2011 was not a good year for local TV advertising -- dropping nearly 8% versus the year before. BIA/Kelsey says advertising revenue for TV stations' over-the-air-efforts pulled in $17.9 billion, down from $19.4 billion in 2010. While local TV stations did improve substantially from their online/digital efforts -- up 18.7% -- it was not enough to make up the difference. Online ad revenues increased to $535 million from $450 million in 2010. Better -- but not great -- news will come during this year, when usual sharp gains from political and Olympic advertising kick in. BIA/Kelsey says both on-air and online revenues will reach $20.3 billion. Mark Fratrik, vice president and chief economist, BIA/Kelsey, stated: "Advertising income for local television is trending upward and showing signs of rebound, with a good first quarter for many public television companies. Still, the 2012 over-the-air television advertising market is not what it was 11 years ago." BIA/Kelsey says television's share of overall local media will continue to grow -- 13.9% in 2011, rising to 14.3% in 2016. The group expects local television to continue to get a "significant boost" from online revenues in the coming years -- almost doubling its current ad totals to $1 billion by 2016. Combined TV and online is estimated to be $22.8 billion by 2016 -- nearly the record levels recorded in 2006. Just over-the-air TV will climb to $21.8 in five years. Overall, local media is estimated to be $151.3 billion by 2016, up from $132.8 billion in 2011.
More optimistic than other recent media analysts' estimations, Anthony DiClemente of Barclays Capital expects upfront revenue for the major four broadcast and cable networks to climb 4.3% and 6.3%, respectively. Much like other estimates, DiClemente expects cable to be higher than broadcast overall -- getting to $9.88 billion and the broadcast networks $9.5 billion. A recent estimate from Morgan Stanley said broadcast networks could gain 1% to $9.2 billion, and 4.3% to $9.7 billion for cable. There are some 60-plus advertising-supported cable networks. DiClemente guesses that CBS will reach nearly $3 billion overall; ABC will come in at $2.6 billion; and NBC will hit $1.8 billion. Fox will come in after ABC with $2.1 billion, but DiClemente expects volume to be 2.1% lower, partly because of weaker current season “American Idol” ratings. “Idol” contributes a healthy overall share of Fox’s prime-time ratings. Also, Fox will hold back more upfront inventory for the scatter marketplace. In a report, DiClemente says automotive advertising will push the market -- still representing some 20% of overall upfront spend. He says this year’s upfront will be still strong. although not as powerful as last year’s marketplace. He believes CBS will have the best results when it comes to the cost-per-thousand viewers: 10% higher versus a year ago. Fox is expected to increase 9%; ABC, 8%; and NBC, 7%.
Nespresso, a division of Nestle, is doing its first-ever television advertising campaign in the U.S. The campaign, "The best cafe. Yours" will include digital media and point of purchase, and will, per the company, "connect the European-style coffee experience to the values and aspirations of the American coffee connoisseur." The effort, via The Martin Agency, comprises a 30-second spot, which launches this week. The ad looks like it was shot inside an Old World cafe. Then the camera takes in Nespresso's Lattissima+ machine and a woman selecting one of the Nespresso coffee capsules. We see her operate the machine, dropping the pod into the canister, hitting the brew button. A drop of water rolls down her neck and we see that she just stepped out of the shower in her home. "The goal of the television ad is to showcase the sophistication that Nespresso evokes among consumers," said Franz Niedermair, vice president of marketing, Nespresso North America, in a statement. The effort includes the relaunch of the U.S. website, www.nespresso.com. Niedermair tells Marketing Daily that Nespresso has advertised in national print publications and through digital ad buys in the past, but that "TV allows us to tell the Nespresso story to broader audiences." The effort focuses on the company's Grands Crus machines. Niedermair says the national TV spot will run in two flights starting now through June and October through December on early morning, prime-time network; and a wide range of cable channels. The company also sells machines and coffee at select Bloomingdale's and machines at stores like Sur La Table, Macy's, Williams-Sonoma, and Crate and Barrel. "We continue to be the worldwide reference in premium portioned coffee, and the goal of the campaign was to further educate American consumers new to Nespresso about the Nespresso system," says Niedermair. Nespresso has branded stores in New York, Boston and Miami, and also sells online at www.nespresso.com. A 2011 report on the coffee category via Mintel suggests, not surprisingly, that convenience is a major attraction for single-cup coffee users. The firm says 17% of all coffee drinkers report drinking single-cup coffee, and 79% of respondents who drink single-cup coffee brewed from a pod-style machine cite the convenience of that method as a reason for using it. "This is especially true of women, who are notably more likely than men to say that they use pod-style coffee because it is convenient," says the report. The study also says the ability to brew a fresh cup of coffee without reheating coffee that has already been made -- or making a full pot of coffee -- is a big driver.
