For the first time, U.S. consumers could spend more on online movies this year than on physical video formats. Per research firm IHS, this would mark the first year that consumption of legal, Internet-delivered movies will outstrip those of DVDs and Blu-ray discs, combined. The legal, paid consumption of movies online in the United States is projected to reach 3.4 billion views in 2012 -- approximately 1.0 billion views higher than the 2.4 billion combined retail and rental physical video transactions, according to IHS. It is important to note, however, that comparing digital views to physical retail and rental transactions is like comparing apples to oranges. Purchased and rented discs are often viewed more than one time per retail or rental transaction. “The overall view for U.S. video spending is less bleak when other forms of transactional and on-demand subscription video are added to the mix,” said Michael Arrington, senior analyst for U.S. video at IHS. “If revenue were to be added from other viewing options, such as video-on-demand, Internet-based sales and rentals, and subscription streaming from providers like Netflix and Hulu Plus -- alternatives to physical disc purchases and rentals that consumers have been steadily gravitating toward for the past several years -- consumer spending across all outlets of home video would amount to nearly $17.2 billion, a much more substantial figure.” Prospects for the physical video market could likewise improve this year compared to 2011, especially as U.S. consumer spending at the box office in March was up more than 20% from the same time last year. Given hit movies such as “The Hunger Games,” “Twilight: Breaking Dawn Part 2” and “The Avengers,” a real potential exists for a lift in the video market this year that could minimize the overall projected decline, according to Arrington. In 2011, average spending on physical video media per U.S. video household owning either a DVD or BD player slipped to $133.31 -- down 11% from $149.53 in 2010. Consumer spending on packaged video will keep declining through 2016, reaching slightly more than $11.4 billion by the end of that year -- a neighborhood last seen in pre-DVD 1994. Of that total, retail spending in 2016 is estimated to amount to slightly less than $5.4 billion -- the level in 1997 when DVDs were first launched. Rental spending will be more than $6 billion -- similar to what was reached in 1990, well before the 2001 rental peak.
The problem of rampant copyright infringement on sites like YouTube can’t be solved by technology alone. In fact, a group of lawyers probably wouldn’t agree about who owns what on a given piece of uploaded content, senior Google executives said when asked about how the company addresses the problem. Speaking at the D: All Things Digital conference in Silicon Valley last week, Google SVP of Advertising Susan Wojcicki and Sundar Pichai, SVP of Chrome and Google Apps, told interviewer Walt Mossberg that the problem of policing copyright infringement on YouTube is far more complicated than simply identifying a piece of copyrighted content and removing it from the site. Mossberg prefaced the question by pointing out that Ari Emanuel, co-CEO of talent agency William Morris Endeavor Entertainment, had said “about 22 times” that YouTube was unwilling to stop violating the copyrights of his clients, yet they can easily filter out obscene content like child pornography. “I think he was misinformed, very misinformed,” Wojcicki said. “We have done as much as we possibly can. We do not want to be building a business based upon piracy.” She added that whereas child pornography is easy to identify by simply looking at the content, copyrighted material is far more complicated. “What's important to understand is it's tough to scan through a video and know for sure that it's copyrighted and who exactly owns the copyright,” Pichai said. “Take a bunch of content, take a bunch of lawyers, and ask them who owns which content. I'm sure the lawyers won't agree,” Wojcicki said, adding: “There can be different components within the same show owned by different people. We can solve all the technical parts. But at the end of the day, in order to know what to do with that content, we need to hear from the content owner.” YouTube currently uses a system called Content ID to identify copyrighted material. Content owners are asked to give YouTube either video or audio clips from their catalog that they have rights for. When the system identifies a piece of their content, they are given a choice: they can keep the content on the site and enter into an advertising revenue-sharing arrangement with YouTube, or they can ask YouTube to simply pull it down. Pichai said YouTube has sunk $30 million into Content ID, and will continue to improve it.
