ABC's deal with Apple begins to sink in

ABC’s deal with Apple to provide its hit shows for two bucks a pop via the new video iPod should be a significant concern for all broadcasters, not just ABC affiliates. A day after the announcement, stories are popping up that hint at the obvious: this is a threat to the status quo. It’s a threat, because it undercuts the essential value proposition for a network affiliate — exclusive delivery of original programming, including reruns.

What’s really happening is that in today’s distributed media world, middlemen are increasingly unnecessary. It is inevitable that program producers will distribute directly to consumers, and that’s true of all forms of media. Not only is this a threat to network affiliates, it also attacks the cable distribution model as well. Here’s a terribly important piece of insight from Rafat Ali at PaidContent:

To protect its turf, cable giant Comcast has 400 software engineers building what amounts to a TV version of the Internet, stocked with movies, archived TV programs and other interactive features, including a search function. This is where talks with Google and AOL fit in…
Now that ABC has broken the mold, the others will follow suit. And once it’s discovered that people will pay a couple of bucks for programs on demand, other “sizes” of the programs will follow as well. Only the distribution method remains in question, and technology will take care of that.

I was stunned by the initial reaction of the current ABC affiliates board chairman, WLOX-TV GM Leon Long. He said that given the choice of watching a program on a two and a half inch screen and a 50-inch HDTV with surround sound, people will choose the latter. This misses the point completely.

The prebundled media model is dead. Broadcasters can slow its demise, but it cannot put the genie back in the bottle.

Video on Demand (VOD) is the new model, and the advertising community is already talking about how to approach such a model. Cory Treffiletti wrote in yesterday’s MediaPost Online Spin that one possibility is an uninterruptible “pod” of ads at the beginning of a VOD product. Look for this down-the-road, even on items that are paid. We’ve already been conditioned to sit through such in movie theatres.

One other note about ABC. I’ve been told that the network is offering zero network compensation as it renews affiliate agreements this year. That’s an important piece of the puzzle to me, because it telegraphs downstream intent. I wouldn’t be surprised if the net comp position is reversed one day, and affiliates are required to pay for the original programming, much as they do for syndicated programs. This might even be a good thing for local television, because one has to assume they would have access to more ad inventory.

Meanwhile, I will continue to hammer home the reality that local media companies will not survive unless they aggressively pursue unfamiliar business models available to them via the same disruption that threatens their old model. It’s a time of incredible opportunity, and that’s the truth.

USAToday | PaidContent | Hollywood Reporter

NEW: Jeff Jarvis asks the biggie: “Will vloggers and other independent producers of video bits, like podcasters, be able to use this as a channel of distribution, free or paid?” Hmm…

Comments

  1. Meanwhile, I will continue to hammer home the reality that local media companies will not survive unless they aggressively pursue unfamiliar business models available to them via the same disruption that threatens their old model. It’s a time of incredible opportunity, and that’s the truth.

    Amen

  2. The way I see it is that content providers are figuring out ways to provide content other that via broadcasters. For the consumer, it’s the ultimate timeshifting, later and without the cable bill. For example, you only want one or two shows, then you download those shows for a few bucks a week – a lot cheaper than $50+ for cable.

    Second item. Look at the BUZZ, people are excited about smaller video screens that are affordable. As an industry, television is going big screen HDTV with high priced sets. Who will win?

  3. Who will win?

    Both. I think that people will want to be able to go portable with their content, however they will also want a way to plug and play their portable content on those big screens.

Speak Your Mind

*