Simulmedia, which uses set-top-box data to help advertisers hone in on a target, has received $6 million in funding from its trio of venture-capital investors, which include Time Warner Investments. The total brings the company’s funding through a seed and other rounds to $27.25 million. Avalon Ventures and Union Square Ventures join the Time Warner arm in backing the company. Simulmedia, which describes its offering as an ad network for television, has increased its staff from 20 to 40 over the past nine months. The company said revenue has doubled each quarter. It culls data from 17 million set-top boxes and has worked with 11 media agencies on 200 campaigns. Explaining Simulmedia’s efforts, John Piccone, senior vice president of sales, said recently at an industry event: “Television is not going to the Web, the Web is coming to television” and the company wants to bring “Web marketing tactics to linear television.” “Demographics do not buy products -- people buy products,” he added, referring to its aims in assisting advertiser targeting. “That we share the same age or gender doesn’t mean we share the same interests. We know this on the Web, it’s true on television.” Piccone said Simulmedia has 800 times more American TV viewing data than Nielsen to help bolster targeting. Simulmedia was founded by Dave Morgan, who also launched Tacoda and Real Media.
Honda has inked a deal with ESPN to back a multiplatform initiative about Title IX, which many say has revolutionized female athletics since the legislation was signed 40 years ago. The arrangement includes a link with the espnW site, a regular “SportsCenter” feature and presence on a televised awards show. On Mondays through June, Honda will back the “The Power of IX” countdown of the top 40 athletes of the past 40 years on SportsCenter. The Honda Sports Awards, honoring college female athletes, will air on ESPNU for the first time June 23 as part of a larger awards program. Honda will also serve as the presenting sponsor of a special edition of “E:60” focusing on women and sports. Laura Gentile, who oversees espnW, which was launched in October, stated that one goal is to bring “a deeper awareness of Title IX’s impact.” Honda is the presenting sponsor of a “The Power of IX” espnW microsite. On the site, espnW is aiming to put together the “largest female athlete photo mosaic in history” and encouraging females to upload their photos, which will run alongside legends such as Serena Williams and Billie Jean King.
The TV term “season low" for a network TV show usually can’t be found in the same sentence as “series finale.” But TV is changing. In most usual scenarios for a TV network show, a viewership builds throughout the year, culminating in more viewers as it reaches a big moment in its story line. CBS’ “The Good Wife” may claim both ends of this. For its season ender, it dipped 11% to land at a Nielsen preliminary live-plus-same-day 1.7 rating/4 share among key 18-49 viewers. “Wife,” however, did win the night in overall viewers -- 9.83 million. Analysts say increased time-shifting activity for many shows -– especially some dramas -- have led to viewer changes. Other network shows gone the same route. A year ago, NBC’s now-departed “Chuck,” for example, sank to its season-low among 18-49 viewers at its series finale. It also had a high percentage of its viewers watching the show on a time-shifted basis. “Wife” was up against some strong competition -– an original episode of Fox’s “Family Guy,” which scored the second-best ratings of the night: a 2.8/7. There was also a fresh ABC’s “Desperate Housewives” at a healthy 2.5/6. “Guy” was 12% higher from its last original episode outing; “Housewives” was down a tick from its last original. CBS had better luck earlier in the night: “Amazing Race” was at a 2.2/6, although down 15% from the week before. CBS’s midseason show, “NYC 22” at 10 p.m., went lower to a 1.2/3. ABC’s “Once Upon A Time” continued as the top-rated Sunday show, earning a 2.9/8. At 10 p.m., ABC had “GCB” at a 1.9/5. “Time” was down a bit from last week, but “GCB” gained some 30% from its last original outing. Two hours worth of “Celebrity Apprentice” gave NBC a 1.9/5 between 9 p.m. and 11 p.m., down two-tenths of one rating point from a week before. Fox’s animated comedies -- apart from higher “Family Guy” numbers -- were steady versus a year ago. ABC won the night with a 2.2/6 among key 18-49 viewers; Fox scored a 1.9/5; CBS took a 1.6/4; NBC earned a 1.4/4; and Univision had a 0.9/3.
