The big trade show this week is NAB in Las Vegas where the hot topic will be...video-on-the-web. Which has nothing to do with TV broadcasting as a technology (an increasingly absurd proposition) but a lot to do with the major networks that supply content to broadcast stations.
Virtually every major primetime show on traditional broadcast networks, as well as good share of top programs on basic cable and premium networks, are now available online. But no one knows if TV shows on the web will ever be able to financially compensate for declining audiences on the regular tube.
All this online video experimentation has led to one conclusion so far: broadcast networks (and broadcast stations) had better get used to tiny audiences on the Internet. According to comScore Media Metrix, ABC.com was the top online broadcast network destination on the Internet during February, pulling in 8.5 million unique visitors over its entire lineup of shows for the whole month. Sounds impressive, but at those numbers, any given primetime TV show would be cancelled well before the end of the TV season.
All of the major broadcast networks are still doing well enough, as were newspapers around 2000, when the Internet began its onslaught against the print news medium. But as this NYT article about the trouble at CBS attests, things are not looking good for traditional TV (i.e. "broadcast") networks.
Just as newspapers had a golden final year or two of continued economic health before blogs, online publications, news feeders and other Internet rivals really accelerated what has been a decades-long decline, it's possible that traditional broadcast networks are in their last throes as strong businesses before web video competitors accelerate their own decades-long decline. When ABC can only pull in 8.5 million unique visitors on the web for an entire month, but has built its business model to pull in 19 million viewers for a single episode of Desperate Housewives, something's got to give.
Granted, the Internet can extract an advertising premium because of the ability to track actual viewing times and frequencies. And web video audiences will no doubt grow over time. Plus there's the (non-UK, non-Canadian) foreign sales market, where the whole web video viewing craze is about three to five years behind the U.S.
Still, how will broadcast networks cope with the tiny audiences that the web delivers? Unlike newspapers, which were far more wedded to the old ways of doing things and dependent on not-easy-to-jettison physical distribution, all of the broadcast networks are becoming adept at transitioning themselves to this new more competitive world. News Corp., Disney, CBS, NBC-U are diversified entertainment conglomerates.
But to drop from an audience of 19 million to a fraction of that is going to require some fancy footwork. We'll hear all about it as the NAB show gets underway.
Posted by Cynthia Brumfield at 4:54 PM | Print | Comments (0)One of the most strangely-timed potential corporate mergers was announced this morning: ailing video rental giant Blockbuster has offered $6 per share to buy ailing retail electronics giant Circuit City, representing a hefty premium over the $3.90 closing price Circuit City fetched on Friday.
Blockbuster thinks the combination would result in a "$18 billion global retail enterprise uniquely positioned to capitalize on the growing convergence of media content and electronic devices." Initial reaction, however, is almost scathing.
CNET's Larry Dignan says "Here’s a deal where 1 + 1 = 0.5." Henry Blodget's reaction: "Tie two bricks together and they still don't float."
They're both right. Both companies are teetering on the edge of oblivion and we're in a recession, no friend to the retail industry.
But, at least Blockbuster CEO Jim Keyes is behaving like a forward-looking CEO of a dinosaur video rental company. Blockbuster has nowhere to go, faces killer competition from Netflix and its recent forays into the online movie distribution business won't help -- there's just too much competition.
Instead, Keyes thinks that Circuit City will provide Blockbuster with the infrastructure it needs to enter the next hot thing: distributing video to TV sets and mobile devices. "What this combination provides is the ultimate distribution channel for [digital] content," he said during a conference call to discuss the bid.
"It's not necessarily downloading content to the PC that will ultimately capture the imagination of the consumer...The opportunity to get that content on your TV and your mobile device is a game-changing opportunity."
But there are major roadblocks to reaching that game-changing opportunity. For one thing, Blockbuster will likely have to incur debt to take Circuit City on. For another thing, Circuit City isn't playing ball.
Blockbuster went public because Circuit City won't take the next steps in making a deal reality. Blockbuster "decided to make the offer public so that the circuit city shareholders can decide for themselves," Keyes said during the call.
Finally, despite the forwarding-looking nature of Keyes' vision of transforming Blockbuster into a leader in delivering Internet video to the TV set or mobile device, there's not a lot of immediate money to be made in this still-nascent sector. We're talking years before mobile TV and web-video-to-the-TV generates enough cash to cover the costs of merging these two dinosaurs.
Posted by Cynthia Brumfield at 9:38 AM | Print | Comments (0)
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