Despite across-the-board declines in TV broadcast ratings, local TV news is more valuable in drawing viewers' advertising attention than other programming. A study by Hearst Television -- which owns TV stations -- and TV researcher Frank N. Magid Associates says local news ranked first, with a 49% score, when viewers were asked what type of program was "a major part of my daily routine." But local news was only a bit better than second-place local TV airing sitcoms, at 47%. Reality shows were at 42%; cable dramas and movies tallied a 37% number; and cable news programming was at 34%. When asked about when TV viewers "pay attention" to programming, consumers gave a 45% number to local news, with cable news programming at 39%. Consumers gave better numbers when considering the "most important" connotation: 81% said local news was most important when considering local TV, national broadcast and national cable news programming. Only 17% of those surveyed said they record local TV news for later viewing. Fifty-seven percent said they "never," "rarely" or only "sometimes" fast-forward through portions of recorded local TV newscasts. In terms of news consumption across all media platforms, 55% of respondents said they prefer local TV as their medium for news. Web sites were second, at 19%. The survey covered 2,500 local TV viewers. Hearst Television has 29 TV and two radio stations, reaching about 18% of U.S. TV households.
TV network overall prime-time unit costs are flat to slightly down versus a year ago -- part of an overall downward trend resulting from declining ratings. Media agency TargetCast tcm says the four networks' average cost for a 30-second commercial was $80,495 in the third quarter -- down 2% versus the year before. The second-quarter average was $123,881 -- virtually flat versus the previous 2009 second-quarter period. But it had major help to maintain this strength of flat pricing. "The robust demand for television combined with limited available inventory, stable ratings and a very soft market a year earlier drove unit prices and CPMs higher in the second quarter," stated Gary Carr, senior vice president, executive director of national broadcast at TargetCast tcm. However, the longer-term picture shows a continuing drop. Carr adds: "Network unit costs overall have been experiencing significant declines in recent years due to declining ratings and the growth of cable." Once again, Fox was the leader -- with the highest unit cost of $211,732 in the second quarter of 2010. ABC was next at $125,940, followed by CBS in third place at $110,794 and NBC in fourth place at $81,784. In the slower summer third quarter, Fox was again tops with $104,842. The other three networks' unit costs ranged from $70,000 to $79,000. Ad-supported cable networks, however, continue to show higher results. TargetCast says the average unit cost of the top 15 rated cable networks in prime time among adults 25-54 was up 9.6% in the second quarter and 7.1% in the third quarter. The best cable network was ESPN --- topping the list at $27,000 in the second quarter and $30,000 in the third quarter. TNT was next, with a second-quarter price of $23,000 and a third quarter number of $18,000. One bit of bad news for cable: TargetCast says older, more established cable networks are starting to feel the pinch of lower ratings -- especially among adults 25-54. It says cable networks were down 4% in both the second and third quarters. However, because cable maintains a strong price efficiency to broadcast, more ad money was directed their way anyway.
LIN TV CEO Vincent Sadusky joined the chorus of station-group executives suggesting that prices for syndicated programming may have reached an apex. Instead, replacing it with local programming can pull in higher ratings and boost the bottom line with the lower costs. As for off-network sitcoms, Sadusky indicated that syndicators are seeking inflated prices and longer contracts that could outlive a show's popularity. Example: the "Two and a Half Men" sellers asking for seven-year deals. "We just don't think shows are going to have those kinds of legs," Sadusky said at a recent investor event. "The days of the "Seinfelds" coming off net are really over." He said LIN will continue to pursue quality off-net programming, but may have more leverage than in past years: "We won't chase it down if terms get out of hand." Beyond sitcoms, some station-group executives have suggested recently that even "The Oprah Winfrey Show" ending could lead to more local programming and a net positive. LIN, with 32 stations, has expanded its local offerings, notably with lifestyle-type shows resembling some of the "Today" show's segments. They cost less and offer new ad opportunities. "Because it's not news, we don't have the same standards that we have in terms of objectivity, so we can have a little bit of fun," Sadusky said. "We can have our hosts drink the Dunkin' Donuts' coffee mug ... we can do some product integration. We can have a chef on from a local restaurant and get outside the 30- and 60-second spots. ... Advertisers love new ideas being brought to the table." Fox doesn't offer affiliates a morning show, so stations have space to experiment. On LIN's Fox affiliate in Providence, there is "The Rhode Show" ("Rhode" as in Rhode Island) from 8 a.m. to 9 a.m. on weekdays, and again from 1 p.m. to 1:30 p.m. In the Norfolk, Va. market, there is a "Hamptons Roads Show" in the same morning slot, and a related hour from 10 a.m. to 11 a.m. on LIN's Mobile, Ala. The Fox outlet has "Studio 10" in the 8 a.m. hour. Video from the shows and related content can be placed on station Web sites, providing additional offerings cross-platform. Back on syndication strategy, the stronger local programming gives LIN some heft when negotiating with syndicators, Sadusky said. "It's an opportunity for us to have a bit more leverage and kind of control of our own destiny, a bit more than the historical broadcast model," he said. Still, he expects the traditional station business model, given the need for syndicated content, to succeed for some time.