Today, Wild Turkey Bourbon launched the first television ad campaign in its 157-year history. The inaugural spot takes a humorous approach. Faced with serving a surly-looking, intimidating patron, a new bartender is loathe to take his boss’s advice: “Give ’em the bird.” But the novice quickly learns that the phrase is bar slang for serving a Wild Turkey Bourbon. (Once served, the patron displays a hint of sociability, by lifting his glass in salute.) The spot will run through the spring in 30- and 15-second versions on nationwide outlets including ESPN, Comedy Central, Spike, TNT and TBS. The TV media flight is expected to garner an estimated 150 million impressions. The brand’s ongoing marketing campaign also includes print, out-of-home, digital, social media and public relations. The campaign was developed by New-York based FLY Communications. The spot was directed by Bob Giraldi, whose credits include Michael Jackson’s award-winning “Beat It” music video and Jackson’s 1984 Pepsi commercial, one of the most-watched ads of all time. “It’s never easy to take a more than 150-year-old brand and put it on television for the first time,” noted Umberto Luchini, head of marketing for Wild Turkey parent Campari America. “I think our ‘Give ’em the Bird’ campaign stays true to the Wild Turkey brand [and] to our loyal fans, who will absolutely understand the wink and nod humor in the spot, and see this commercial as being Wild Turkey, through and through.” Since acquiring the Wild Turkey brand in 2009, Campari America has launched portfolio extensions (Wild Turkey 81 Bourbon and Wild Turkey 81 Rye); updated the portfolio’s packaging; opened a new, $44 million packaging facility; and doubled output through a $50 million expansion of the brand’s distillery.
When Madison Avenue’s top direct-response marketers and agencies want to track the effectiveness of their media, many turn to Core Media Systems, the Fairfield, NJ-based technology firm that supports much of the direct-response media industry. When CoreMedia wanted to maximize the return on an ambitious philanthropic investment, it turned back to its clients, and some of its biggest suppliers. The investment, a benefit concert featuring recording artists O.A.R. that will be held the evening of May 24 in New York City’s Hammerstein Ballroom, to raise money for The Good Tidings Foundation, is being completely underwritten by CoreMedia to celebrate the company’s 20th anniversary. The return – sponsorships from clients and suppliers, as well as personal contributions from the Millennial generation media planners and buyers expected to attend – is expected to raise as much as $300,000, or about 3% of the Los Angeles-based charity’s 2013 operating budget. “The conversion rate,” says CoreMedia Founder-CEO Glenn DeKraker, was “90%.” “We’re a direct-response-oriented company, so we had to come up with a metric to measure our performance,” he adds. The 90% conversion, however, is only the direct ROI base on the clients and vendors who pledged to sponsor the event -- companies including Publicis’ ZenithOptimedia Group, Omnicom’s Omnicom Media Group, Chief Media, InterMedia, Active Media’s ActiveCares unit, Comcast’s AdDelivery and Spotlight units, and Google –- but DeKraker says the big payoff will come from directly impacting the long-term behavior of the Millennials expected to attend the event. “If I can convert 100 of these 700 Millennials into philanthropy, that would be great,” he says, sharing a self-deprecating content strategy designed to do just that. “Instead of a 57-year-old getting up and talking to Millennials, it will be a 32-year-old lead singer [O.A.R.] doing it,” he says, adding that the event will have only about “five or six minutes” to make that conversion, and that he figured O.A.R.’s Marc Roberge would be better than DeKraker himself in delivering it. The cause-related campaign is not the first for CoreMedia or O.A.R. The band is known of its ongoing support of the Heard The World Fund, and CoreMedia has used its previous anniversary’s -- its 10th, 15th and 16th -- to create events around supporting important charities. Most of those previous ones were big, global charities like Bono’s Project Red, which CoreMedia’s support was only a small contributor to. For The Good Tidings Foundation, CoreMedia’s support will be a material contributor to its ability to expand beyond Los Angeles to help other underserved communities in the U.S. The charity supports academic, cultural and athletic programs in inner city communities, and DeKraker says every dollar raised goes back into the community. While CoreMedia is absorbing the entire cost of the event itself, DeKraker concedes there will be some indirect return for the technology firm -- the intangible brand benefit of its clients associating it with its philanthropic work. DeKraker says the idea for this event started in 2007, when he was backstage with his daughter meeting O.A.R after a performance, and while it took five years to bring to life, he says he is already planning something big to celebrate CoreMedia’s 25th anniversary. “I have an idea,” he says.