Ever since Netflix announced that it was looking to acquire and develop original content, critics have dismissed the move as a weak attempt to try and become more like HBO. But Netflix Chief Content Officer Ted Sarandos believes HBO and other media companies with TV Everywhere offerings are actually trying to become more like the on-demand streaming video service. “Everyone keeps talking about whether or not Netflix is becoming more like HBO, and the truth is HBO is becoming more like Netflix,” Sarandos said last week, speaking at the Nomura 2nd Annual U.S. Media & Telecom Summit in New York. “Much more on-demand centric, much more serialized-centric. That’s the evolution of television, to become much more like Netflix.” Sarandos is, of course, referring to HBO’s HBO Go streaming online video service, which provides HBO subscribers with on-demand access to its movies and original series. Whereas HBO releases one new episode of its original series every week or every other week, Sarandos said that Netflix plans to launch every episode of upcoming original series like House of Cards all at once. “It’s really taking on-demand to its natural extreme, which is that for every 100,00 people that want to watch every night at 8 p.m., there’s a couple of thousand that want to watch the whole thing this weekend. And I want to be able to service them both," he said Sarandos added that House of Cards, the upcoming series from David Fincher that stars Kevin Spacey and Robin Wright, was a smart deal because the big names guarantee a sizable built-in viewer base “without spending a nickel in marketing.” He said the big risk is whether or not Fincher & co make a “lousy” show. “We bet that they’re going to make a great show.”
Google represents the first technology company to be fully ad-supported. It’s since evolved to being a media company, but “Google-envy” has led many tech firms to dream up the next great ad-supported business, while media companies struggle to maintain a grip on their ad dollars in the first place. In video, while pre-rolls are disruptive (that’s good for marketers), they’re not adding value to the overall user experience like paid search ads do (which is bad for marketers). Meanwhile, Google’s YouTube has so much inventory that it allows users to skip on ads, with advertisers only paying when a user watched the ad to the end. It’s looking increasingly likely that there’s simply not enough ad revenue to go around. With aggregators owning the audience and thus controlling the advertiser relationship, it’s particularly hard for content creators to survive on ad revenue alone. Traditional media content creators have offline revenue streams and can view online video as a promotional/marketing tool (with any revenue from online being a welcome bonus). But for new-media producers who count on Internet revenue to survive, they have to make online video commercial a revenue-generator. While advertising is always going to be biggest possible revenue source, ultimately supporting the ecosystem. creators need to look at other sources of revenue. The obvious first group includes aggregators and redistributors. The problem for content creators is that the standard revenue share deal usually doesn’t generate enough money to buy a happy meal. With that in mind, here are ten groups that content creators can turn to for revenue (provided, of course, you’re producing the right balance of content to provide these groups with value). 1) Portals. Portals have been producing video for years -- but often it’s branded entertainment for their advertisers, which tends to be high-end programming that isn’t necessarily what users are looking for. As such, chances are that their in-house team is only servicing 1% of their needed videos. With portals fighting for mindshare and time spent on their site, they’re always looking for more video content. 2) Television companies. Until Revision3’s acquisition by Discovery Communications, TV-centric media companies’ need for low-cost production capabilities was outweighed by the reality that they had more than enough of their own content to monetize. But that acquisition suggests that some media companies will continue to shelter their super-premium content and look out for premium content to feature and monetize online. 3) Print companies. Print-centric media companies have been losing revenue forever, and some see online video as a truly incremental source of revenues. While some are adopting a low-hanging-fruit option (ex: newspapers arming journalists with cameras, magazines publishing videos of photo shoots), eventually they’ll seek to license or hire producers to make up for print revenue loss. 4) Other new-media producers. We’re not there yet, but eventually we’ll see a tipping point where video content producers are totally sold out and adding more videos will create more ad inventory and thus, ad revenue (right now the former is true, but it’s unclear if the latter is also true). Because a low proportion of producers have a large own-and-operated destination, licensing additional content is not necessarily financially feasible (due to margins). But once there’s enough advertising in the ecosystem, then some will see merit in investing in their own property. That investment will come from marketing, providing (you guessed it) more content. 