Social media may have reached critical mass as a consumer medium, but its role as a mass advertising medium is still emerging. But if the initial findings of a comprehensive tracking study of Americans' use of social media are any indication, it may prove to be more than just a powerful "listening tool" for marketers." The findings, which are being released today from "The Faces of Social Media," a joint research venture of Knowledge Networks and MediaPost Communications' Center for Media Research, indicate that social media has already attained the kind of advertising influence and acceptability as advanced forms of TV advertising such as video-on-demand and HDTV. A significant of majority (59%) of social media users surveyed for the study said advertising is a "fair price to pay for social media sites and features," though that percentage has actually declined four percentage points from 63% in 2009. A smaller, but significant share of social media users (15%) said they are more inclined to purchase from brands that advertise on social media sites, a level Knowledge Networks says compares "favorably with levels found among HDTV viewers and VOD users." That percentage is down slightly from 16% in 2009. While the companies did not release details on specific advertising categories, Patricia Graham, Chief Strategy Officer of Knowledge Networks said the influence "varies widely" by advertiser and brand. The ongoing tracking study measures the effects of social media on consumers covering 39 specific product categories, ranging from financial services to giant retailers to packaged goods. Another early insight disclosed as part of this morning's release is that mobile platforms and applications can greatly compound the advertising and brand effects of social media. Of 13- to 54-years-old smartphone owners who have apps on their phone, almost a third (32%) said they are more inclined to purchase the brands that advertise or have marketing messages in the app. And almost three quarters (70%) of them said ads are a fair price to pay compared to social media's 59 percent. The study also found that ads within apps also appeal to smartphone owners between the ages of 13 and 54, with 40% saying that ads they see while using their smartphones are usually relevant to their "needs and interests." "Marketers can expect more impact reaching social media users via mobile, based on these new findings," said Chuck Martin, director of the Center for Media Research. "As more people move to smartphones, there will be an increased opportunity for advertisers to improve their reach to consumers with increased relevance."
In contrast to other new premium TV sites started recently, MidCenturyTV.com has launched with seemingly little conflict with the major TV networks and studios. The Corvallis, Ore.-based MidCenturyTV's focus is old TV shows -- really old TV -- from 1948 to 1974. "I have experienced firsthand the difficulty of getting straight to the links of the great old shows," stated Bob Poulsen, president of MidCenturyTV. "So I created this site to give quick access to what users search for most: free, studio-authorized shows online." The site offers video to Hulu, TVLand and CBS.com, which the company says eliminates the problem of combing through thousands of search results. Classic TV shows are available online -- mostly for free. They are searchable along with its older prime-time schedules and a complete guide to DVDs of those shows, if available. Poulsen says MidCenturyTV.com will be a minimalist kind of TV portal in this area, with a simply designed Web site. Newer TV show sites -- FilmOn and ivi TV -- have run into legal problems with the TV networks in airing current premium TV shows. Previously, Poulsen helped develop a media guide called Ecola Newsstand.
