Recently I wrote about the “arrival” of video on the Internet. I thought that I’d get a few weeks at least until there were some other significant developments. But, no, the announcements keep coming. Last Monday Disney went public with its plan for free access to programming, the day after broadcast. Hard on its heels Fox released its plan to make its first run shows such as “24” also available the day after broadcast.
These are breakthrough developments for three reasons:
First, both these broadcasters are extending the model they know best: free programming, supported by advertising. Disney’s plan is to embed traditional spots that cannot be skipped or fast forwarded through, although the programming itself will have the pause, rewind and fast forward features we use on our personal video recorders. Fox did not provide that level of detail, so it may or may not have the same expectation for advertising.
Second, Fox has explicitly said it will split the advertising revenue from its Internet operation with its local affiliates. This notion of the networks generating revenue from its programming, possibly at the expense of lower viewership at the local affiliates during the initial broadcast, has been a sore point with the affiliates. Fox has addressed them head on—and presumably to the satisfaction of the affiliates.
Third, together with CBS’ offering of free online access to the NCAA tournament while charging for ad-less replays of hit shows like “Survivor,” says that the old time networks are adapting to a new game: multiple business models. Anne Sweeney, president of the Disney-ABC Television Group was right on target when she told a cable executive audience, "None of us live in the world of one business model.” They are seeing these options as an opportunity and responding accordingly. Previously much of their motivation was largely defensive, to hedge on the threat the Intrenet posed.
One of the benefits of the Internet is that it expands the options available to everyone—both users and content providers. In the past, resources were scarce enough that there was limited room for experimentation and segmentation on television. Broadcast spectrum was allocated in such as way that it almost mandated that it be used to reach the largest possible audience, hence the mass audience programming of the old networks. Cable expanded choices, allowing Time Warner and others, for example, to offer user-funded channels, such as HBO, with a different programming model than on its ad supported WB broadcast network.
But the Internet, helped along with broadband, is a marketer’s Nirvana and a viewers Utopia (well, at least compared to the first 50 years). We have free first run TV, paid first run, ad supported free next day access with ads or paid commercial-less next day access. There are opportunities for downloading to small, portable players and larger, fixed displays. Advertisers can efficiently target smaller audiences than ever, converting video into the equivalent of the print world’s magazine rack.
Michael Nathanson, media analyst for Sanford C. Bernstein & Company, tells it straight: “A lot of companies are trying experiments like these, not just Disney. But no one knows what the business model is and whether it will pay off." Very true. And the same could be said in the early days of radio, when there were experiments with different subscription and advertiser models.
The difference today is that we are likely to find that multiple models will profitably co-exist with one another, which should please both stockholders and entrepreneurs. And consumers will soon find – to borrow from another industry—they can “have it their way” when it comes to video
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