Online broadcasting, oxymoron or solution?

Syncbak LogoThe National Association of Broadcasters, the Consumer Electronics Association, seven local media companies and other investors are betting — with their money — on the future of local television through a tech start‐up called Syncbak. It’s a nifty concept. By identifying local viewers, the software allows those people to watch the in‐market network and local content of TV stations (and more) online. The company’s press releases tout the solving of “the problem” of people watching TV online, namely that the broadcast signal determines who can watch broadcast TV. This duplicates that. Problem solved.

But is this really “the problem” that needs solving?

From the company’s website:

Syncbak’s new broadcasting platform protects rights holders and creates vast new revenue and distribution opportunities for broadcasters and programmers.

Syncbak brings consumers the live local television they want, when and where they want it on the devices they already own and carry.

Syncbak’s Internet broadcasting platform creates new revenue opportunities for programmers to extend and protect the value of their programming in more markets nationwide.

The company recently closed a $4 million Series B finance round, bringing total capital raised to $5.6 million. Its creator, Jack Perry, has deep roots in the “signal delivery” world, having innovated the method by which satellite companies provide distant network signals and local programming to their subscribers. He was also the founder of TitanTV. Jack and his team are very capable of pulling this off, and they don’t seem to have any problem raising the money necessary to do so.

Facebook has apparently built an app for Syncbak, which will allow its massive user base to watch local TV through Facebook. This is significant, because Facebook is the AOL of today. It’s audience seems to like everything Facebook offers, and this will be no exception. But Syncbak won’t stop there, which is why the application and concept are likely to work. Syncbak promises video on demand (VOD) from broadcasters, too, but the question will be in how that’s distributed. If Syncbak is smart, they’ll work with Netflix, Google TV and Apple TV, because they are establishing themselves as the go‐to infrastructures for unbundled television.

The concept, however, is a wager, a bet that the old paradigm of broadcasting will work in the new paradigm of the Web. I wouldn’t want any part of that bet, because it’s the textbook “new wine into old wineskins” problem. The idea is to carve up the Web into DMAs (designated marketing areas) and work within those geographic spaces, exactly as broadcasting has since the beginning. It defiantly rejects the 3‐way nature of the Web in favor of an old 2‐way model, and it uses the scarcity of copyright as the hammer to make and mold the new world. This treats the Web as broadcasting’s playground when it is actually the playground of “the people,” and especially Jay Rosen’s “the people formerly known as the audience.”

It makes more sense than the newspaper consortium did, but it’s still an inside industry attempt to save itself. The disruption doesn’t care. This is really all about money, BIG money, and challenges await Syncbak as it attempts to replace the broadcast signal. For example, will broadcasters continue to take one‐third of prime time to provide nothing but commercials and marketing? The energy behind TiVo and other DVRs suggests a “no” answer might be wise, but Syncbak simply retransmits the local signals. DVR penetration increased 4% in the last year on an absolute basis (11% on a relative basis) to 39.7% of TV Households in February 2011 according to Nielsen. The 50% threshold is just a little way away, but freedom and “saving time” are the biggest reasons people pay for DVRs. Any “new” system of TV viewing that doesn’t respect this won’t get very far.

It also assumes much from the people formerly known as the advertisers. I’ve yet to see the software that can instantly switch TV ads in a commercial pod to address people at the browser level, but I wouldn’t be surprised if it’s coming. Yes there will be data, but data is a two‐edged sword. Yes there will be targeting, but targeting is a very different skill than mass marketing, which is what this is really seems to be all about. But it also assumes that this is a model that advertisers want. I’d be very careful in making that assumption.

How Syncbak WorksIn an excellent summary piece, Paul Sweeting of Concurrent Media writes that Syncbak works by “embedding a bit of code in a broadcaster’s digital over‐the‐air signal.” A device either embedded in a TV set or sold separately listens for code, writes Sweeting, “and if it hears it sends a signal back to the station that authorizes that consumer to receive the station’s Internet channel.” If and when the signal isn’t “heard,” the digital feed stops. It’s similar to the technology that Jack Perry designed for the Satellite industry.

There are many questions about the technology, but Sweeting says the big one is how consumer electronics manufacturers will respond.

Embedding the Syncbak antenna chip in a TV or set‐top box would give consumers one more reason to cut the cable cord. Right now, pay‐TV service providers have an edge over over‐the‐top competitors like Apple TV and Roku through their access to local broadcast stations. Cord‐cutters, of course, can always get their local stations over‐the‐air, but the sort of input‐switching required between an OTA antenna and broadband‐delivered services likely limits cord-cutting’s appeal among the mass audience.

Sweeting also notes that Syncbak, if it works, would be a natural acquisition target for Apple. “Adding local stations to Apple TV (or Google TV), alongside Netflix, iTunes and perhaps a few other services,” he writes, “could help turn the Apple STB into a full pay‐TV‐in‐a‐box device should Apple choose to go that route.”

And what is it about Apple’s iTunes content model (the ecosystem for Apple TV)? Oh yeah, it takes a 30% cut of any revenue earned via its platform.

Jack PerryBut let’s get back to Jack Perry. In his blog, he enthusiastically points to what an opportunity Syncbak provides to broadcasters, especially as it relates to innovation:

Innovative broadcasters using Syncbak technology will:

  • offer multiple channels over the web, even those not broadcast over the air (think à la carte)
  • function as the DVR “in the cloud&
  • deliver more content to more screens (more devices) in more places

Our Syncbak technology assumes all consumers will eventually have a “connected television” and because of that, with our technology, an innovative broadcaster will offer more content on more devices OTT to each of the viewers they are licensed to reach over‐the‐air.

I have ten concerns about this, the combined weight of which lead me to be skeptical, although I would love to see it take off.