As it moves toward an IPO, Nielsen has added three years to CEO David Calhoun's contract. In the process, Calhoun gets a hefty signing bonus and jump in his base salary. The new deal runs through 2014. The previous agreement was scheduled to expire at the end of 2011. The new deal comes with a $6 million signing bonus, while Calhoun's base salary goes from $1.5 million to $1.625 million. However, the signing bonus must be repaid by Calhoun if he leaves the company for any reason before Jan. 1, 2013. Nielsen disclosed the new agreement, which went into effect in late October, in an amended pre-IPO government filing last month. Nielsen, controlled by a group of private-equity investors, has indicated that it will look to net $1.66 billion in an IPO. Calhoun joined Nielsen in 2006 after a lengthy tenure at General Electric, where he was CEO of multiple units, including ones involving aircraft engines and insurance. Calhoun's new Nielsen deal also comes with the potential for a better payout, should he be terminated under certain circumstances during the length of the deal. Both the previous and current deals prevent Calhoun from hiring Nielsen employees, or competing with the company, for a period of two years after his departure. There are also non-disparagement clauses. Outside salary and annual bonus, Calhoun's original 2006 deal came with commitments that he would receive payments of $29.5 million by January 2012. An additional payout that could exceed $14.5 million is also coming by that time. The new deal adds $3 million to that amount, which will come after January 2012. In the 2006 deal, Calhoun received millions of stock options in connection with his investing $20 million of his own money in Nielsen when he joined.
Although new data suggests consumers are slowly abandoning pay TV services, one study says the vast majority intend to maintain traditional subscriptions with cable, satellite and telco TV/video companies. While consumers increasingly are using new digital platforms -- the Internet, video-on-demand, new set-top box functions -- an annual study by TV researcher Frank Magid Associates says it is additive. The solid use of traditional TV delivery remains. For example, it says only 10% of consumers express an interest in viewing a TV show and movie viewing from the Internet, viewed on a laptop, computer or tablet screen. Conversely, bigger traditional TV screens -- as well as new Internet connected services, AppleTV, Google TV, Roku, and others -- continue to fuel higher interest in traditional TV screening. Although recent data has shown first-time declines in subscription TV (per a recent report by SNL Kagan), the Magid study notes only a 1% decline. Future indications are that only 3% of consumers may join this group, "suggesting a relatively stable subscriber base for traditional providers." It says only 2.5% of consumers use Internet content exclusively. The real danger of new alternative video platforms is harming the DVD purchase and rentals business -- which continue to see price discounts, new low-priced kiosk DVD dealers and lower overall revenue. Touting more strength for traditional TV with bigger screens and new technology, it says 8% of consumers are likely to purchase a 3D television set in the next 12 months. It estimates that roughly 5% of U.S homes will have a 3D television by the fall of 2011. "As new video viewing platforms, such as instant streaming and mobile apps proliferate, consumers are simply adding them to their portfolio of video viewing options," stated Maryann Baldwin, vice president of Magid Media Futures. "Our research indicates this is definitely not a zero-sum game," she adds. "At least at this point, it appears traditional subscription services and alternative viewing platforms can coexist with services like TV Everywhere locking in revenues for traditional providers."
When it comes to video ad campaigns, targeting has a far greater impact on ad performance than ad length, according to a new study from video ad tech firm TidalTV. According to a recent online study, TidalTV found that 30-second ads can far "outperform" 15-second ads, without negatively impacting consumers' experience. Contradicting previous research, the study also found that advertisers can achieve what TidalTV calls "30-second creative performance" with 15-second video creative. The study confirmed that 30-second video ads surpassed 15-second video ads in click-through rates by 11%, but this improvement comes at the cost of consumer satisfaction, as evidenced by a 10% drop in video completion rates. While it is well documented that 15-second video ads have higher completion rates, the new study revealed that 15-second ads drastically improved in performance when they were targeted to the desired demographic audience. The ads saw a 110% increase in click-through rates compared to 30-second untargeted ads, while also maintaining a 29% lift in video completion rates. The study also found that with proper targeting, advertisers can use higher-performing :30 second ad units without compromising customer satisfaction. Not only did the results show a 201% lift in CTR for targeted 30-second ads, they also demonstrated a 7% increase in completion rate compared to 15-second untargeted ads. According to TidalTV, the data proves that ad relevancy does impact consumer favorability and satisfaction, and illustrates that what matters is not only what video ad length you serve, but also that marketers using targeting to place the right ad in front of the right audience will see higher performance. "This just helps to resolve the ongoing debate that marketers and agencies face -- 'Can we repurpose TV creative?,' or 'Is 15 seconds the online standard?,'" said Kevin Haley, chief scientist at TidalTV. "The bottom line is that combining both targeting and the right creative video length can really have a significant impact on campaign performance." The research evaluated 28 ad campaigns across a range of demographics and marketing categories, and included a mix of both 15-second and 30-second video advertisements. In total, the 28 campaigns generated around 62 million impressions.