5) Ad networks. Naturally video ad networks will seek to monetize any and all ad volume a producer can run ads against -- but with a distribution model across hundreds of sites, the margins simply don’t always work out. However, display ad networks are always looking for video content as a hedge from both the emerging video ad networks and the shift of display to video advertising. 6) Ad agencies. Ad agencies are facing shrinking margins and an existential threat. With content and marketing blurring rapidly, even the largest of ad agencies are looking for content creation and catalogs to offer more to their clients. 7) Online publishers. Publishers command audiences, own brands with the kind of halo that advertisers seek out, produce massive amount of text content, have relationships with advertisers -- but lack video content and production expertise (or don’t have as much as they need). Striking up deals with publishers is always an option for video producers. 8) Consumer product companies. Consumer product companies are looking at extending brands into content without wanting to do it from scratch internally. While some companies like Red Bull are massive producers now, most are content to license or outsource. 9) Stock video and image companies. Stock video and image companies have been toying with moving into video to unlock the value of their raw footage while obtaining distribution on emerging platforms. While this may be a tad too revolutionary for some, it’s a matter of time before some of the players go all in. 10) Academic publishers and educational providers. Academic publishers and educational providers are looking at adding video to their tools and resources, as video and remote learning become commonplace. Ultimately, a producer needs a diversified revenue strategy to survive -- let alone thrive. It’s unlikely that these 10 groups prove to be a salvation. But before everyone bets the house on advertising alone, it’s worth it to explore these options.
Never mind Hollywood and New York. If you’re looking to keep the TV industry alive, maybe you should think about Emerald City. Perhaps you recall Dorothy, small and meek. She schlepped around Oz for two-and-a-half hours with three freaks and a Cairn terrier trying to find the wizardry to get her back to Kansas. They dodged flying monkeys, spent a night doing mad opiates, and brutally melted Cora, the Maxwell House lady -- not realizing that Dorothy had the power to get home all along. All she had to do was click her heels three times and deliver the safe words: “There’s no place like home.” I mention this because for besieged broadcasters, there may be a Glinda, good witch of the North. Her name is Dave Morgan, who says TV has had the power to solve its existential problems all along. All it has to do is click its data together and say, “I know who watches what, when, in every home.” “Too many people see television as the past, not the future,” says Morgan, founder and CEO of Simulmedia, which calls itself a data-driven audience network, but which is basically the online ad network model adapted for broadcast and cable. “We don’t believe that TV is going to the Web. We believe that the Web is going to TV.” Morgan would be the guy to see things that way. He was the founder of the behavioral-marketing firm Tacoda, which was sold to AOL five years ago for $275 million. He previously founded Real Media, an early ad network, which eventually became 24/7 Real Media and was acquired by WPP for $649 million. If this were me, I’d be fly fishing in Nepal and playing gin rummy with Kruggerands, but whatever; he has the bona fides. He also has the benefit of looking at the gathering catastrophe that is broadcast without preconceived notions about how things should be done, nor any stake in the status quo. What he has instead is 300 terabytes of data. “We have every program schedule for every one of 6,000 systems, every one of the 55,000 ads that run on TV every day, and we have the actual anonymous viewing of 30 million Americans, every second of every day, and we have the entire 30,000 Nielsen panel, box by box.” And by crunching the data along Tacoda lines, “we can predict with extraordinary accuracy what is watched in 116 million TV households. This is rocket-science data management.” As a consequence, he says, Simulmedia can create ad schedules that embrace not a few major networks and gorilla cable channels, but of much of the long-tail of the cable universe, so that audiences are aggregated at peak efficiency. The result is that advertisers can benefit from the very fragmentation that is playing havoc with the business models of broadcasters and marketers alike. They can enjoy real reach, without the costly over-frequency they get by desperate buying of GRPs from a handful of the usual suspects. “Inertia in the television industry,” Glinda says, “is impossible to exaggerate.” Not to mention denial. Not to mention