MEDIA CURRENT: YOUR TV FUTURE
Internet Video (IV) will play an increasingly important role in the distribution of independent “film.” Even for the few who still shoot, edit and distribute on 16mm or 35mm stock, your future – if only for marketing and promotion — is tied to the digital 1s and 0s that are redefining media and communications.
IV distribution is restructuring release “windows” and revenue recoupment. Revenue opportunities through DVD sales are shrinking; the TV market (with the exception of HBO, PBS and some made-fors) is evaporating; international commitments are tougher to snag; and the once higher mark-up on educational sales is a thing of the past.
For indie makers, IV distribution promises a new opportunity to reach viewers, recoup the production investment and go on to make one’s next film. However, the IV market is like the 1848 California Gold Rush – everything was possible, but few found gold.
It is impossible to predict the future of indie film distribution, but three conferences on how the commercial television business are addressing the disruptive impact of the Internet offer some useful insights. They paint a dismal picture of what’s coming and how indie filmmakers might be able to take advantage of these changes.
The Social TV Summit focused on how the industry has been adapting to “out-of-the-box” changes; the Future of TV Forum focused on the industry’s efforts to keep technological disruptions “inside-the-box”; and the TV of Tomorrow sought to thread the needle between the two approaches. As one industry wag proclaimed, the old “www” for “World Wide Web” now means video “whatever whenever wherever.”
Broadband Internet is a disruptive technology challenging established ways of doing business for movies and television. It challenges the TV business in three critical ways: (i) it represents a new way to distribute programming content through either Internet Protocol TV (IPTV) or Over-the-Top (OTT) methods; (ii) it offers a new, more interactive or social media experience through services like Twitter and Facebook; and (iii) it is spawning the incorporation of second (and sometimes third) interactive devices (e.g., computer, smartphone or tablet) as part of the viewing experience.
Three additional factors are adding to the overall challenge facing the TV business. First, new TV sets sales have stalled, a development attributed to the ongoing recession, the failure of 3D-TV to catch on, and the changing viewing habits of those under 30 years. Second, cable TV subscribers are “cord cutting” or giving up the $100 a month cable bill for broadband-only access via an alternative set-top device (e.g., Roku box, games player, computer or smartphone) to OTT content, including Netflix, Amazon and Hulu. And, third, changing cost structures and programming economics are forcing TV networks to look for cheaper and cheaper content to fill the 24/7 schedule. (One conference presenter reported that the new YouTube programming venture is paying $100,000 an hour, down from $500,000-plus for network shows.)
The consequences of these developments are significant. Put simply: What is television? Is it the TV set, the wall-mounted flat screen “box” that displays an ever-growing assortment of programming? Is it the channels and/or networks that one turns to in order to find a particular program? Or is it the program itself, the shows and stars one watches – and advertises underwrite?
Networks, like studios, are being superseded by highly promoted “branded” shows distributed through multiple viewing platforms. Do viewers care if “60 Minutes” is on CBS or “X-Factor” is on Fox?; except for Disney/Pixar animations, who cares if J. Edgar is distributed by Warner Bros? Even the online movie bible, iMDb, doesn’t identify the distributor. TV networks face the same fate.
The three conferences were pegged to TV industry insiders and drew knowledgeable pros. Most of the speakers represented specialty tech tools and “value-added” marketing and advertising companies as well as some of the major TV networks and distributors. They laid out the landscape of the TV-video future – one even more dependent on advertising dollars. Little attention was paid to what could be called (for a lack of better word) “premium” programming services like PBS and HBO that show longer-form (one-hour-plus) features and are not driven by ad revenues; equally revealing, little mention was made of the disruptive role of YouTube and user-generated-content (UGC), let alone UGC porn.