Seeing is believing -- particularly when it comes to in-home, 3D technology. In time for the holiday season (and as a possible way to goose sales), Panasonic is embarking on a 14-city, two-week mall tour showcasing its 3D television systems. Beginning on Wednesday, Panasonic launches its Unwrap 3D Tour, which includes seven interactive mall displays to be erected in malls in New York, Philadelphia, Atlanta, Chicago, Dallas, Los Angeles and San Francisco. The displays will then move to seven other metro locations. The displays will showcase the company's 3D offerings, from Viera plasma TVs to Blu-Ray disc players, and other products including a consumer 3D camcorder and the world's first digital camera with an interchangeable 3D lens. The displays will include content from 3D movies, television programming and PC-based 3D games. The interactive displays take a page from a similar initiative conceived by the Consumer Electronics Association, ESPN and the country's top cable and satellite providers earlier in the fall. That promotion, titled "National 3D Demo Days," involved setting up 3D viewing areas in some of the nation's top electronic retailers, giving consumers a chance to watch 3D sports programming in the stores to get a better idea of the 3D experience. As part of the promotion, the company is giving away 3 Full HD 3D Home Entertainment systems, which include a Viera 3D Plasma TV, 3D Blu-Ray home theater system, 3D glasses, a 3D camcorder and the Lumix GH2 camera with an interchangeable 3D lens. Regardless, the company has its work cut out for it this holiday season. Despite the hype that started last January behind 3DTV, people are still taking a wait-and-see approach. In a recent survey of users by consumer electronics information site Retrevo.com, 3DTVs ranked seventh among the most desired holiday items among consumers. According to Retrevo's director of content Andrew Eisner, much of the hesitation around the technology has to do with incremental costs (such as glasses) and a lack of original programming. Panasonic representatives did not return calls seeking more information.
The Ion network, with no unscripted programming in the schedule yet, has hired a top programming executive steeped in the nonfiction genre. Former chief of the Discovery network, John Ford, joins as president of programming. Ford had been leading Discovery from 2007 until late 2009 -- his second stint there -- after a six-year run at the National Geographic Channel. At Discovery Communications, he also logged time running the Military Channel and Discovery Times. Ion, which targets adults 25 to 54, has been a sort of CBS Classic lately, with its weekday programming made up of reruns of the network's hits "Ghost Whisperer" and "Without a Trace" and current show "Criminal Minds." The network did try an original reality show with Emeril Lagasse earlier this year, but that went up in smoke quickly. Ford will be based in New York and will oversee development of any original programming, acquisitions, creative strategy and scheduling for the network. He will work with Marc Zand, who becomes executive vice president of content acquisitions and digital networks. Zand will continue to oversee Ion multicast channels Qubo and Ion Life. Ion Media Networks CEO Brandon Burgess stated that Ford's background in acquisitions and unscripted content will help as more "content sources are on the table as Ion ... looks to extend its television franchise." Among his credits at Discovery are helping launch its HD channel and Discovery Health Channel, about to become the Oprah Winfrey Network, and leading programming at TLC.
At least 10 months out, Fox has begun plugging what it hopes will be another successful sing-off. The network started airing 10-second teasers for "The X Factor" on Thanksgiving night. Perhaps looking to play off the "Coming to America" theme for the British show, the promos show an "X" inserted as one of the towers holding up the Brooklyn Bridge. The spots -- which call to mind the opening of FX's "Rescue Me" -- provide little information, except a coming-next-fall notice. But that will change as spots become as prevalent with Coca-Cola branding during "American Idol" broadcasts from January-May. "X Factor" is linked with "Idol," with Simon Cowell as its executive producer. It has been a hit in Great Britain, giving the world Susan Boyle earlier this year. "X Factor" allows for contestants older than the 16-to-29s on "Idol." There are also competitions in different age brackets, and groups can perform as well. Cowell is expected to announce the judges that will join him on the "X Factor" panel next month, with several possibly coming over from the U.K. version. Fox has not announced a premiere date other than the fall. Starting in January, one of the "Idol" weekly shows will move to Thursdays, with two new judges.
