• by Cory Treffiletti , Featured Contributor, December 21, 2005

I read an article last week, right here in MediaPost, that centered on the potential revenue streams associated with delivery of content on-demand by broadcasters. The article stated that it might be years before the new media formats make money and that the reason media execs were rushing to offer many methods of delivery was because they're unclear on what to expect. In the final paragraph, Leslie Moonves was quoted as saying, "New media is exciting, but it's still not going to be our bread and butter for a long time. It's going to be our gravy."

I found this last quote, and the underlying rationale for its statement, to be very interesting. The fundamental argument is that the networks want to be providing their content every which way possible because they aren't sure where to place their bets for the future. I think their execution is smart, but they need to realize that there will be no clear favorite. There will be no "winner" in this model, except for consumers themselves.

As media becomes more and more fragmented, the ability for smaller and smaller subsegments of the audience to access content and entertain themselves becomes more and more necessary. Over the last few weeks I've heard the statement made that there are actually more people watching television content now than there were two or three years ago, and I think that's right. There are more people watching network programming now, but they're not watching it on the networks' schedules. They're watching it in TiVo, iPods, PSPs and other tools. This is obvious, but what does that mean?

It means that the networks will have to invest in each of these delivery formats and they'll need to have a longer-term vision to make these formats work and to prove their scalability. If the networks look at on-demand as a short-term win, and if they focus on these tools being windfalls of revenue, then they'll be sorely mistaken. None of these new media efforts are going to reach a mass audience in the way that TV did in the '70s and '80s. Though TV is still the dominant electronic device in the home, it is morphing into something more digital, able to access content from more than one location. These new delivery methods will have to be invested in and managed to profitability while consumers decide when and where they'll look to interact. In this case, the whole will be stronger than the sum of its parts. As the traditional TV audience erodes, it is not giving up on TV content, it's just choosing other ways to receive it! These numerous methods will add up to as much, if not more, than the current "traditional " TV audience.

And the networks will have to evaluate their performance through the total of all these new media efforts. Just because only one million people may access network content on their PSP doesn't mean the networks shouldn't invest in this delivery method. If they don't, that is potentially one million people they lose from their audience. If you want to understand the potential revenue that comes from new media, you need to incorporate an analysis of the potential loss of audience that isn't able to access the content in the way they'd like.

For example, I'm now addicted to "Lost," but I've never watched it on TV. I watch it on my computer, or my iPod, but never on a television screen. If the show wasn't available through these methods, than I'd never have seen it and become a fan! Now that I am a fan, will I watch it on a traditional TV? Certainly, if I happen to be around one and it's on--or it's TiVo'd.

The point is that while these new media formats may not be the networks' "bread and butter," I think they need to recognize it's a lot more than the gravy. It's the way that consumers are going to view their content for years to come. I love that the networks are starting to embrace new media, but I hope they're doing it for the right reasons.