The key buzzword at both conferences was “engagement.” It represents the effort by TV producers and programmers to harness the disruptive effects of the new technologies to strengthen TV ad sales. Various speakers saw Twitter and Facebook as providing invaluable opportunities to take advantage of the multi-set phenomenon. They identified four ways that such services could engage and hold viewers: (i) enabling socially shared exchanges, (ii) offering appropriate games and voting schemes, (iii) providing value-added information and (iv) facilitating interactive engagements. These new features are intended to capture and hold viewers so as to maximize ad revenues; however, fully accurate audience measurement has not yet to catch up with the new TV viewing practices.
Nevertheless, the media forecaster Jack Myers was bullish on how the online social experience would contribute to significant growth in TV advertising. He estimates that social TV advertising and marketing spending in 2011 at only a $150-$200 million, but projects it to reach an estimated $8-$12 billion in 2020; online video advertising revenue is projected to grow from an estimated $3 billion in 2011 to $30 billion in 2020. Myers noted that that in 2020, existing “broadcast and cable networks [will be] capturing 70% of this spending.”
Speakers at each conferences repeatedly acknowledged that “content is king” and that it is only through appealing programming that the TV industry could attract and hold an audience. However, one consequence of ongoing changes in TV viewing habits and the role of online “engagement” is the feedback loop that is developing between viewers and program producers in the design of shows. While focus groups and testing have long been part of the program production process, the nearly-instantaneous feedback offered through social networking and other interactive online applications may pose the great challenge to the future of TV program production.
Only one speaker, Cliff Marks from National CineMedia (NCM), discussed the theatre setting; NCM promotes on-screen and in-lobby advertising. Marks suggested a new “interactive” tie-in between a movie trailer and a viewer’s smartphone to receive a discount, a 3.0 function of its Movie Night Out app to be launched in Q-1 2012. Sadly, no space is sacred from the advertising message.
These three conferences laid out a broad scenario as to where the future of the TV industry might go. Extrapolating from the events, the following lessons or takeaways can be helpful for indie film and other media makers.
* Long-form narrative content is currently inappropriate for the new world of “interactive” or social television. As one speaker wistfully acknowledged, “Boardwalk Empire” is best appreciated as a good-old TV (and, thus, movie) viewing experience — just sit back and enjoy.
* Social TV’s power to engage viewers can work with feature-length and shorter-form docs, especially when there is a strong “call-to-action” element in the storyline. This can help with the sale of the doc as well as with contributions (in dollars and other actions) to the cause associated with the film.
* The multi-screen TV experience is growing in popularity. The challenge will be how to effectively utilize the other screen(s) to enhance the movie’s overall experience. As one speaker cleverly put it: your duel screens shouldn’t duel! Each screen offers a different experience: the big “wall monitor” is for viewing while the smaller device in your hand (i.e., smartphone) or lap (i.e., tablet) is for engagement.
The TV industry is being challenged by new “cash registers.” Traditionally, cable operators (MSOs) and TV networks have functioned as cash registers. They have, respectively, collected subscriber’s fees and advertiser’s payments, returning a portion to (independent) program producers for the rights to sell their programming “content.” Over the last decade, new means of program purchasing (or cash registers) have emerged with the entry of Netflix, Amazon and iTunes. This development gives TV viewers new ways to acquire and pay for programming, directly threatening the established cable and network TV businesses. This may lead to a more a la carte programming model that further erodes the viability of traditional TV networks and programming schedules.
The big dog at the events was the big disrupter, Google. Together with Twitter, Facebook, Netflix and Amazon, Google is leading the charge to realign the TV business. The Google juggernaut consists of the increasing number of services it offers, the total online population it serves and its deep, deep pockets. Among it most powerful business units are: (i) its hold on the online search function; (ii) its control of the online ad market; (iii) its vast YouTube content archive; (iv) the growing adoption of Android operating system (OS) on smartphones and tables (including Amazon’s Fire); (v) its build-out of a high-speed broadband network in Kansas City, KS and Kansas City, MO; and (vi) the likely approval of its acquisition of Motorola Mobility. This sets the stage to its growing presence in TV, movies and other forms of “entertainment” programming. Its future role is foreshadowed in YouTube’s big toe-in-the-water $100 million commitment to create new online channels.
(Image from Future of Television Forum.)