From the no-surprise department: Sony has cut prices for its newfangled Google TV units, up to a massive 25% off certain models. This is no surprise because Google TV has been unable to secure the highest-profile content out there -- broadcast network prime-time shows. The big four networks have blocked Google from using its content on the new service to be run -- so far -- on Sony television sets. Timing is everything. It 's only the day after Cyber Monday. But apparently this was enough time for Sony to figure out that a $1,200 consumer product without big-name TV brands -- even with network TV ratings sliding -- isn't enough to convince those new, aggressive media consumers this is the next big thing. It has been reported the price of a 46-inch Google TV is now $1,000. With its Walkman, Sony was a magic brand name when mobile music was just starting out. This changed quickly with the launch of the Apple iPod. Sony wants to regain some of that panache with one of its still-best-known remaining products -- television sets -- spun off now into holy grail land of Internet-connected TVs. Seemed like a good idea. But consumers are quicker to figure out what new technology is capable of -- and its limitations. You can't blame Sony. Even consumer research notes that Internet-connected TVs seem like the next big thing -- and a better near-term bet than 3D TVs. While 3D may seem to elicit better quality, consumers already get this quality feeling from plain-old HDTVs. Internet options just add to that value. The better question: How did Google blow it? How do you start up a product where its biggest piece -- the stuff that runs on the screen -- can't be delivered? Right now, Google has been shut out with what seems like a massive misfire. Maybe company strategists thought the networks would have to come around -- because, after all "We're the powerful Google and all your consumers know Google." Obviously, the brand names of Google -- and even Sony -- aren't enough. Consumers, however, would have come running for a name that's quite a mouthful: the "ABC-Fox-NBC-CBS" Internet-connected TV set.
The jury is still out on Hulu Plus and even on Apple's 99-cent episode rentals, but a new study by Ipsos finds that the younger demo is serious enough about on-demand viewing of TV online that they are willing to pay for it. In a speculative what-if survey of 18-to-34-year olds, Ipsos found that in a world of limited free options for viewing TV after its original airing, 51% of this group was interested in fee-based models from Hulu, Netflix or iTunes. Ipsos OTX MediaCT created a scenario where free alternatives were not available and TV was available via Netflix at $9 a month, iTunes at $1 a download with no ads, and Hulu at $1 with ads. Attitudes towards pay models for post-broadcast TV appear to be very age-specific. While 17% of the younger demo was interested in a pay-per-episode Hulu model only 11% of those 35 and older wanted to buy in. Overall 49% of youth had no interest in pay models while 70% of the 35+ group eschewed pay post-broadcast TV altogether. While Hulu set a standard for ad-supported free TV content online, many younger viewers will follow it and other providers behind a pay wall. "The young adult population clearly has an appetite for accessing their regularly watched shows and are willing to pay for that access," says Brian Cruikshank, EVP at Ipsos. "Further, the fee-based market is competitive with no dominant service." The survey showed Netflix with a slight edge in user preference, but overall the field for pay models in TV seems wide open. Of course this suggests that for all of the time, money and effort Hulu, Netflix and iTunes have put into their digital TV models, legacy media companies have room to maneuver competitive services and even throw some of their weight around when it comes to distributing content on any of these digital platforms. Ipsos feels that the per-episode model is appealing especially to the youth market and will likely drive the greatest growth. Interestingly, the eagerness to use the Web to catch up on or re-experience TV content varies a bit from genre to genre and even moreso from show to show. People are more likely to want to re-watch comedies than other genres, but a subscription service like Netflix was more appealing for its run of dramas since viewers wanted access to whole season continuities. Ipsos found that most TV programs merited online viewing on Hulu, Netflix or iTunes among 40% to 50% of their audiences. But when it came to marquee documentaries or niche programs like Mad Men and True Blood that number shot up to 60%. In other words, on-air mass popularity or even a single business model, may not be predictive of online video success. Whether someone wants to see a show on the Web, and which way they want to pay for it, will be specific to genres and shows.