gross misrepresentation. “Almost everyone in this world is living in a dream. I have never, ever in my life been lied to as much as I have in the last three years. What these agencies are telling their clients, it’s unbelievable.” But wait, you might say -- what about privacy? TiVo ran into all sorts of aggravation from customers who were creeped out by the service’s ability to behaviorally target programming, never mind ads. It was the, “My TiVo knows that I’m gay” problem – one sure to become a far greater issue if 30 million Americans start noticing ad targeting based on their personal viewing habits. Indeed, Morgan believes we are moving inevitably toward an opt-in model on set-top boxes, game consoles, Blu Ray players and other devices capable of gathering usage data. And he favors opt-in, for what he concedes will be the small percentage of viewers who wish to have the benefit of software that helps them find the programming needles in the 1,000-channel haystack. Let’s say a mere 1 million households opt in, versus the 30 million he gets data on now. No problem. “Today all of television advertising in the country is based on a panel of less than 20,000 [Nielsen] homes,” he says. “You don’t need to have many people opt in to have drastically better data than what is used to measure TV today. One percent opt-in gives you more than a million households. The projectability goes off the charts. “TV starts in this game with extraordinary effectiveness. No other medium can drive the awareness and emotional response of the 30-second interruptive, sight-sound-and-motion of TV. It doesn’t need hyper-targeting to unleash its potential. It just needs better targeting.” But wait. Morgan got in touch to respond to last week’s column, asking for dissenting views about my apocalyptic vision of the TV business, which includes my 7-year-old prediction that some or all of the Big 5 English-language networks will be off the air by 2020. Now, the question was never “Is TV a good ad medium?” Of course it is. The question is, will the nets be able to survive fragmentation and associated loss of ad revenue and still keep the lights on? Simulmedia’s model implies more money, not less, flowing out of the big networks and into the long-tail. Won’t that just accelerate the chaos scenario? “It doesn’t break the model for broadcast,” Morgan replies, “but it could break the model for some broadcasters. Collapse won’t sweep everybody away, but it will sweep away those who don’t act.” Ironically, some of Simulmedia’s biggest clients are networks, who use the service to target viewers all over the telesphere with promos for upcoming shows. Because data tells them exactly where to trawl for viewers. Sort of like the Wizard of Oz madly clicking his own heels. This suits Dave Morgan just fine. After raking in gajillions in his online adventures, he himself is feeling he is finally at home. “I like TV,” says the Good Witch of the Northeast Corridor. “It’s the Internet with two more zeroes.”
Sunday’s brilliant “Mad Men” episode, “The Other Woman,” touched on the contemptuous treatment of women in the workplace. The year was early 1967, when women were far from breaking the “glass ceiling” of America’s corporate world. (Spoiler Alert!) By the end of the episode, Elisabeth Moss’ Peggy has left SCDP for greener pastures as a copy chief, and Christina Hendricks’ Joan has slept her way to a 5% share of the agency. Many viewers were aghast at these new developments,and the flurry of recaps deconstructing the moral compexities of Joan’s choice are still going strong. In one of my favorite interviews in our Archive of American Television collection, series creator Matthew Weiner (in 2010) enlightens us on the character of Joan: “Joan was just supposed to be in the pilot -- some woman who worked there who was going to introduce Peggy to the office and in turn introduce us to the office -- but she’s kind of become the flipside. I mean, there’s obviously more than two dimensions to a woman’s possible experience, and certainly Betty is the third part of it. Joan is great…she’s the most rigid, judgmental and self-confident, yet at the same time she’s wrong about everything. But she’s still sticking to it and she lives by her decisions. And there’s a wisdom there, but there’s also a kind of cruel reality that keeps smacking her in the face which she chooses to ignore. It’s kind of like if you believe in something and you do everything you’re told… if you do X, Y, Z, you will get ‘this.’ And it didn’t happen. Joan is still supporting that methodology to other people, even though it hasn’t happened for her. I love her sexual confidence. Part of me wanted to say that people were having sex back then. Because everyone was shocked by it. ‘Oh, it wasn’t like that! People didn’t do it. People didn’t have premarital sex.’ It’s not changed, and I wanted her to be that person who was kind of unapologetically a vixen. Because that actually wasn’t a fairly recent archetype. You could be a sexually aggressive woman if you just reeked of knowledge and confidence. Of course, it hasn’t been great for her, but….” Glad I could sneak that in. So, what’s in store for women in the 1970s and beyond? What do Joan and Peggy have to look forward to as the years progress? We combed through the Archive to hear what some of the women who paved the way to the executive suites in the advertising-adjacent industry of television had to say about their own experiences: Joan Ganz Cooney (named Executive Director, later President & CEO of Children’s Television Workshop in 1968) “I was born at the right time, because when I was doing what I was doing here, the women's movement was just starting, so I was turned into a star by the media, which was extremely helpful, in terms of keeping money government flowing. I gained real power because of this immense focus on me, as a woman running the Children's Television Workshop. I was asked to be on corporate boards because I was a woman and the boards were just integrating in the '70s -- and that was immensely helpful to me, since I learned how corporations ran. The only thing I remember, is at the start, when it was being discussed who would head Children's Television Workshop, a woman at the Ford Foundation said ‘We ought to get a man to run it because it would have more respect if there was a man there.’ I was asked to draw up a list of those I thought might head up the Children's Television Workshop. I thought through who might do it, from public television and universities, but I said, ‘Be aware if you choose somebody else to run it, I'm not going to be number two.’ That put them in a huge dilemma because [the concept of the Workshop] was in my head; it wasn't on a piece of paper. So the idea died pretty quickly that they would bring in a man to run it.” Ethel Winant (named Vice President of Talent and Casting at CBS in 1973) “[CBS Chairman] William Paley never quite got, I mean, never quite got used to the fact that there was a woman in the room. When he would go through his mail, I was always the one he would turn to and say, ‘Here, would you make sure this gets to my secretary.’ I’d take a deep breath and think, 'No, I’m not going to do that.' I might have to say, ‘Albert, a butler, is right behind you, Mr. Paley, I’m sure Albert would be happy to take your mail.’ And he’d sort of shrug, saying, ‘All right.’ It was just automatic. If there was a woman in the room, you were the one who took the mail or made the phone call.” Marcy Carsey (named Vice President Comedy Series Programming at ABC in 1974) “In the mid-‘70s, there was a progressive feeling in the air. Women were all career women. Maybe the ERA was buzzing around, I don't know. But ABC was actively trying to hire women because ABC said ‘ Most people watching television are women. So why don't we have a lot of programmers who are women. Who know whereof they’re programming to. At one point at ABC in the mid to late '70s, I was in charge of comedy programming. And later, I was in charge of series programming. Esther Shapiro was in charge of mini-series. Pam Dixon was in charge of casting. Jackie Smith was in charge of daytime. There were women all over the place, in almost every department; they were either in charge or almost in charge. So it was a wonderful time at ABC. I progressed fast. I went from being a program executive when I went there in 1974 to being head of series television in 1979.” Barbara Corday (named Vice President for Comedy Series Development at ABC in 1979) “The status of women executives has changed tremendously. …It is definitely much more comfortable for women than it ever was before. The downside is that when they started having women presidents, in my observation, they started having men chairmen of these companies. Chairman was never really a job. At the entertainment divisions of networks when I worked at networks, there were no chairmen. There was the president of entertainment. Now, ever since there have been women presidents, there are suddenly chairmen. I find that interesting.” Geraldine Laybourne (named Program Manager at Nickelodeon in 1980) “At MTV Networks, I was the first woman who got into the executive team, and I couldn't wait to bring in other women. Sara Levinson was the second one in. We were very good at MTV Networks supporting other women, which is not true of most of broadcast television. But I can remember a kind of secret pact, that if Sara didn't feel I got heard, she would repeat what I said. If I didn't feel she got heard, I would repeat what she said. If a guy, 10 minutes later would say what Sara had said, I would say, "Good for you, supporting Sara's idea." We trained a group of people to listen to each other. Eventually, I realized that most of what happens in corporate America is that the alpha male speaks and everybody listens, and they're usually the people who know the least about what needs to be done. So my job was not just getting women heard, but other men around the table who weren't the alpha dog but who were close to the problem. A lot of the tricks about trying to make sure that women got heard actually applied to, how about we have a company where everybody can get heard.” You can see more from these interviewees at http://emmytvlegends.org.