Media's End Game: Video For Every Screen
There are all kinds of good news-bad news scenarios that makes media a conundrum.
The bad news: cable and broadcast audiences are declining.
The good news: pay TV and video subscribers and revenues are growing.
The good news: audience and engagement measurement is evolving into a more useful science.
The bad news: it cannot happen fast enough.
The undertow of disruptive innovation and rapid change in media is unprecedented. Netflix, which was given its last rites a year ago, is now being touted by some as the next cable network and content wholesaler.
An outlier like Aereo has quickly emerged “the cord cutter’s dream,” sidestepping retrans laws by providing consumers with the antennas and tools needed to stream video on their own. If it survives legal challenges, it will “hasten the transition to long-debated, usage-based pricing for broadband,” notes Bernstein analyst Craig Moffett.
More than ever, the end game appears to be ubiquitous video for universal screens. Its measured penetration and effectiveness will be the key that unlocks a windfall of digital value.
Bernstein analyst Todd Juenger conservatively estimates $2 billion to $4 billion in advertising inventory is being held back or not counted as traditional TV video gingerly transitions to Internet and cloud distribution. With half of all cell phone-touting Americans using smartphones -- expected to morph to 70% by 2013, according to Nielsen -- media’s future hinges on measuring and mining pocket video and interactivity.
Globally, there will be 10 billion mobile Internet devices by 2016, or 1.4 connected devices per every 7.3 billion persons on the planet by that time, according to Cisco. That’s pure opportunity. In more specific company terms, a pure TV player such as CBS can generate an additional $6 billion in enterprise value by continuing to reinvent itself in digital terms, creating new interactive advertising and fee-based revenues.
Ironically, Internet display measurement is “horribly worse” than TV measurement with widely varying delivery estimates from competing sources, no duplication of impressions and no demographics, Juenger observes. It is a double whammy, considering how audience fragmentation has strained the currency of television that still supports $60 billion in annual advertising, some of which will increasingly find its way to interactive media venues.
Bottom line: more than one in every four local ad dollars will be spent on digital by 2016, according to BIA/Kelsey.
That makes hybrid approaches to quantifying those new connections -- and creating value and revenues -- inevitable, but not necessarily more effective. Nielsen proposes combining Internet video and traditional TV into blended impressions to create a single budget and planning process with its new Cross-Platform Campaign Ratings.
The kicker is it will include new and emerging forms of video on YouTube, Hulu, iPads and other mobile devices excluded from its baseline C3 audience count – which doesn’t even include traditional TV or cable VOD within three days of the original air date or out-of-home!
The mistake is considering these “TV audiences” in isolation rather than as more lucrative, all-encompassing video consumers. It is akin to cramming the Pandora’s box of interactive video into static television’s stable.
As content and advertising quantification becomes more holistic with the fusion of data and video across all size screens and platforms, media will redefine itself in economic and creative terms.
Then it won’t matter if cable network audiences are off 8% from a year ago or that overall pay TV subscribers are up by half a million or that Netflix’s domestic Web site visitors are up 13% from a year ago while it negotiates with cable operators to be included in movie cable packages.
It will all be part of a global connected video experience that will thrive on ubiquitous value creation rather than be stymied by today’s false and failing defense of crumbling silos.