Lately we have seen announcements regarding new OTT ("over the top") box launches, like Roku and Boxee. Netflix has done a masterful job of securing distribution agreements with these boxes. Netflix's marketing strategy -- perhaps a throwback to AOL's CD-ROM mailing campaign-- offers every new customer a free trial period. Today the company has one million new subscribers trialing the streaming service. Since content is the driver that fuels the adoption rates of these new boxes, new upstarts are essentially in the same business as the cable companies. For instance, Boxee has discussed building a payment platform for a la carte viewing of premium content. By challenging the incumbents at content delivery, Boxee may morph into looking like a stand-alone "multichannel video provider." Perhaps Yahoo's connected TV store -- which will charge consumers for downloading TV widgets and content -- will end up partnering with many of these entrants through revenue-sharing agreements. All new HDTV sets have four to five HDMI ports. Today you can plug Sezmi, Google TV, Apple TV, Roku, and Boxee into the back of your set and still have room for your cable box. Early adopters (and I am in this group) will juggle the boxes, keep track of open HDMI ports, and buy boxes based on available content. Recently Hulu signed a content distribution agreement with Sony for the Dash. The Sony Dash is an Internet device, with a 7-inch screen, that is primarily an alarm clock. So instead of cutting a deal with Google TV, Hulu announced the launch of an alarm clock. Google TV -- which has positioned itself as platform-agnostic -- has made little headway. Perhaps with Google TV ads looming in the background, the stakes are so high that content owners are first dipping their toes by way of the independent boxes (and Sony Dash). Sezmi has the most to gain if it can strike a deal with Hulu. The over-the-air signal, program guide, and DVR, makes for a new distribution pipeline that broadcasters can exploit. Add Hulu into that Sezmi mix, and broadcasters would have the complete package in order to further monetize their spectrum. Comcast released an iPad application a few weeks ago that links the programming schedule to the set top box. Today I can log onto Xfinity on my iPad, and easily switch HDTV channels from the tablet's program guide or the video on demand library. From a technical standpoint, the return path from the iPad to Comcast's data center is through Internet-based software. The final leg to the set top box, however, is the interactive television standard, "EBIF." The television industry has been on an integration bender since the passage of the Telecommunications Act of 1996. Back then we saw major M & A activity around cable companies that gobbled up smaller systems so that they could build service areas around DMAs. It is in the DNA of cable to think in terms of integrating technologies so that systematic improvements can be rolled out to subscribers. Content owners have benefited from this ideology as now retransmission consent (and carriage agreements) have tremendous influence, along with marketing synergies, over an entire DMA. Today, because of multiscreen technologies (like Comcast's iPad app), the pendulum may swing back, away from high-stakes carriage negotiations. Instead, the parties might find common ground through technology agreements. Future carriage deals will probably include the licensing of interactive advertising services that can deliver a multiscreen experience. These shared service agreements, in my opinion, could become the primary growth area for the media industry over the next several years. As I see it, there are three multiscreen advertising zones that broadcasters and cable companies should focus on: Hyper-local: Mobile telephones -- tuned to video content -- could insert clickable advertising near point of purchase, coupons, discounts, fire sales, and analytics. Premium pricing per click. Regional: DMA-based traditional and interactive advertising. Today's widely published and available CPM pricing will make room for value-added multiscreen rate cards. National: Broadcasters could insert clickable advertising inside TV Everywhere avails. Kind of like local advertising, except now with limited national reach. Many technology companies, like SeaChange International, are bundling solutions that can stream content to mobile, PC, and television by way of the cabler's CDN. As Mark Cuban has pointed out, the bandwidth constraints of today's Internet won't support the entire video market anytime soon. Cable's hybrid approach is the technology to beat. Industry players that have been banging the drum for net neutrality don't seem to be walking that straight line anymore. The marketplace is convoluted, with many Internet folks trying to get in cable's business. The ideals behind net neutrality seem weakened by the drive to compete, and many have already begun positioning next-generation services. Comcast's iPad app, in my opinion, has shown us that the Garden of