The Fellowship of the Digital Ring

Last week, I was surprised to learn that National Cable Communications (NCC), the nation's largest spot cable advertising representation firm -- and owned by the country's largest cable systems operators -- has been retained by telco Verizon to handle local inventory sales for its video service FiOS. I've always thought that the telco's IPTV plans to enter the video service realm would be construed most dangerous to the local cable operator - another entity competing for "fair share" of local market TV advertising budgets. Presently, local cable operators glean only $5.5 billion of the $25 billion local TV ad expenditure even though TV viewers spend over 50% of their time watching cable programming. So perhaps, this alliance of pay TV operators through a single-source sales representative provides a mechanism for them collectively to build a greater presence in the market to challenge the dominant TV station broadcasters; and portend[MO1] s extending the fellowship as follows:

 

¨    AT&T's video service U-verse, which does not compete in the same markets as rival telco Verizon, joins the association and benefits from its clout as well as infrastructure sales/support cost savings.

 

¨    Satcaster EchoStar (13+ million subscribers) melds into the alliance after its acquisition by AT&T -- a persistent rumor.

 

¨    Satcaster EchoStar (13+ million subscribers) and rival DirecTV (16+ million subscribers) merge -- another persistent rumor; or align their sales organizations -- an additional persistent rumor, giving the satellite platforms' nearly equal penetration to digital cable.

 

For those of you not familiar with J.R.R. Tolkien's "Lord of the Rings," The Fellowship of the Ring was formed as a brotherhood between members of the various Free People of Middle-earth (phantasmagorical but analog). Its purpose was to take the One Ring to Mordor so that it might be cast into the fires of Orodruin, the mountain in which it was forged, with the intent that it be destroyed and Middle-earth be saved from tyranny or dominance by only one form of communications.

The Fellowship consisted of nine pay TV distribution members: four Hobbits (Comcast, Time Warner, Cox, and Charter), two Men (EchoStar and DirecTV), one Elf (Verizon's FiOS), one Dwarf (AT&T's U-verse -- based purely on subscription penetration) and a wizard (to be determined, though technological in nature). In opposition stood Sauron and his minions including the Nazgul, Numenoreans, Uruk-Hai and Orcs -- those representing the free TV broadcasting marketplace. 

Come February 2009, when the One Ring is converted from analog into digital spectrum, the dominant free TV purveyors and their multichannel TV station transmissions - upwards of four per TV station -- could be challenged for the first time by a digital pay TV Fellowship that is supported by upwards of 100 million households -- only 10+% less than the broadcasters 114 million household reach. Thus possibly altering ad revenue aggregation and TV viewing in favor of the Fellowship in years to come.

The form in which wizardry will influence the impending conflict can only be surmised. To date, the Fellowship has already conjured up interactive advertising applications and measurement -- though in limited deployment -- that include advertising incantations (request for interaction, telescoping, long form, microsite), program soothsaying (TV Guide Interactive), addressable polymorphism (Invidi, Navic, OpenTV, Visible World), lifestyle divination (Acxiom, Experian), click stream numerology (Nielsen, Rentrak, TNS), and ad auctioning transmutation (Google TV, Navic's Admira). To date, our intelligence has revealed very little about the foresight of the digital terrestrialists. Over and disparate. 

 


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