Programmers and Advertisers No Longer Need Rely On The Middleman -- Television -- to Package Everything Together For the Masses. Within 10 Years In Most Homes It’s Goodbye TV and Hello Media Center.

Already around the globe television providers are experimenting with selling programs via broadband that appeared on television the night before. Live sporting events are being streamed for free, some with advertising sponsorship, broadcasters are even talking about a free catch-up period to view programs on broadband that were missed when televised, and advertisers are forming their own broadband channels to promote their products.

It used to be real simple. Programmers made the programs, advertisers picked up the bills by advertising within those programs and paying a lot of money for the privilege because they were drawing in the masses, and television was the delivery vehicle that made all of that possible. But the Internet, more specific ally broadband Internet, has changed the whole equation.

Today the consumer decides when to watch a program. The television station may decide when it transmits that program but the viewer decides when to watch. The trend started years ago with the VCR and today it has dissolved practically into a quagmire of choices. Tape it on the VCR, or the PVR, or pay to watch it the next day via broadband delivery or even watch it for free, advertising sponsored via broadband, or watch something that is not being televised but available via broadband, advertising sponsored or free…the list goes on.

ftm background

Is There A Correlation Between Internet Advertising Increasing 22% in 2005 While National Newspaper Advertising Dropped 4.7%, And That Some 50 Million Americans Now Turn to the Internet For Their Daily News Fix?
As broadband Internet access increases so will their users turn to the Internet for their daily news requirements, according to significant US research. And since 37% of adult Americans now have broadband compared to 10% four years ago, is it just coincidence that advertising revenue growth for traditional media fell last year while on the Internet it soared 22.3%?

Before Long the UKs TV Magazines Will Need to List Broadband TV Programming From Several Vendors, But There Will Be No Schedules – Welcome to Watch What You Like When You Want
BT, the largest British telephone company, is teaming with Philips and Microsoft, to turn itself also into a television company next year offering 30 digital terrestrial channels via aerial reception plus a video on demand library and a “catch-up” service covering the past seven days delivered via broadband. Not to be outdone, satellite broadcaster BSkyB is paying £211 million for broadband supplier Easynet that puts the company, 37.2% owned by News Corporation, into the telecom and broadband business.

Can Television Survive Broadband?
With more and more program makers eyeing broadband Internet as the overall video delivery preference within the next five years, and with broadband experiments on the verge of opening vast new pipelines into the home the obvious question is then what happens to television as we know it today?

After Asia-Pacific, Europe Is The World’s Second Largest Broadband Market With More and More Video Programming Being Streamed
Europe is witnessing the death of dial-up Internet with some countries probably eliminating it completely within five years, according to a new study by Strategic Analytics. And as broadband grows, so, too, are the video streaming programs on offer, whether from new start-ups or major players like the BBC and BSkyB.

With Broadband Penetration Rates Breaking All Forecasts Any Newspaper Site Not Using Local Video on Its Web Site Is Already Behind the Times
In the UK telephone operator BT announced it has reached its milestone of 5 million broadband clients a full 12 months early.

For programmers the opportunities are endless. Even more venues on which to sell programming, but the trends are showing that the same program as shown on TV may not necessarily work on mobile or even on broadband. The challenge is to get the right content to the right medium.

And for the TV networks broadband is a whole new vehicle on which to make money. CBS earned all of $4 million in April from broadband streaming of the NCAA Men’s basketball championship, making available on broadband those games that were not being televised locally. Disney is going to show some of its top shows via broadband – it’s great when you own the producing studio and the television network -- so for programmers and networks broadband expansion translates into more money whether it be from advertising sponsors or pay per view.

Well, if it doesn’t get more involved in the digital world real fast it may well get left behind because the basic concept of television that we all grew up with will be gone faster than you may think. Television may have only around three years left to really get its act together.

According to new report released by Research and Markets by 2008 video streaming technology will be mainstream and fully integrated into any broadband service. By 2015, 90% of all households in the developed world are forecast to have a home media center – a home entertainment hub that will simplify on demand services such as choosing when to watch any video offering. Video on Demand is expected to grow to 350 million households by 2010, about the same number of households that globally subscribe to cable television today.

