster cooperation amongst competitors you “hire” an independent trusted authority to properly allocate resources. The MPC team has drawn up a broadcast game plan for environmental adaptation, evolution, survival and success in the face of the internet revolution.
– As Benjamin Franklin famously stated at the signing of the Declaration of Independence:
“We must all hang together, or assuredly we shall all hang separately.”
Kathryn Miller says:
April 7, 2011 at 1:03 pm
over the top is a delivery technology — a delivery technology that tv can participate in, if it wants to. OTT is not competition to television stations, unless people in their mother’s basement with a webcam are competition to a local news service.
Hans Schoonover says:
April 7, 2011 at 1:31 pm
Local advertising spend trend data on traditional media is expected to fall by $5 – 8 billion in 2014. The cause is escalating demand for iTV; including the Roku XD|S, Logitech Google TV, Apple TV, Microsoft MediaRoom and many others. MPC provides better tools and local fulfillment…. Internet based companies want your broadcast advertising sales revenue, and not just a piece of it, they want ALL OF IT!
Hans Schoonover says:
April 7, 2011 at 1:36 pm
The expense of doing it yourself coupled with infrastructure compromises will turn non-MPC participants into information superhighway road kill in the face of steamroller competition from the much larger internet and telco companies. A local TV Station all alone by itself might look good trying, but eventually their lack of sufficient scale will prove to be the same Achilles heel of many a heroic yet fallen dot-com start-up: under-capitalization eventually starves the eager but ill-equipped beast to death even as it grows.
The time to band together, share infrastructure, and build the next generation of local broadcasting in the internet era is now, call me to learn more.
Cameron Hutton says:
April 7, 2011 at 2:05 pm
The notion of combining MCO/NOC operations in markets is interesting from a variety of levels but I am having trouble understanding any relevance to that notion and “surviving OTT”?
Seems to me these are two completely separate issues. Consolidating a backend system does not address OTT and is more about a decision on cost control and/or content creation.
OTT is actually a tremendous opportunity for broadcasters. It provides a new way to engage viewers and audiences in more great local content, and ultimately drive new revenue streams. Our company has deployed numerous local TV news widgets for multiple station groups. We are on OTT sets from Sony, Samsung, Toshiba, Vizio, etc…and users can access on-demand content (news, weather, sports, video) from their local station via their TV set with a click of the remote.
In addition to deploying an OTT solution, another relevant activity for broadcasters that want to leverage the OTT opportunity is to participate in the ATSC, and in particular with the emerging 2.0 standard. Investing time in creating and defining the technology and how it can interact on an internet-connected device is a great way to get involved and positioned for success.
Hans Schoonover says:
April 7, 2011 at 2:23 pm
The MPC business model is designed as an answer to internet encroachment…. READ: By Dawn C. Chmielewski and Meg James, Los Angeles Times January 18, 2011: For Hollywood, it was a tough 2010. ….. “The jury is still out on whether there is a digital model that can replicate the profitability of the old linear model,” Bernstein’s Moffett said. “Nobody has cracked the code for online profitability.”
Hans Schoonover says:
April 7, 2011 at 2:26 pm
MPC Concepts team mission: 1) MPC is for broadcasters who want to quit losing viewers to the Internet while not risking core profitability. And 2) Our goal is for MPC long term capital value to increase with better local audience ratings resulting in increased multimedia business revenues.
Hans Schoonover says:
April 7, 2011 at 4:43 pm
Thank you for your calls: My email is [email protected] …… MPC is a “Rainmaker” bringing local TV blessed relief from the Ad revenue drought! Think about it; “What killed most of the railroads during the last century?” No, it was not the automobile or aviation, it was limited thinking. They thought they were in the railroad business — actually they were in the business of people and product transportation. What business do you think you are in today?
Hans Schoonover says:
April 21, 2011 at 8:43 pm
What is the MPC value proposition to partner TV Stations?
– Lower monthly payments on the road to ownership of their local MPC
– Protects an individual station’s brand while reducing costs through shared infrastructure
– Partnership delivers a competitive advantage against Cable, Telco and IPTV services
– Helps TV Stations build their future TV projects where DTV & the Internet become as one