Hi folks, The Digital Content NewFronts seem to have sparked a debate about whether -- and how fast -- TV dollars will flow to the Web. Today we’ll hear from one prominent Internet entrepreneur who believes Web dollars will actually flow into TV. After that, we’ll assess the aftermath of last week’s Senate Commerce Committee hearing on the future of video migration. Then, more unnamed sources weigh in on Hulu’s TV Everywhere talks, and finally: Revision3 is in talks to be acquired by a major media company. Why Web Dollars May Actually Flow to TV Forbes’ Rob Hof has an interview with Simulmedia CEO and MediaPost Online Spin writer Dave Morgan about where he thinks television dollars are headed in the future. Perhaps the most surprising claim made by Morgan, who co-founded 24/7 Real Media (bought by WPP Group) and Tacoda (bought by AOL), is that online advertising dollars will flow into television, and not vice versa, as companies like Google and Facebook have hoped. Simulmedia, which is an ad network for television, is also announcing a $6 million round of funding from previous investors Avalon Ventures, Union Square Ventures and Time Warner Investments, which brings its funding total to over $27 million. Morgan reveals that the company didn’t need much money because it is already close to profitability. How is that? Morgan explains: “Where online ad networks permitted a reduction in the pricing of impressions, because they made more impressions more accessible, we can increase the value of advertising for networks and operators by applying more data to an industry that has a finite and relatively controlled inventory volume.” Because of this, he says not only are TV dollars not going online -- digital dollars are headed for TV. Next Steps Unclear Following Senate Hearing on Internet Video What -- if anything -- did the Senate Commerce Committee hearing last week about video migration achieve, asks Multichannel News columnist Gary Arlen. While the notion that the 1996 Telecommunications Act needs to be updated is certainly true, there’s no way Congress is going to start the arduous task of reform so late in the term. Arlen adds that the hearing didn’t provide any definitive plans for next steps, either -- in fact, a Committee staffer said he was unsure about how the Committee plans to follow up. Equally “perplexing” was the fact that a rather large constituency -- big media -- was uninvited to the Senate hearing. Media and telecom giants will obviously have a huge say in any eventual legislation, as will other government agencies like the DOJ, the Pentagon and the FTC and FCC. Ultimately, Arlen says all that was really achieved by the hearing was to open an official record about the competitive value of Internet video, and to put a marker in the ground that says we’re in the midst of historic change. Thanks, Senate Commerce Committee -- we knew that already. Source: Hulu's TV Everywhere Discussions are About Fox Content Only As it turns out, TV Everywhere-style authentication may only be coming to Fox content on Hulu, Mashable reports, rather than to the entire online video service. Late Sunday, The New York Post cited unnamed sources who said that the joint video venture from News Corp., Disney and Comcast would be moving to a more authentication-heavy model, and that this was part of the reason Providence Equity Partners decided to sell its stake in Hulu back to the media owners. But now, Mashable sources claim that the talks only involve certain programming; one of the sources said the discussions were mainly about Fox signing more cable and satellite providers into its online system. Of the three Hulu owners, News Corp-owned Fox has certainly been the most bullish when it comes to restricting content to cable and satellite providers. Last fall, the network began limiting next-day access to its programming to Fox.com, allowing Verizon and Dish Network subscribers to log in and view next-day content while others have to wait eight days. Fox’s current agreement with subscription-based Hulu Plus allows next-day access to most of its content -- although for some shows, such as "The Simpsons," Hulu users must authenticate a subscription service with either Verizon or Dish Network. Sources: Discovery Channel to Buy Revision3 Citing multiple sources, TechCrunch is reporting that video content provider Revision3 is looking to sell itself to The Discovery Channel. One source puts the price tag at between $30 and $40 million, and said the deal would close as soon as this week. Revision3 posted an ad revenue gain of 53 percent in 2011, although no numbers were disclosed -- and a video view increase of 359 percent, to 800 million views. It also reported a subscriber base of 4.5 million on YouTube. The Discovery Channel, which touts itself as the #1 nonfiction media company in the world, hasn’t been able to translate its analog success to the Web. “So the match seems to make sense,” TechCrunch says.
