Broadcast Media Dead Within Ten Years
Ten years ago, it was obvious that as soon as consumers had enough bandwidth coming into their homes, broadcast media would start to die. In the last few years, that threshold has been crossed as home broadband speeds reached 2Mbps, 8Mbps, and now 20+Mbps. In parallel with the development of broadband technology, early adopters started to download their music, TV shows and movies. Today, we’re at a tipping point: the consumption of downloaded audio and video content is extending from being the preserve of the early adopter crowd, towards the high-volume mainstream. From here on in, it seems clear that the level consumption of broadcast media is going to drop off rapidly.
If we look back to when early adopters first started downloading significant amounts of media, we find it was about ten years ago. It’s taken a decade to reach this tipping point of downloading becoming mainstreeam. So, what are the early adopters doing today? Well, they’re beginning to cancel their cable TV and satellite TV subscriptions, relying solely on downloads for their media needs. And, where the early adopters lead in this area, history has shown that the mainstream will surely follow. All things being equal then, in ten years, broadcast media will be all but on its deathbed.
Why is this happening? One reason is simply that broadcast doesn’t simply doesn’t meet people’s needs as well as downloading does. In large part, that’s because of the failing business models of media companies around the world. Traditional media companies like to dice-and-slice their intellectual property. For example, by trying to restrict viewing of certain shows by geographical region. Consumers, on the other hand want to watch what they want, when they want; and that’s what downloading lets them do.
Laggard traditional media companie are only just beginning to understand what’s going on, despite the fact that the changes are occurring over a period of decades. So slow have they been to react, that new, Internet-focussed media is starting gaining a foot-hold. Audio podcasts are already more interesting than radio, especially talk radio; podcasts are serving their audiences with higher-quality programming than you’ll find on any radio station - for example, The Gillmor Gang, or This Week In Tech. Video podcasts are now reaching similar heights of achievement, despite the increased time-commitment that producing high-quality video programming requires compared with audio. Even on the most limited budgets, the best talent is out-performing traditional TV companies. For example, The Totally Rad Show is produced in a garage by four people (three in front of camera, one behind), but the use of green-screen means that you’d never know.
To date, audio and video podcasting has tended to serve small, niche audiences that are tech-savvy. However, in the coming decade, as the high-volume mainstream starts to adopt the technology, new audiences for more varied types of programming will emerge.
It’s not only TV and radio that’s at risk from not reacting to the needs of their customers; even movie studios won’t be immune. Today, instead of just being focussed on making great movies, movie studios prefer to focus on making movies that employ hundreds of people per movie, and have budgets in the tens or hundreds of millions. The truth, though, is that you don’t need more than low to mid single-digit millions of dollars to make a great movie; and that creates an opportunity for Internet-focussed movie companies to emerge.
In the next decade, it’s going to be truly fascinating to see how traditional TV, radio, music and movie companies react to a world that’s just about to see fundamental change taking place. Today, many of these companies seem to be more focussed on suing their customers, than on trying to meet those very same customers’ needs. So far, old-media’s attempts at providing on-line video, for example, have mostly terrible (an exception is the BBC’s iPlayer service)… and they wonder why their services haven’t taken off! Old media is going to have to do better, because if these guys carry on they way they’re going, they’ll reach oblivion long before 2018…
Asam Bashir wrote:
Broadcast media needs to understand relationship between switchover disruption and incentive to innovate for a monopoly. Since broadcast media has decreasing market power, the incentives to innovate become more attractive.
http://levine.sscnet.ucla.edu/papers/monopoly_innovation.pdf
Also some great arguments for decreasing IP protection as market increases,
http://levine.sscnet.ucla.edu/papers/scalerev10.pdf
Posted 28 May 2008 at 6:50 am ¶
Mr X wrote:
Video killed the radio star…
This is complex. First there is the same tension between the producers of content and the distribution channel - clearly with more distribution channels the power is going to shift towards the content providers - just like in music - however, just like in music record companies do fill a valuable role in sorting the wheat from the chaff - most of the bands you hear breaking free of record companies are famous already - it’s really hard to make it big on your own - there is just too much noise (sic).
The early pioneers on the net don’t have that much competition - they soon will and new shows may find it much harder to reach critical mass.
Perhaps more than music ( although music has it’s very influential producers ) the TV companies actually have significant input into the final creative content - that role is still needed and I’m not sure it will move beyond the commissioning TV companies easily due to capital costs ( aside from shows like totallyrad which a terrestrial channel might put on at 4 am )
Then there is the broadcast mode - ie the idea that everyone gets the same program at the same time - ( some distribution methods mandate this to some extent, other follow the model but are not limited to it - so lets separate the technology of distribution with the idea of broadcasting….- you can broadcast on the web… )
Two points here:
One - is or can be incredibly bandwidth efficient: while early adopters download lots, if everyone did that there currently wouldn’t be enough bandwidth to go around - distribution channels will still matter for a while.
