Apple TV’s digital revolution will kill these studios – if they don’t wise up in time

Apple Online StoreAnders Bylund writes for The Motley Fool, “This week, The Wall Street Journal reports that the [TV] industry is deeply divided over what the redesigned Apple TV box means to their business models.”

• Viacom
• NBC Universal
• CBS
• News Corp.
• Disney/ABC

“The studios above are listed in strict order from least to most receptive of new trends. Time Warner, which isn’t huge in television properties, but certainly casts a wide shadow in the media landscape, would fit in between News Corp. and Disney by my estimation. Several of its executives have shown signs of digital life for a long time,” Bylund writes. “NBC and Viacom come across as tone-deaf and insensitive. If the pricing model needs work, that’s something to figure out after the launch. I don’t imagine that either content providers or consumers sign perpetual contracts with payment terms and selection policies in blood, after all. Prices change all the time; why would a brand-new device and its equally newborn service be any different?”

Bylund writes, “It’s in all the studios’ best interest to take the consumer-centric world view and start selling their content on terms the average viewer would agree to. Disney and Warner are already there; News Corp. and CBS just need a friendly nudge in the right direction; and I think the glory days are over for NBC and Viacom, unless they have radical makeovers at the top.”

Full article here.

90 Comments

  1. When Jeff Zucker announced his (forced) departure from NBC, for a brief moment, it looked like NBC may have rid itself of a greedy curmudgeon Luddite who kept pulling it back into the 20th century. Unfortunately, very soon after the announcement, the Comcast guy (Burke?) who will replace him declared just about the same nonsense that Zucker kept spewing, about the rental price on iTunes ($1) being too low for their shows.

    I had already mentioned this before; it is very easy to figure out if $1 is too low or not. Figure out how much your advertising minute costs for your prime time shows (on average). Multiply by number of minutes per show (8 for 30-min sitcom, 16 for a 1-hour drama), then figure out your average ratings for your prime time shows and figure out how much money in advertising you receive for each viewer. I would argue it is much less than $1 per person.

    TV networks are still oblivious to the fact that their advertising model is coasting on empty, and that it is only a matter of time that advertisers will finally wake up and realise that most of those prime time ratings that Nielsen is reporting end up being either TiVO or DVR re-plays, where none of their ads are actually being seen (but are actually fully paid for). Let’s not forget Hulu, which shows only 2 minutes of ads on a 1-hour drama (from a single sponsor).

    In other words, that TV advertising gravy train is very soon going to pull into a station and stay there forever, while AppleTV gravy train is leaving the station. Those who quickly transfer from one to the other train will live. As it looks right now, NBC and CBS are staying on that old train, in the station.

  2. When Jeff Zucker announced his (forced) departure from NBC, for a brief moment, it looked like NBC may have rid itself of a greedy curmudgeon Luddite who kept pulling it back into the 20th century. Unfortunately, very soon after the announcement, the Comcast guy (Burke?) who will replace him declared just about the same nonsense that Zucker kept spewing, about the rental price on iTunes ($1) being too low for their shows.

    I had already mentioned this before; it is very easy to figure out if $1 is too low or not. Figure out how much your advertising minute costs for your prime time shows (on average). Multiply by number of minutes per show (8 for 30-min sitcom, 16 for a 1-hour drama), then figure out your average ratings for your prime time shows and figure out how much money in advertising you receive for each viewer. I would argue it is much less than $1 per person.

    TV networks are still oblivious to the fact that their advertising model is coasting on empty, and that it is only a matter of time that advertisers will finally wake up and realise that most of those prime time ratings that Nielsen is reporting end up being either TiVO or DVR re-plays, where none of their ads are actually being seen (but are actually fully paid for). Let’s not forget Hulu, which shows only 2 minutes of ads on a 1-hour drama (from a single sponsor).

    In other words, that TV advertising gravy train is very soon going to pull into a station and stay there forever, while AppleTV gravy train is leaving the station. Those who quickly transfer from one to the other train will live. As it looks right now, NBC and CBS are staying on that old train, in the station.