Happy Monday! There is lots of speculation in today’s Video Daily Roundup, starting with a report that Hulu is considering a move to a TV Everywhere-type authentication model. Next, Apple is reportedly negotiating a content deal with the multi-studio venture EPIX. GroupM’s Rino Scanzoni takes us through the problems with the much-heralded Digital Content NewFronts. CBS’ David Poltrack tells us why online video viewers are worth more to advertisers than TV viewers. Finally: a Russian video company strikes content deals with major Hollywood studios. Source: Hulu Considers Authentication Model Sources tell The New York Post that Hulu, the joint video venture from News Corp, Disney and Comcast, is considering a change to a “TV Everywhere” model, whereby viewers would have to prove they are pay-TV customers in order to watch shows through the popular online service. These sources also claim this authentication model was behind the move last week by Providence Equity Partners to cash out of Hulu after five years. A separate report from the NY Post says that NBCUniversal, in its first Olympics under Comcast’s ownership, is considering a similar authentication model for the games in London this summer. The move toward authentication would certainly result in a shrinking audience for Hulu, which earned $420 million in ad revenue last year. It also comes at a time when just about every cable and network operator is considering its streaming strategy. Sources: Apple Close to EPIX Deal, New TV Product Apple Inc is in negotiations to stream films owned by EPIX on Apple TV and its other devices -- including a long-awaited Smart TV -- Reuters reported on Friday, citing unnamed sources. The talks are still preliminary, and no agreement is considered near, one of the sources said. Apple is expected to unveil a new TV product later this year or in 2013. EPIX is a three-year-old joint venture between major studios Lions Gate, MGM and Paramount Pictures. TV networks and film studios, uneasy about the manner in which Apple disintermediated the music industry with iTunes and its various devices, have largely boxed Apple out of licensing their content. The iPhone maker, which has become the world’s most valuable corporation, tried unsuccessfully to secure agreements with the studios for a new TV service last year, one of the sources said. The Problem with the NewFronts The so-called Digital Content NewFronts wrap up this Wednesday, after two weeks of top online video publishers like AOL and Hulu parading their content in front of brands and agencies in the hope that they can attract TV dollars from their closely held budgets. It’s all “kind of absurd,” says GroupM Chief Investment Officer Rino Scanzoni. While nobody is saying that Web video content doesn’t matter, Scanzoni points to two glaring problems with the Web video market that make the urgency for an upfront seem a little ridiculous: a lack of consistent measurement, and the fact that on the Web, content choices are infinite and audiences are unpredictable (whereas TV offers scarcity and universal measurement). However, Scanzoni is optimistic about initiatives like Nielsen’s Online Campaign ratings, which aims to bring gross rating points to online video, but at the moment, only a few publishers use the product -- while others, including Google, offer competing GRP services. Poltrack: Streaming Viewers Worth More Than Live TV Viewers The online video advertising industry has reached a “significant tipping point,” according to CBS Chief Research Officer David Poltrack. At a recent industry conference, Poltrack claimed: "a viewer streaming our program online is now worth substantially more to us than a person watching that program in playback mode and skipping many of the commercials." He added that the value (to advertisers) of the online video viewer is surpassing that of the live-TV viewer, too. Analyst David Charmatz also believes that despite the rise of subscription services like Netflix and Hulu Plus, the future of streaming TV will be ad-supported, mostly because many consumers simply aren’t willing to pay for content. While they willingly hand over money for apps and ringtones, “there is a whole group of people -- millions or potentially billions of people -- who don't see the value proposition in buying content.” Russian Video Service Reaches Deals with Hollywood Majors Russian company ivi.ru has become Eastern Europe’s first online video service to license content from Hollywood’s major movie studios. The deals total some 65,000 items of video content from the likes of 20th Century Fox, Walt Disney, Sony Pictures, Warner Bros., Paramount Pictures and NBC Universal. “The reached agreements are an important step for the development of the legitimate video market in Russia and fighting piracy in the digital content industry,” said Oleg Tumanov, chairman of the board and managing director of ivi.ru. According to research group Romir Gallup International, ivi.ru is Russia’s leading online video service, with a market share of about 30 percent. The company’s revenue streams include advertising, pay-per-view and subscription models.