Two - some things are natural events - of their moment - the champions league final, a Saturday night show with audience voting, even an episode of a popular soap - you can’t talk about it a week later if everybody else watched it on the day.
Finally I think the real challenge - again like the music industry - is the changing way things are payed for. In music the live performance is becoming increasingly important over the recording sales.
With TV technology is going to make it more difficult to support programmes with Ads - the cost of a video ad to produce isn’t going to be supported by the fragmented market and technology just means people can skip them.
So in summary, more power to content creators, distribution channels still matter, distinct editorial voice of channels matter, creation or control of distribution of key ‘events’ is crucial, subscription services probably better placed than ad supported.
Organizations which have the above strengths and embrace the new distribution channels will prosper….
So radio still lives on - no longer king but fills a certain niche - I’m not sure ‘event TV’ delivered by well know companies will die any time soon.
Posted 28 May 2008 at 11:15 pm ¶
simon wrote:
@Mr X,
I agree with much of what you say at a high level: content creators should do better in the new era; the new technology offers amazing new opportunities; and distribution channels (and their brands) still matter; and organisations that embrace the new opportunities will prosper.
However, you have to ask: how many of the established players will truly embrace new opportunities? I suspect many of them simply won’t be up to it e.g. issues about switch-over disruption as per Asam’s reference. There are many, many examples of companies that die because they fail to understand the opportunities offered by new technology; and fail because they don’t feel able to take a short-term hit to go after something new.
The truth is probaby that there is probably too much dead wood in the media world, supported by a business model that isn’t going to work in future.
Here’s a tiny example, which can extrapolated on. Take a video podcast like Diggnation. That’s two guys sitting on a couch drinking beer and chatting. They have maybe an additional half FTE required to technically in bring the show to “air” (camerawork and editing combined); and another half FTE selling sponsorship slots and organising live shows with audiences. No studio is required for the shoot; and the editing is done in a small editing suite.
So, that’s 1 FTE plus a couple of hours work for the “talent” to shoot a 40 minute episode. I’m guessing on those numbers, but I suspect I’m not too far off. That’s an incredibly lean operation. Much, much leaner than would be used to produce an equivalent show, with equivalent production quality on broadcast TV.
And here’s the killer… how many viewers do they get for that show? Many more than they’d get on some random cable/satellite TV, or in a bad time slot on a major channel. Maybe ten times more viewers, in fact.
The value proposition is clear: 5X-10X lower costs for 10X the viewers. Or 50X-100X “better value” in all.
Can you extrapolate from that? I believe you can. That means there are really great opportunities for new players. The challenge is to grow the budgets for shows in line with potential audience growth.
As for big events that are best watched live… you’re right. I should have had a different title for this post because you *can*, of course, “broadcast” on the web. What I should have said was: cable, satellite and terrestial broadcast TV will be dead in ten years.
Posted 29 May 2008 at 1:59 pm ¶
Mr x wrote:
I’m not sure how many type of programs can be done with some guys on a sofa - chat/opinion shows and review shows. Generally these types of shows are not prime time on TV - which suggests if you want large audiences then it doesn’t cut it - so they are never going to step up, build a business and take away champions league away from the big players - just less people watching the 4am technology shows - the only threat in the football is the content providers themselves deciding that don’t need the broadcaster.
I take your point with technology production standards are going up and costs coming down. I guess my point is this challenges not just traditional companies but everyone - I’m not sure how many viewers diggnation gets now but in 2006 it was getting 250,000 - *worldwide* - if those guys launched now would they get that? How much is first mover advantage? It’s not exactly difficult to to copy…. but as I say that’s only for a certain class of programs - for example I think people might find it much harder to have a hit comedy.
I notice diggnation does a hybrid of product placement/ad. I see this perhaps a more significant challenge in that spend is moving away from ads to evangelism/placement etc. Again the music industry has a long track record of paying people to just try and get airplay or a plug - obviously now companies pay people to create their own content. Some companies go even further - Apple create and broadcast their own events… they advertise a lot as well - but probably not on Diggnation as they have *that* audience already covered - its the general public that watch the football and Saturday night TV that they want to build brand awareness with.
Posted 29 May 2008 at 7:16 pm ¶
simon wrote:
How many chat/opinion shows? Well, there are quite a prime time shows like that. On the BBC… check out, for example, the One Show at 7.00pm every week day, or Friday Night With Jonathan Ross at 10.30pm weekly, or The Graham Norton Show at 9.45pm weekly.