It was in that light that Beth Comstock, NBC Universal’s president of digital media, who was behind the network’s $600 million purchase of the iVillage portal aimed at women, told local television stations at the annual marketing conference of the Television Bureau of Advertising that they needed to concentrate on expanding their web presence. For television as well as newspapers it is all about multi-platform.

And with newspapers making about nine times more off their web sites than television makes off theirs, the work of the local station is cut out. And she warned of the seriousness of her message by telling the delegates, “This isn’t about deriving growth, this is about staying in business.”

She likened the Internet to a raging river and local television needs to jump right in. And there was no doubt the key to success to all of this was local content – say isn’t that what newspapers are preaching, too?

But there is the rub for TV. Stations have been cutting back on local programming to save money. And news budgets are continually being slashed. And yet now they are being told that in order to survive they need to make a considerable digital presence and to do that they need all of that local programming back again. How can a station manager win?

Even more worrying, she said it is not just a matter of regurgitating the same video that showed previously on television. “It’s not good enough just to repurpose your television content onto the digital platform. The ultimate challenge is in developing good content that is right for the digital medium.” In other words, you’ve got to spend some money to make sure you have the right product.

She told the stations to concentrate on the three “Cs” – context, community and content. She urged them to get active in providing news and information as it happens to all digital platforms including mobile, the idea being to make the television station relevant in the context of the viewer’s busy day. For community she urged that stations bring people together for whatever subjects interest them – shades of MySpace -- and content should include consumer video in addition to what the station can produce itself.

The networks are conscious they cannot just leave their affiliates out there to flounder. To help the stations along in that digital world NBC and its 213 affiliates have formed a joint venture to offer via the Internet various informational programming produced by the local stations. The service would be advertising sponsored – perhaps by some of those very same television advertising dollars that are being diverted to the Internet. Fox, meanwhile, reached a deal with its affiliates to share revenue for video on demand and other digital distribution streams.

And as real questioning is going on about the need for a middleman for television, those same questions are being asked about the need of middlemen portals on the Internet, too. Do the networks and programmers really need the Yahoos and Googles to ensure the most eyes for programming?

Just a few months ago the answer would have been a definite “Yes”. Today, it’s not so sure. The original thinking was that the portals, that draw in the big crowds to make advertising sites a big success, would show network programming, advertising supported on their portals – a good deal for them with no production costs, but they get advertising money just like local TV stations – but today the networks and programmers are questioning the need for the portal middlemen.

Instead the networks are experimenting in putting some of their programming for free on their own websites in services that won’t let users fast-forward the ads. The portals still think the networks need them for promotional purposes – how will viewers find the programs otherwise and to make big money on the Internet it requires large numbers of viewers -- but television is about as powerful a cross-media promotional platform that there is.

If the networks do make a success of doing it by themselves then for Yahoo and Google to get into video in a big way – which they know they need to do -- will mean they need to buy in or produce their own programming – something they have been reluctant to do so far – but that NBC venture with its affiliates might be the perfect type of vehicle for their purposes.

For all the negatives, it is not yet all doom and gloom for television. According to a recent Nielsen survey for the Television Advertising Bureau, 82% of Americans believe that television advertising is the most influential compared to just 7% for newspapers, 5% for radio, 4% for the Internet and also for magazines.

When it came to the most authoritative advertising medium 51% said television compared to 24% for newspapers, 11% for magazines, 10% for radio and 5% for the Internet. And 44% said television was their main news source compared to 11% for newspapers and 9% for both the Internet and radio.

And as the first source for local weather, traffic or sports it was TV with 56%, the Internet 13%, radio 11% and newspapers at the far end with 7%.

With those kinds of numbers, it makes you wonder why it is television more than any of the other mediums that are suffering from advertising spends being diverted to the Internet.

Maybe the advertisers understand something that the Nielsen survey didn’t pick up on – something like market fragmentation and value for money?

Programmers and Advertisers No Longer Need Rely On The Middleman -- Television -- to Package Everything Together For the Masses. Within 10 Years In Most Homes It’s Goodbye TV and Hello Media Center.

It’s a simple logarithm: As broadband usage goes up, television usage as we know it today goes down. And broadband usage is going way up!