Eden will be found in interactive multiscreen technologies. Rule-makers should be cautious before making anyone take a bite out of the net neutrality apple. When Comcast introduced the iPad app, subscribers were finally given the tool they needed in order to search cable's enormous library of premium video content. Over time, as subscribers become familiar with premium video search, and online DVR scheduling, they may become overwhelmed by content options. Tablet navigation, I believe, will be the catalyst that causes the cable industry to rethink future subscription bundles. Certainly a healthy OTT market will develop, with millions of subscribers. But it probably will be much smaller than DBS, since the building of that infrastructure would be tough for the OTT independents to shoulder. Especially since, as of late, the OTTs have announced no major differentiations from cable's product. The OTT sector, therefore, will probably have limited influence on cable. Ironically, Internet programmers like "Funny or Die" and "Revision3" might find a home on Comcast's iPad app, since the definition of a carriage agreement is no longer set in stone. CableLabs has released the next interactive television EBIF specification, called IO6. IO6 may pave the way for one day when numerous apps (widgets) will be able to share the TV screen simultaneously. In other words, the cable industry seems to be integrating along the path so that one day TV may be a multiple choice clickable experience tied (bound) to content. In the future, advertising is definitely going to exponentially increase in units on the screen. This development, in my opinion, will at some point push the cable industry to integrate all multiscreen devices so that consumers can share their clicked response data with friends, probably much as we do it now on Facebook.
Microsoft, were you listening or did I just nail your intention to integrate Internet services into Xbox 360 through the Bing search engine and widgets? Early in November I described how the company may have supercharged Xbox 360 through Kinect, the add-on to the Xbox 360 entertainment console, but the one basic tool that could turn the console into a true entertainment experience doesn't exist in the box. "Integrating Bing into the Xbox 360 console would give consumers the ability to search for content on the Internet and provide a competitive alternative to Google TV and Apple TV," I wrote back then. "It would give advertisers another opportunity to raise awareness through the combined Bing and Yahoo search deal." Apparently, Microsoft is in talks with media companies to license content from TV networks for a subscription Web TV service through Xbox 360, according to Reuters. It also reminds us that for years Microsoft has played in the TV business and invested in interactive television initiatives like Web TV and MSN TV set-top box software. No word yet of integrating Bing, but Microsoft certainly can't leave the search engine out of the mix. Microsoft, of course, doesn't comment on rumor or speculation. But no need to confirm when the tech company continues to tout Xbox 360 as an entertainment center, rather than a game console. So, it has no choice but to compete with the likes of Google and Apple. Besides, the Redmond, Wash., Home of the Future, where Microsoft features experimental technology wouldn't be complete without it. Ties to movie studios like Pixar and social networks such as Facebook will give consumers direct connections with the services. At Microsoft's cloud focused Professional Developer Conference 2010, Pixar Studios, founded by Apple CEO Steve Jobs, talked about the proof of concept highlighting animation in the application RenderMan on Windows Azure. A computer graphics (CG) movie is converted from data to video frame by frame through a process called rendering. With all the data that goes into a movie it would take years and years to render without the proper software and processing speeds. Google already launched Google TV, but the Web-TV service led to partnerships with Sony televisions and Logitech set-top boxes met with resistance from Viacom, ABC, NBC, CBS and Fox-all have blocked Internet versions of their shows through Google TV. What's at stake? Billions, according to Evan Sakes from Lungfish Communications, Needham, Mass, who calls my attention to all the dollars "entrenched in the 'traditional' TV business model." He tells us through a blog comment that cable companies charge between "$50 and $200 per month, and programmers get $.05 to $5 per sub per month, plus billions of dollars more in network advertising, against which they make long-term rights commitments to properties like the NFL and the Olympics to promote the rest of their on-air skeds." Saks tells us Viacom and others haven't ignored the potential to make money on the side. Maybe Microsoft will get it right and give networks a portion of the "long-term control of of a multi-billion dollar industry," which in turn will give Microsoft a greater degree of success?