Today, Diggnation gets over 500,000 downloads per episode, with on average more than one person viewing each download. So… what does a reasonably good, original content, prime-time show on a non-premium UK satellite channel gets? Maybe 50,000 viewers.
The viewing figures Diggnation gets are comparable to things like: the number one top-rated football match on Sky One; or the number one top-rated shows on the second tier channels from the big broadcaster’s e.g BBC3, ITV2, More4.
Look at the end credits of any of these shows. There’s rather more than one person working behind the scenes on all of them. I don’t think there’s any getting away from the fact that the traditional media production companies are massively inefficient in terms of human resources.
However, it’s not just “people on a couch type shows” - the real point is: these problems of over-staffing are *all over* TV and even movie making.
Why? I suspect it’s all about the gravy train certain people are riding - it’s very much easier to skim money off a big budget than a small one. For example, want to fly to a city for a meeting? If you’ve got a $150M budget for your movie, you’ll take a private jet, and drink bottles of Cristal champagne on the way, and check in at the most fancy hotel in town, and dine in the best restaurant and have a three thousand dollar bottle of wine with your meal. Plus, no need to do any work yourself - you can have a team of ten people to do it for you. You sure as hell wouldn’t be doing any of that if you had a $5M budget for your movie!
For sure, the big budgets aren’t there because consumers demand the kind of content that only huge teams of people can produce. The truth is: is that you *can* have a huge hit with movies made with low budgets. For example, the movie “Four Weddings And A Funeral” has grossed around a quarter of a billion dollars. How much did it cost to make? Just $4.5M.
Compare that to a big budget movie like a Harry Potter movie that might gross around a billion dollars i.e. four times Four Weddings. Those cost 30X more to make. Why do they cost that? Because of all the people employed in making the film. If you look at the end credits of these big budget productions, the number of people involved is just amazing. There must be hundreds if not thousands of people credited.
Anytime a movie director shows they can have a big box office hit with a super low budget… watch what happens. The big industry guys go in and make sure the talent is brought into the fold and given big budgets to play with for their next film. Why? Because no-one inside the industry wants anyone thinking you can routinely make a $250M grossing movie with a $5M budget… ‘cos that would make life pretty unpleasant for them.
Posted 29 May 2008 at 8:22 pm ¶
Mr X wrote:
The one show gets 4.4 million ( in the UK ) - the others don’t register in the top 30 - because they aren’t prime time.
The top rated BBC3 program gets 1.378 million - but I take your point - though again your not comparing like with like - UK specific versus worldwide. See http://www.barb.co.uk/viewingsummary/weekreports.cfm?report=weeklytop30&requesttimeout=500&flag=viewingsummary
for lots of stats.
There is no denying that Diggnation is successful - the question is - is it the exception rather than the rule? Just because a tecchy program succeeds on a tecchy medium doesn’t mean others will succeed - remember TheSpot? - the idea was an online soap - that was over 10 years ago - made by professionals.
http://en.wikipedia.org/wiki/The_Spot
Apparently it failed due to imitators diluting the audience….
I think there are significant barriers to creating something like Eastenders or Coro that get 8-10 million viewers *several* times a week - you will need to well capitalized and able to promote the product over a sustained period of time - and already have channels to promote - that massively favours the encumbants.
I’d agree with you about the budgets of some films - but that’s a different story. I’m not sure abuse is so rife in TV - a lot of content is made by independent production houses - they are going to want to minimize costs to maximize profit - that was the point of the Birt bean counting reforms in the BBC in that area - I assume they don’t all operate as a cartel and that production costs have gradually drifted down.
Posted 30 May 2008 at 5:25 pm ¶
simon wrote:
Definitely the challenge for the current crop of pure-play on-line content producers is to successfully move beyond their technology industry niche, in order to move to the next level in terms of audience size. Easier said than done, I know!
Is the general on-line audience there yet? For sure it is now; but is wasn’t a few years ago. As an example of general audiences, BBC iPlayer now serves up over 20 million on-line shows per month in the UK alone, and the number of views is growing at around 20% per month as word spreads about how useful a service it is. Also, I believe that NBC estimates that more than hundred million people are going to view their on-line coverage of the Olympics, which is going to be much more extensive on-line than their broadcast TV coverage. In other words, NBC see streaming video as an exclusive medium for significant amounts of content.
