Commentary

TV Networks' Digital Platforms STILL Experimental, Yielding Digital Pennies

by Wayne Friedman , Staff Writer, August 26, 2010

Here's what you need to know about premium TV shows currently running on different digital video platforms these days: It's still all experimental.

Those "digital pennies" Jeff Zucker, president and CEO of NBC Universal, complained about some years ago? They still haven't changed into "digital nickels" or "digital dimes." The bottom line is that, as one executive says, it's all an experiment; everyone is still doing "R&D."

Perhaps that is too long a time for digital experimentation during anything called "the digital age."

It was fall 2005 was when we first heard the revolutionary news that Walt Disney Co. was offering its TV shows to be sold -- advertising-free -- on Apple's then-called iTunes Music Store. It's now five years later and everyone is still fooling around with formats: free, ad-supported; fee-based, commercial-free; VOD; and others.

A few months ago, the company that started it all, Apple, was talking up a cable-like monthly digital programming service -- a move that was seemingly pre-empted by the big three TV-media companies' Hulu digital service, where for $10 a month, you get an all-you-can-eat, fewer-commercials monthly plan for access to all TV series, past and present, with no time limitation.

Now Apple -- looking for another wrinkle in the testy world of video services -- is thinking price-sensitivity and flexibility: a one-time 99 cent "rental" fee for a commercial-free exclusive screening of a TV episode for 48 hours. Why? Perhaps the thinking is that we may not want every single episode of "The Good Wife" or "Law & Order: SVU" forever.

Much as it did in 2003, Apple's aim will be to talk up the fact that this won't result in "viewership erosion," and that it could be used for promotion of existing traditional TV viewing.

TV networks may say they want to be on every platform and device, in every type of service, no matter where their customers are. But not-so-secretly, they still seek that one golden digital platform offering substantial revenues, something that can complement or even replace the current traditional TV advertising model.

At the same time, TV networks have the compounded problem of making sure new technologies -- HDTV, 3D, or Internet-enabled TVs -- work to provide optimal advertising revenues.

Rental TV shows won't be the total answer. It's just another clumsy step toward a place where -- impossibly -- consumers, advertisers, and television executives are entertainingly, aesthetically, and financially happy, all at the same time.

3 comments about "TV Networks' Digital Platforms STILL Experimental, Yielding Digital Pennies ".

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Charles Rosin from Live Dibs, August 26, 2010 at 2:12 p.m.
My decision to put my energies into digital/mobile instead of primetime (where I had played for 25 plus years) was triggered by that decision by Disney to sell "Lost" on iTunes in 2005...I think why there are still digital pennies stems from the agenda of all the gate keepers/qualified decision makers which is to preserve their salaries (and the salaries of their clients) by intimidating/retarding/rejecting anything that threatens the status quo.
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Paul Van winkle from FUNCTION, August 26, 2010 at 5:14 p.m.

No one in any decision-making (P&L) capacity at any network has suggested mobile and internet platforms will replace or challenge the TV screen any time soon. No one. This gets plainly reiterated at NAB, by CBS, Discovery, Sun, ABC and Deloitte, et al.

Neilsen, the home and the big screen (TV )represent the Mothership. 30 seconds of advertising time during the 2010 Superbowl costs $2.6 million - (and ever try and watch Hulu on your TV?). Across the board, TV advertising provides by far the largest, best and least volitile revenue and viewing streams, and will into the forseeable future -- hyping, pimping, posing and pontifications to the contrary serve to add pennnies where possible, and the tech investor community. BTW, why should the networks act to change such a model.....? The bulk of Americans still live under roofs not bridges or in their cars.

Kevin Mirek, August 28, 2010 at 12:30 a.m.

Free TV is hard to beat, pricewise! I think the silver bullet for which everyone is looking is, in fact, Free TV. Think about it. It's the one platform all people want (free I mean), the TV part just has to be better. Then viewership and advertisers will return.