While new-media/technology business plans and elevator pitches have forever salivated about how television was a $70 billion market ripe for disruption, actually television advertising cracked the $70 billion mark for the first time in 2011, up 5% from 2010. That’s right, folks: TV advertising is getting bigger, with no sign of slowing down. The reality is that the hyper-fragmentation of audiences is making television’s mass media appeal more enticing to advertisers. After all, as a wise man once told me: “Targeting is overrated; everyone buys soap.” Considering that the Internet’s main promises are targeting and tracking, that’s a bad omen. In fact, you can almost argue -- no matter how reluctantly -- that the Internet, social media, tablets etc., are helping television grow. I watch more TV today than I have in the past ten years, even though I may occasionally have multiple screens on when I do. Indeed, according to Nielsen, "45% of tablet owners watch TV and use their tablet together at least once a day. A whopping 69% say they do so at least several times a week and only 12% say they never do this," writes Frederic Lardinois in TechCrunch. In other words, while we’ve certainly seen a shift of consumer mindshare from print, radio, and yes, television to the Internet, the jury isn’t only out on whether the Web helps or hurts television, as of now, the jury has rendered its verdict: the Web is definitely helping. There’s no doubt that growth rates favor the Internet. Online video advertising in the U.S. grew from $1.4 billion in 2010 to $1.8 billion in 2011 -- a more than respectable 29% annual growth rate. Total online advertising in the U.S. grew 22%, to $31 billion. Meanwhile, TV advertising grew 5% to $70 billion. But therein lies the problem: my company’s revenues grew 75%, but the absolute number remains rather light, so getting over-excited about growth rates alone is disingenuous, doing a disservice to everyone hoping for the pie to grow to the point where it can feed everyone. That applies equally to content producers and distributors, albeit in different ways. It’s pretty clear that distribution is a winner-take-all sweepstakes (or rather, top two or three). But it’s almost more daunting for producers as a whole at a time when cheap technology and “filterless” distribution lead to a democratization of publishing. The bottom line is that the online video pie’s not growing fast enough. This column has highlighted the reasons for that underwhelming trajectory: overreliance of in-banner ad distribution; lack of good content with meaningful distribution; the difference between what users watch, distributors feature and marketers want to associate with; lack of funding for content; massive oversupply of ad inventory pummeling prices, etc. If you reread that list, it sounds very contradictory. But what the Web lacks and was/is television’s ace, perhaps, is programming. After all, the reason why you both have a lack of good content with meaningful distribution AND an oversupply of ad inventory pummeling prices is specifically due to the difference between what users watch, distributors feature and marketers want to associate with. Only if you program the content better do you create the kind of economics and environment that will make advertising work online. Of course, given the democratic nature of the Web, that might be impossible. In March, for example, the number of video ads doubled annually to 8 billion -- thanks in no small part to YouTube -- but viewers are pleading “no mas, no mas” as is. This is why so many in the ecosystem hope that branded content will emerge as a viable form of advertising, but that will only occur if the content and advertising are balanced by the viewer’s standard.
Tough to admit that one of the businesses you bought as part of a big overall media deal is moving tragically in the wrong direction. Steve Burke, president/CEO of NBC Universal, a company now majority-owned by Comcast Corp. said as much at a recent media outing, according to The Wrap: “The movie business is in steady decline.” Mind you, Universal Studios’ Ron Meyer has done a decent job of keeping the business profitable in recent year, compared with other studios. For his part, Burke doesn’t really get too involved and lets Meyer do his stuff. That makes sense, since the movie business is not something Comcast executives know well. Comcast knows TV – and especially cable TV. Though he gave somewhat dire predications about movies, Burke knows where some entertainment stuff should be headed. When it comes to content, especially TV-distributed content, Comcast has a digital plan. But replacing current theatrical revenues is another issue that still makes entertainment executives scratch their collective heads. What can really replace the high-flying DVD/home entertainment business of years ago? Few digital options out there seem to have grabbed consumers’ fancy. We all know business transitions aren’t fun – especially when longtime business partners still hold a lot of cards. Talk to nervous TV station executives about network and Hollywood partners, and then talk to nervous movie exhibitors about Hollywood and independent filmmakers. Universal Studios already tried “premium VOD” (video on demand) with “Tower Heist” back in October –an effort to shorten the premiere theatrical windows of big expensive movies while grabbing a premium price tag of $59.99. It was probably too soon, and movie exhibitors rebelled big time. And Universal, perhaps sensing that this was a bridge too far, pulled back. Now comes the cry, “The movie business is in decline.” It seems like a fair warning cry to exhibitors that conditions are tough and that content owners are restless and want big change. But wait. There is another side of the equation here: quality. Remember some time back, when Meyer said that the industry – including his own studios – made some bad movies (even though softened up his remarks afterward)? “We make a lot of shitty movies," Meyer was quoted as saying. "Every one of them breaks my heart.” Between what Burke said, and Meyer’s cry about poor content, you have an intersection that is hard to cross.