  3. I think a big hurdle to wider acceptance of devices like Apple TV is the lack of live programming options.

    Give me a way to watch live sporting events and other such programming and many people would likely jump right in.

  4. I think a big hurdle to wider acceptance of devices like Apple TV is the lack of live programming options.

    Give me a way to watch live sporting events and other such programming and many people would likely jump right in.

  5. One other thing, about advertising. Vast majority of contributors to this forum consider it scourge of our society, the nuisance of which everyone tries to get rid.

    That is simply not going to happen. We would never know of existence of vast majority of products (and services) out there, if there weren’t for advertising.

    What most here detest is actually not just any advertising: it is the traditional “carpet-bombing” model, which bombards us with irrelevant information. I don’t care about car commercials (I live in Manhattan) any more than someone in Florida cares for a snow blower. Yet, in my average 3-hour daily TV watching, I get to see at least five car commercials. In fact, the number of commercials I get to see that are completely irrelevant to me is at least 50 (out of probably 90 that I’ll have a chance of seeing during 3 hours of broadcast TV). For that reason (and many others), I just don’t watch broadcast TV (or basic cable) anymore.

    New media provides precision strikes for advertising. Rather than getting 90 ads, 50 of which will be irrelevant, I get what I’m interested in. I get to see far fewer ads, advertiser gets far higher value for money, broadcaster does far fewer “collateral damage” with irrelevant content. Everyone wins.

  6. One other thing, about advertising. Vast majority of contributors to this forum consider it scourge of our society, the nuisance of which everyone tries to get rid.

    That is simply not going to happen. We would never know of existence of vast majority of products (and services) out there, if there weren’t for advertising.

    What most here detest is actually not just any advertising: it is the traditional “carpet-bombing” model, which bombards us with irrelevant information. I don’t care about car commercials (I live in Manhattan) any more than someone in Florida cares for a snow blower. Yet, in my average 3-hour daily TV watching, I get to see at least five car commercials. In fact, the number of commercials I get to see that are completely irrelevant to me is at least 50 (out of probably 90 that I’ll have a chance of seeing during 3 hours of broadcast TV). For that reason (and many others), I just don’t watch broadcast TV (or basic cable) anymore.

    New media provides precision strikes for advertising. Rather than getting 90 ads, 50 of which will be irrelevant, I get what I’m interested in. I get to see far fewer ads, advertiser gets far higher value for money, broadcaster does far fewer “collateral damage” with irrelevant content. Everyone wins.

  7. Duh,

    a: Disney/ABC = Steve Jobs largest shareholder

    b: NBC Universal – Just bought by Comcast, nations largest Internet Service Provider

    And since one really needs a cable modem to download anything in some sort of reasonable time, that leaves a in sort sort of deep do-do.

    You GOT to own the cables. They can squeeze you out at anytime. As more and more people subscribe to the Apple TV, Netflix etc., the less bandwidth there is and everything slows down….

  8. Duh,

    a: Disney/ABC = Steve Jobs largest shareholder

    b: NBC Universal – Just bought by Comcast, nations largest Internet Service Provider

    And since one really needs a cable modem to download anything in some sort of reasonable time, that leaves a in sort sort of deep do-do.

    You GOT to own the cables. They can squeeze you out at anytime. As more and more people subscribe to the Apple TV, Netflix etc., the less bandwidth there is and everything slows down….

  9. @ Predrag

    As usual from you a really insightful analysis.

    The complete lack of advertising is we Brits like the BBC so much.

    Yet we complain at the profligate spending of Aunty Beeb but for £12 a month it’s fantastic value.

    .

  10. @ Predrag

    As usual from you a really insightful analysis.

    The complete lack of advertising is we Brits like the BBC so much.

    Yet we complain at the profligate spending of Aunty Beeb but for £12 a month it’s fantastic value.

    .

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