Great Advice for TV Industry

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Stephen White, president of Gracenote, succinctly summarizes excellent advice for the TV industry:

  • You Can’t Take Content Away: The outdated model based on controlling distribution is dying. If you force it underground — that is, “illegal streams and downloads” — you’ve lost the battle.

  • Adapt or Die: The millennial generation is addicted to YouTube, on-demand and streaming services. They no longer tune in at a specific time and date, and are increasingly shying away from paying for premium cable bundles. With filmmakers and producers spending the time and resources to make great TV programing, like “Homeland,” “Girls” and “Mad Men,” delivery methods should be figured out to get these shows to viewers who won’t pay $150 per month in subscription fees.

  • Open the Windows: The “distribution window” is used by Hollywood to define how long a VOD and streaming service can distribute movies and TV programming. The problem? If the window for season one of “Downton Abbey” is about to close from Netflix or your cable provider, and you haven’t watched any of the episodes, you better call in sick to work to get your fill of the Granthams and the Crawleys, or miss the entire season altogether.

  • Stop Explaining Business Models: Movie and TV viewers don’t give a sh*t about business models. They just want to watch their favorite shows — whenever and wherever they choose. The music industry followed the same pattern in the early 2000s, explaining why the economics of music streaming and downloads would not support artists and the industry. Guess who won?

  • Open Up to Developers: Don’t assume innovation will only come from within your organization. By tapping the developer community, you will be able to move faster and find new ways to use or distribute content, which could result in new monetization strategies. Some of the more forward-thinking media properties, including ESPN, are already doing this, allowing developers to hack ad strategies and sports data.

  • Rethink Discovery: As video distribution evolves, there needs to be a corresponding evolution in how people discover new movies and TV programming. If viewers are paying hefty monthly subscriptions (which today support a lot of what they don’t watch), it is critical to provide paths to find what they really want to watch. The current TV guides embedded in our set-top boxes have to be completely rethought.

  • Reinvent Measurement: We still depend on a small sample of viewers to rate the popularity of programs and we base all advertising decisions on this data. However, the technology to measure real time usage inside the TV exists today and has the potential to enable more precise measurement and better targeting of advertising.

Although the TV industry knows better, sort of, than the music industry not to try to kill digital distribution (cf Napster), too many legacy TV folks are kicking and screaming against new business models. Too many are either in denial or simply unable to imagine a new way of doing things. Of course it’s true that legacy systems and structures don’t just go away; many of them may deeply shape new models.

However, those in the TV industry have a choice. They can continue to insist that legacy models be imposed on a changing market, extracting more and more subscriber fees from an increasingly restless audience and further criminalizing audiences who watch unauthorized content. This option will result in an increase of piracy, dissatisfied customers, and extreme vulnerability to disruptive competitors. Sometimes systems change seemingly overnight; what seems concrete one season suddenly evanesces.

The other option is to begin to adapt to new business models immediately. Offer options, choices, convenience, accessibility, positive user experiences, and lower the prices. Instead of confusing price with value and insist that viewers must continue to pay >$80/month for TV, unlock the value of all that pent up consumer demand for easy-to-access reasonably priced nonlinear programming. Sure, content producers may have to lower budgets. Sure, profit margins may shrink. But the outcome will be a growing and profitable entertainment market with a larger piece of the pie for creators.

Audiences need entertainment. But they don’t need specific entertainment companies to provide it. The entertainment companies that survive will be the ones that respond to the market demand for reasonably priced nonlinear programming.

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