I heard it again at the National Association of Broadcasters' convention: Traditional pay TV and broadcast models are going to go the way of the buggy whip. This was not the first time, nor will it be the last time that this phrase has been uttered by folks on the online video side of the business.
Interestingly, another set of observations I made on more than one occasion at NAB was the difference in perspective of folks from traditional media discussing online video and those from new media companies discussing the same. The new-media folks were for most part aggressively touting the buggy-whip scenario of all the disruptions and upheavals that technology is wreaking on the fundamentals of video distribution and consumption - concluding that the traditional businesses will go by the way of the buggy whip.
The folks from the traditional business side of the industry were defending their businesses with arguments of, well, business. Their position (if I may take the liberty to summarize and therefore generalize some), was that the online video business models and revenue flow don't make for good business at scale -- today. Online video is a good extension of traditional mass media and not a replacement for it. The inter-dependent ecosystem of publishers, distributors and advertisers has strong underpinnings that will not change overnight, even if the technologies are there to disrupt the value chain.
For many of us in the industry, these two sets of arguments are not new. However, every time I read commentary on one or the other side of the argument, I realize that people are either oblivious of the counter argument, or conveniently choose to ignore it for whatever reason. I do however know from firsthand experience that for a lot of people the traditional media food chain is a blind spot.
The "buggy whip" metaphor is one that we are all familiar with for sure. The automobile made the buggy and therefore the buggy whip obsolete. This metaphor comes up innumerable times in the context of traditional media versus digital media over the past few years.
That got me thinking that actually very few things go the way of the buggy whip these days. Even the music industry is still hanging on, raking it in with live concerts and still cranking out platinum stars. Regardless, the woes of the music biz were inherent long before digital media came along, as I wrote a few years ago in Streaming Media. In other words, music industry members were their own undoing well before digital media appeared on the scene.
Rather than apply the dated buggy-whip metaphor to what is happening in video, I think what is going on the in the automobile industry today offers a better playbook for our industry. I am talking about the emerging hybrid and electric car technologies as an evolutionary step and a slowly changing paradigm. The auto industry is slowly but surely developing and adopting these new technologies, and a market is developing around them, even when the economics are not entirely favorable. I could go on, but you get the idea. Eventually, it is bound to happen that the traditional technologies will become obsolete. Meanwhile, the traditional technologies are actually getting better.
But that is only half the story, as is the case within our industry. For many, if not most online video startups, traditional media is providing the viability for their businesses -- think of most of the OVPs, metadata and discovery companies, online publishers, connected devices, and others. At the same time online video companies are providing traditional media an extension of their business into emerging distribution and consumption trends. This is augmenting the existing ecosystem that will expand before it is replaced by the new technologies in its entirety.
Let's look at an example of a new hybrid ecosystem: Consumers are purchasing Roku boxes primarily because of Netflix; Netflix is gaining subscribers by the millions because it carries traditional broadcast and pay TV programming; Revision3 (and others) are featured on Roku and will be discovered by consumers on account of that, while they (consumers) bought Roku to watch Netflix and probably would not have bought it to just watch Revision3. Meanwhile traditional broadcast and pay tv programming (and some very old archives) are finding new distribution channels.
The two sides of the industry have more in common and more interdependencies than is commonly acknowledged. The fact that they show up at the same shows and even on the same panels is evidence of that. While competitive tension is a good thing, being able to leverage each other's strengths is a bigger force. The ones that will have the hardest time riding this rising tide are those whose businesses rely on a fork lift replacement of an existing paradigm. For the rest, both in traditional and online video this is a great time to be in media and an unprecedented time of opportunity to build customer satisfaction and brand loyalty.