  1. Watching TV on the Web isn’t the issue anymore that reading a newspaper online is the issue for that industry. The disruption is about advertising and advertisers finding new ways to enable commerce. The idea of watching TV on the Web has nothing to do with that; it simply gives the illusion of providing a new advertising vehicle. Madison Avenue still needs mass marketing, and I suspect that will always be the case. The problem, however, is that it just doesn’t need it as much, and eventually, different ways of assembling that mass will work far better than putting an ad next to (supposedly) scarce content.
  2. It’s just another form of cable TV Now, I like cable, but it’s still a form of mass media, and there’s nothing really innovative there. This may shuffle the deck somewhat, but if it simply makes broadcasters feel and operate more like cable, so what? Cable is disrupted, too, and cutting the cord simply to pay similar fees isn’t going to cut it, because of the next concern.
  3. This underestimates empowered consumers, and that could be its biggest problem. There is no evidence whatsoever that people will sit through 5‐minute commercial pods online any more than they will in front of their TV sets. The Web is a 3‐way communications medium, and that third way — Jay Rosen’s “Great Horizontal” — is where local media companies ought to be looking. Instead, this sticks a thumb in their collective eye by demanding they live by old rules. That horse has already left the barn.
  4. By offering VOD only as a paid service, it further opens the door for others in the unbundled world We’ve got this idea that only OUR content or our network’s content is “real” content, just as newspapers thought THEIR content was somehow special. Folks, it’s just not. Anybody can make content, and there are those specializing in the kind of stuff that plays well in a VOD world online. We make a big mistake in underestimating this when we look only at numbers revealing Netflix’s strength with consumers, or look at how much people love their hulu. This may hasten local VOD entering into the systems of others, such as GoogleTV or AppleTV, but there’s really no reason we couldn’t already be involved there, if we so desired.
  5. It’s illogical for program creators, because they no longer require middlemen. Middlemen are inefficient (and the Web abhors inefficiencies), and especially those who exist simply to take a cut of money that’s available, as in retransmission consent. More and more alternate delivery systems (like Satellite) will be offering their own programming (like DirectTV is doing with “Damages”), which has to get the attention of the studios. Middleman distribution is living on borrow time, because the economics simply won’t make sense downstream.
  6. At best, the money will be split three ways: Syncbak, local broadcasters, and the networks. As noted above, if Apple or Google were to acquire the company, any split could change. Broadcasters are now used to and badly need that “second revenue stream,” so this model feels right. But it could also be a sticky wicket when it comes to real innovation.
  7. The network model is already broken. It’s not about “broad” anything anymore. Niches are where it’s at, and those can be down to the street level in the new world. Let’s face it. How many Emmy‐Award winning shows get canceled — even those just nominated (can you say “Friday Night Lights?”) — simply because they don’t produce a big enough “broad” audience? This is insane, but it’s also the lifeblood of the networks. While it’s certainly true that people are watching more TV than ever, program shares keep generally falling. The unbundling of TV will further that, to say nothing of how more people than ever are producing their own TV entertainment.
  8. It’s all about copyright. Media companies are betting the ranch on this, but again, copyright is not “the problem” that needs solving. It’s more a matter of infrastructure, and being a TV station online accomplishes nothing. We might be able to find some clever ways to stunt using this, but each comes with tradeoffs and consequences. If, for example, we follow Jack’s suggestion and offer more content to more devices “over‐the‐top,” then the FCC has to ask why broadcasters need a broadcast signal in the first place?
  9. There’s a TON of money at stake. This is a concern, because many very smart people outside the broadcasting community know it. They have deep pockets and are unafraid to fund concepts that need a longer runway than broadcasters are willing or able to provide. The money pot is called local advertising. It’s the target of Google, Yahoo, MSN, AOL, Groupon, Reach Local, and every new application designed to enable commerce.
  10. It opens the door for the law of unintended consequences, and I see two potentially coming. The first I’ve already alluded to: If people can get their live news, information and emergency coverage via a wire or wireless broadband, why does the FCC still need to license the people’s spectrum for broadcasting? Secondly, and even more importantly, focusing on this keeps us mired in brand and brand‐extension strategies, when we need instead to be shifting that focus to new ways of making money via the disruption.

This whole concept is based on a “ping” via the local broadcasters over‐the‐air signal, and, while viable, it isn’t in sync with where things are headed. Let’s face it; the Internet is the future of television, and you don’t need a broadcast signal to carve up local markets online. That can be done with cookies and IP addresses. Media companies will be reshaped to include “touching” markets, so that regional advertising concepts can grow and flourish. Web‐only, non‐TV station branded opportunities exist already, but the industry seems bent on keeping the old fatted calf on life‐support.

“Online broadcasting,” on the one hand, sounds like a pretty interesting solution for the industry. On the other hand, however, it could simply be an oxymoronic attempt to bolt the Web onto an old business model rather than exploiting other competencies to make money in the new world.

Comments

  1. Maureen Van Hoven says

    Perhaps you should call Mr. Perry for an interview. He’s very accessible.

  2. Maureen Van Hoven says

    You need to pull back to see the big picture. While you are spot on in a few areas, you need to know that Syncbak is all about breaking down the barriers between content creator and consumer. Syncbak will make TV free OTT, make TV personal OTT. The ads you see will differ from the ads I see. Syncbak is embedding traffic in the cloud and turning every consumer into their own cable head‐end.

  3. David Horton says

    There are very few things worth watching on broadcast TV as it is. Why should I care whether or not I can receive them on my computer or on a smart phone? If I want local news or weather via the web, I’ll go to a local web site. Why wait for the 11:00 news?

  4. David Horton says

    Ms. Van Hoven says:

    “The ads you see will differ from the ads I see.”

    I say:

    I don’t want to see ANY ads.

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