Fox is following in the footsteps of ABC -- but not from a position it necessarily likes. Fox is offering online inventory -- on hulu.com, for example -- as a make-good for a massive 20% drop in traditional TV ratings. ABC also did this a couple of years back for the same reasons: It didn't have enough -- or the right -- inventory to give back to advertisers, who are guaranteed specific gross rating points in their TV media buys. Two years ago, many national advertisers were more resistant to these kinds of deals, believing online didn't offer the same big-screen bang for their media bucks. But more are coming around to idea of consumers "catching-up" with their missed TV programs using the likes of hulu.com or respective network video players. Networks sellers would say advertisers are getting what amounts to higher-priced inventory. The cost per thousand viewer prices (CPMs) for premium online TV episodes can be three to four times that of traditional TV episodes. Still, we don't know the specifics. For example, does a national TV advertiser get to maintain its make-goods in a three-day time span, matching up with a traditional C3 rating guarantee: commercial ratings plus three days of time shifting? Networks continually tout their live program plus seven days of playback numbers. But on the Internet? That can be plus 20 days, 30 days, 40 days, or whenever. What is the value? (Then again, research has shown most catch-up playback of popular TV programs on the Internet happens quickly -- just a few days after shows' initial TV premiere.) The good news is, these in-need advertisers can at least get into the specific shows and brands they had bought in the first place -- rather than say, replacement TV programming now airing. That's not always possible with traditional TV make-goods. Two years ago, ABC did more or less the same thing for a number of advertisers in giving online make-goods to advertisers who didn't get their expected GRPs on traditional TV media buys. Mike Shaw, president of advertising sales for ABC, told MediaPost then that advertisers were able to get into top-rated shows online, such as "Desperate Housewives," "Grey's Anatomy" and "Lost," while they weren't able to on traditional TV. "The biggest single selling point is the mix," he said. "You get such a high concentration of your total impression in the top five or six shows. It's a mix of inventory I'd never sell you on the linear network." Networks are typically loath to give back cash -- especially now with profitability harder to come for many TV shows. With Fox in a deeper hole presently (though slowly recovering in recent weeks), there's urgency. It's anticipated that come January, Fox should make up for lost ground with the return of a revamped "American Idol" and premieres of four new shows. But TV marketers typically can't wait that long -- and online inventory is available right now.
Only 1% of consumers report they have canceled subscription TV/Video services because they are accessing content instead on the Internet. According to the 2010 edition of the Frank N. Magid & Associates update on cross platform video use and consumer attitudes, cord cutting is likely a myth. Only 2.5% of U.S. media consumers use the Internet exclusively for their content. And only 3% of consumers are even considering leaving TV subscriptions for other video sources. Instead, Magid is finding that the people who use alternative video sources like Web, mobile and streaming media boxes are also spending the most on traditional subscription services. The analysts argue that the statistics show that networks and cable providers should consider these digital alternatives additive. "The average American's capacity to consume video content is impressive," says Magid Media Futures VP Maryann Baldwin in a statement. "As new video platforms such as instant streaming and mobile apps proliferate, consumers are simply adding them to their portfolio of video viewing options." In fact the taste for traditional media on alternative platforms may be lower than some presume. Magid's survey of 1,208 adults age 12 and over found that only 10% of respondents were interested in seeing TV and movie content on computer screens and mobile devices like tablets. Actually, they find there is a surge in interest instead in bringing this and other video on demand content to the TV screen via a connected PC. Interest in converging video on the TV is even higher when consumers are asked about dedicated streaming media boxes like Roku, Apple TV, Google TV and Boxee Video is not a zero-sum game...at least for now and at least not for traditional TV broadcasts. DVDs continue to be most at risk from these new platforms, Magid says. The arrival of 3D TV is tracking slowly but not unlike the adoption curve of HDTV years ago, Magid says. Only 8% of those surveyed said they expected to buy a 3D TV in the next 12 months. Compared to a similar level of interest in the first year HDTV were offered, Magid finds that generally only 4% actually did follow through to buy the new technology in short order. The analysts say they expect 5% of U.S. households to have 3D TVs by the end of 2011. Moreover, consumers are not shoing great concern over the dearth of 3D content available. They appear to be ready to make 3D a future-proofing part of their next TV purchase. Magid says that attitudes toward Tv and other video viewing has remains relatively steady since the introduction of HDTV a decade ago. The additional video services like 3D, streaming media, Web video, TV apps, etc. are likely to added to our existing HD screens and not necessarily divert business from that core of subscription services.