Will there be more value, real and perceived, in the upfront this year? And not just for TV, but for the usual wannabe media suspects? All U.S. TV advertising was up 5% in 2011 versus the year before, to $71.8 billion, according to Nielsen. Olympics and political spending could improve this year’s growth to 6% to 7%. Perhaps around $20 billion or more of that $70-plus billion will be inked during this summer’s upfront negotiations. All this growth signals that TV is still a big deal for broadcast networks, cable networks, syndicated programmers, TV stations and local cable. As for the wannabe upfront media, online video should grow 22%, to $2.3 billion, this year. How much, if any, of that will go upfront? Hard to say, but perhaps some of it should. Depending on estimates, according to eMarketer, it appears as though all advertising spending could grow around 2% to 3.5%, to some $160 billion. Overall Internet spending should grow at about the same level – 23% -- as online video, to just under $40 billion. Print could drop to around $34 billion, from $36 billion. Lest people forget, at least a decade or more ago, there was plenty of talk about how TV marketers didn’t really need a national upfront. That didn’t work out. With that in mind, and with big dollars still at stake, big online players -- YouTube, AOL, Facebook, Yahoo!, and Hulu, among them -- are pushing their own upfront this week, the so-called “newfront.” Non-TV media looking to glom onto TV’s upfront market isn’t a new idea. Years ago, some big magazine groups tried their luck with “upfront” presentations. Hmm…where did that go, exactly? All this has gotten TV Watch thinking about other upfront contenders: radio, out-of-home, newspapers, local digital, promotional, direct mail. Some say that for all of this to happen, there needs to be a “scarcity” issue like in network television -- some piece of content, program or asset, that marketers desire to lock in months in advance. New-media analysts might say the “scarcity” thing is a myth. All you need is to hit the consumer at the right time with the right message. Content is important, but it’s everywhere, and seemingly seeking a lower level with other content -- at least when it comes to TV network and some cable shows. At the same time, media usage is growing. By some accounts, the average U.S. citizen interacts with 11 hours of media or communications a day. What’s a marketer to do? Buy everything “upfront” for an entire year or season == and then take a vacation? Or tinker with media plans all year round? Perhaps the growing world of all media needs both an upfront market to set some bases and also short-term activities -- especially those where marketers can experiment with newer media alternatives.
Did you hear the one about the standup comedians who decided to become Internet entrepreneurs? First it was Louis C.K. and now it’s Aziz Ansari and Jim Gaffigan who are capitalizing on a new business model -- stand-up on demand -- that could theoretically alter the dynamic among performers, distributors and consumers of television comedy. The three of them have essentially gone into business for themselves by cutting out the middleman (e.g., HBO and Comedy Central) and selling downloads of their acts directly to fans. They rented theatres, videotaped their shows in front of live audiences and began streaming them to online fans for five dollars each. (Here’s a sample.) In other words, they are using the Internet to wrest control from producers and business executives and give it back to content providers and consumers. This is the ultimate “a la carte” proposition, taking VOD one step further. The quality is as good as “regular” TV. With a high-speed Internet connection and an HDMI cable, you can either stream the show live or download it onto a laptop and play it back on your television -- and you don’t need to subscribe to cable. In theory, then, comedians (and presumably musicians and other performers) could seize the means of production and take a chunk of business away from TV networks. As Louis C.K. explained, the economics are simple. It cost him $250,000 to rent New York’s Beacon Theatre and produce the show. He had minimal marketing expenses because he was able to promote it on podcasts (Mark Maron’s WTF and Bill Simmons’ Sports Guy), radio shows (NPR’s Fresh Air) and newspaper interviews. Within a couple of weeks he had 200,000 downloads, grossing over a million dollars, for a $750,000 profit (some of which he gave to charity and shared with his crew). In an online statement, Louis concedes: “This is less than I would have been paid by a large company to simply perform the show and let them sell it to you, but they would have charged you about $20 for the video. They would have given you an encrypted and regionally restricted video of limited value, and they would have owned your private information for their own use.” Which leads to the question we’ve been asking for at least a