You’ve raised the question of whether people will find shows that are made available on-line. I think the point is: people are *more* likely to find a show when it’s available on demand over the Net, than if it’s shown on a cable/satellite channel. The Diggnation guys used to present tech shows on cable TV, and they get bigger audiences now on-line for just that reason. On that broadcast TV network, their channel was, I think, getting into two hundred million homes… But no-one new their show existed, so hardly anyone watched.
The same sort of thing is starting to happen with BBC iPlayer. People that use iPlayer are discovering shows they never would have seen on regular TV, simply because they don’t watch BBC3 or BBC4. On iPlayer, all the BBC content is aggrated together in one place, so it’s super-easy to discovery interesting new shows; the channel the show was broadcast on is irrelevant.
The BBC is pretty smart about their on-line strategy - they have totally understood that people want to watch their content when they want to watch it, where they want to watch it, on the device they want. They’re executing incredibly well. I believe that FreeSat set-top boxes will be including support for iPlayer. So, in the near future you won’t even need to be a computer user to be watching on-line TV. You just connect your TV settop box to a broadband connection, and you’re all set with IPTV. It’s noticeable that commercial channels are still pretty luddite by comparison. Channel 4 tries to do what iPlayer is doing, but it’s clunky and inconvenient by comparison (which will mean they get fewer viewers).
I would be surprised to see some BBC content get its premier showing on-line before too long; and even to start seeing some exclusive iPlayer shows. However, they have to watch how they move here - they have a lot of enemies who think the reason the BBC is succeeding with all this stuff is that they have the license fee. The truth, of course, is that the commercial stations are just screwing everything up because they don’t know what they’re doing. For example, have you watched a show on ITV1 recently? No. Neither has anyone else! Their content is just crap, and no-one wants to watch.
Abuse of budgets isn’t at the same scale in TV as it is in movies - the budgets for TV are much smaller. It still happens though - there’s regularly bad publicity about expenses claims for example - too many taxis; too many five hour lunches in expensive restaurants; too many ridiculous decisions about where, and where not, to spend money on shows. So, there’s still plenty of people riding the gravy train, and lots of inefficiences that could be exploited by more stream-lined competitors.
As an example, look how many years it took for the BBC to bring back Dr Who. No-one can credibly claim they didn’t know an audience was there for that; and that it would be a big commercial success if it was done right. The reason it wasn’t brought back before was on the personal whim of people at the top that didn’t want to make that kind of show.
Posted 30 May 2008 at 7:49 pm ¶
Mr X wrote:
Yes iPlayer is great - ISPs are already moaning about the bandwidth it’s using - and iPlayer already has exclusive content - for example extended versions of Have I Got news for You - amusingly with all the swearing left in and available any time of the day or night….
There is no doubt that delivery mechanisms are evolving - but I go back to my original point - radio isn’t dead - it should be if your argument holds - after all you can load all your music onto your portal music player and listen on demand to exactly what you want to listen to.
Sometimes people want other people to choose, sometimes people want to be part of bigger audiences - after all at the heart of TV and recorded music is a passivity - why listen to music when you could be playing it? Why watch TV when you - to quote a show R T Davis cut his teeth on - “could do something less boring instead’
Ads people are going to want to hit the growing older generation - who have both money and time - I think their viewing habits will continue to support the current modes for some time to come.
Posted 31 May 2008 at 4:13 pm ¶
simon wrote:
Hold on - by my argument, broadcast radio shouldn’t be dead… yet! You’ve assumed that 100% of people that would listen to radio own MP3 players. They don’t. iPods have sold well, but not everyone on the planet owns one.
However, people that do own iPods use them in situations where they might have previously listened to the radio. The audio podcast is one of the fastest growing categories of audio content at the moment.
Many people are finding that listening to podcasts is more interesting and/or more convenient than listening to broadcast radio. It’s not only niche tech content that’s available. For example, today, the BBC offers around 160 audio podcasts, in a mix of daily and weekly shows. Millions of people download these every month.
Posted 31 May 2008 at 4:58 pm ¶
Asam Bashir wrote:
Keep an eye on Bollywood as well, it’s far
bigger then Hollywood in production and capacity, and has always had alternatives business models that adapt well to new situations.
http://www.informationweek.com/news/internet/ebusiness/showArticle.jhtml?articleID=206504241
“With Videos-On-Demand, Bollywood Meets Web 2.0
Bollywood.tv is using next-generation caching and content-delivery technology to bring its vast collection of South Asian films to online subscribers around the world.”
New beta on-demand project from market leaders from 70s with VHS model:
http://www.erosplc.com/
http://ondemand.erosentertainment.com/product/prodsection.asp?Movie,Most_Viewed
Posted 31 May 2008 at 6:12 pm ¶