decade: Does the ability of the Internet to disintermediate traditional production organizations (TV networks, record companies, book publishing houses, movie studios, etc.) spell the end of those institutions? Can a consumer cobble together enough TV viewing on the Internet to cut the cord with his cable or satellite provider? To me, the answer remains: Not yet. I don’t think Comedy Central, HBO or any other network with a lot of stand-up comedians really needs to worry right now about the threat from the humor proletariat. How many comedians are really entrepreneurial enough to go through the hassle of organizing a show like this? Louis C.K. risked a quarter of a million dollars not knowing if anyone would actually download the show; he could have made more money and assumed less risk if he’d sold the show to one of the major networks. But even if there were a thousand Louis C.Ks, we’re still a long way from being able to cut the cord. From a consumer’s perspective, it’s a lot easier to turn on the TV and flip around to see what’s playing than it is to proactively seek out a specific URL, go through the payment process, download a show and then sling it to the TV. Maybe you’ll do this once a month for a special event, but the rest of the time you’ll probably be watching regular TV. Having said that, if there’s any one genre of TV that’s vulnerable to online erosion, it’s comedy. Comedy has fundamentally supplanted popular music as the medium that binds today’s teens and young adults (the very audience that is most open to online platforms). Baby Boomers had the Beatles, Springsteen and Michael Jackson as common touchpoints -- but with the fracturing of pop music, there is no musician today who speaks for the Millennial generation. Comedy, however, appeals directly to this generation, especially young men. It exposes the absurdity of modern life and makes people feel like they’re not the only ones who think the rest of the world is crazy. They love Comedy Central and late-night TV comics, but they also love YouTube clips, funny tweets, funny Facebook links, all-humor websites (http://www.funnyordie.com/ or http://www.collegehumor.com/) and other Internet formats. We’ve heard dire predictions before. New distribution systems always threaten the status quo. Silent movies killed vaudeville, talkies killed silent movies, TV killed radio as a comedy platform, cable TV threatened network TV, and now the Internet threatens to put everyone out of business. And all along the line people bemoaned the loss of the good old days. People are always going to laugh. And they will continue to laugh at television programming for the foreseeable future, even if comedians do try to go straight to the consumer. But if someone figures out a way to easily aggregate and organize the Internet’s massive collection of online humor so that it plays easily on a TV set, all bets are off. After all, the business of humor is no laughing matter.
Cord-cutting has gotten a lot of press, but the total number of people canceling their cable subscriptions remains relatively small -- and the executives at Hulu apparently want to keep it that way. The company, owned by News Corp, NBC and Disney, intends to start blocking access to a host of shows for users who don't subscribe to cable TV, the New York Postreports. The news report -- as yet unconfirmed by Hulu -- has left some consumer advocates fuming. The group Free Press questions whether Comcast is violating the terms of its merger with NBCUniversal -- one of which was that Comcast would give up NBC's ability to manage Hulu. "This move to tie Hulu to cable TV service merits close scrutiny from the government agencies that approved the anti-competitive Comcast-NBCU pact in the first place," Free Press policy director Matt Wood said in a statement. "While Hulu should be able to make money on its service, imitating cable's walled-garden model would actually deprive access to millions of willing purchasers." Public Knowledge president and CEO Gigi Sohn said the move would spur consumers to seek out pirated versions of TV shows. She also criticized the Federal Communications Commission for failing to impose a merger condition prohibiting Hulu from blocking people who don't subscribe to cable. Of course, at this point the details remain vague. Hulu hasn't yet made any public statement, and the Post said in its story that the move could take years to complete. Whether the move will discourage cord-cutters remains uncertain -- especially because a lot could happen to change the way video is distributed online in the next few years. Already startups like Aereo are offering cord-cutters new options for TV viewing. Assuming it doesn't get shut down by the courts, Aereo's $12-per-month model -- which allows users to stream the shows available on over-the-air TV to their computers, iPhones and iPads -- could become a lot more attractive to people who find themselves shut out of services like Hulu.