Commentary

Book Excerpt: Television Disrupted -- The Transition from Network to Networked TV

WONKAVISION -- My very latest and greatest invention. Now, I suppose you all know how ordinary television works. You photograph something and then the photograph is split up into millions of tiny pieces, and they go whizzing through the air down to your TV set, where they're all put together again in the right order."

-- Willy Wonka, Charlie and the Chocolate Factory, Roald Dahl, 1964

From a technology perspective, Willy Wonka had it just about right. But very few people think of television as a technology, and there is no reason for them to. Television (from the Greek word "tele" and the Latin word "visio") literally means "far sight" or "far vision." Modern American network television lives up to that name. For more than 50 years, it has been the best, most efficient way to communicate with the largest possible audience. This probably won't change anytime soon. What is changing is our definition of a large audience and the value we are placing on it.

Ratings and demographics, the lingua franca of the television business, are giving way to new types of ROI calculations. Production and distribution are quickly becoming democratized. And every day seems to herald a new, world-changing technology and the portent of a new paradigm to accompany it.

Before we can jump into discussions about all of the things that are changing (hourly at this point) in the television business, we have to cover some basics and learn some vocabulary. Let's look at a brief overview of mass media in the United States.

Linear Video: Good "Old-Fashioned" TV

Linear video for television (analog broadcast) and cable (basic or premium) is what most people think of as "good old-fashioned TV." Linear channels and networks can be found on all broadcast television stations, cable, satellite, and IP/TV systems. The unique attribute of linear television is that it is scheduled for you by the network or station programmers. Marketers sometimes refer to linear programming as "destination television" because you are supposed to watch the program when it is presented. (Of course, consumers don't always do what they're supposed to do.)

When distributed over traditional networks, linear television is still the most efficient way to disseminate emerging news stories, evolving stories that need continuous coverage, sports, and other live events.

Since almost the beginning of the commercial television business, the industry has relied on two kinds of distribution licenses for linear video, "exclusive" and "non-exclusive." Exclusive distribution deals almost always define two specific conditions: duration of the exclusivity (window) and the geographic area (territory). Up to now, the temporal and geographic restrictions were significant and negotiable, but not unreasonably hard to define. For example: You can air 13 episodes of this particular show, nationwide, on free over-the-air and basic cable/satellite from September to May of this year; you are entitled to rerun each episode two times during that period in the territory of the United States and traditional overlap areas.

These business rules evolved over the past half-century. Show lengths (the form factor) became standardized in 30-minute increments, and day parts (the packaging) were identified and named (morning, daytime, prime-time, primetime access, fringe, late-night, family time, etc.). Program categories matured and became part of our pop culture. Up to now, the only way to think about programs was in terms of "genre" (what kind of show they were) and "shelf space" (when they might air). When pitching a new program, for instance, the title of the presentation will often include a one-line subtitle like: "A one-hour weekly afternoon talk show" or "A half-hour morning strip" (strip shows air five days in a row, and are said to be stripped across the schedule).

As George Bernard Shaw once said, "Every profession is a conspiracy against the laity." And, although it is true throughout this book, it is most ironic here, because in this case, the nomenclature is a conspiracy against the business itself.

The reason for this conspiracy is that every program director and producer (buyer and seller) in the television business thinks about the content in terms of its form factor, its packaging, and its distribution: "This is a half-hour strip -- it can play in syndication from 10 a.m. until the noon news on an [owned-and-operated TV station] and anywhere from 9 a.m. to noon on affiliates that don't run a three-hour network morning show." This conception of how the business works gets even more complicated when you add advertising units to the mix. The programming content of a half-hour show is actually 20 to 22 minutes in length. The remaining 8 to 10 minutes are used for advertising and promotion.

Advertising form factors come in lengths from 5 seconds to 2 minutes. A 30-second commercial is the standard "unit," and you will often hear industry veterans speaking about having some number of "units per show" to sell. For example, a "7/7 barter" split usually refers to a half-hour show delivered to a station for free, with seven units of advertising included from the syndicator or producer and seven units for the station to sell. Again, the entire business is based on the form factors, packaging, and distribution methodology of linear television

This is not just lingo. It is the actual currency of the television business. Industry professionals fully understand the value propositions of each of the common form factors, packages, and distribution methodologies. They also understand the way the success of any particular endeavor is to be measured. Return on investment can take the form of ratings, brand awareness, sales lift, purchase intent, transaction, or any combination thereof, but in all cases it is the common nomenclature and common packaging that enables commerce.

Random-Access Video: Good "New-Fashioned" TV

Thinking about television in terms of shelf space and day parts is not a good way to approach networked television. In a playlist-based or on-demand world, the concepts have no meaning. How should we start to think about programming and advertising for networked television? If the show is the smallest cohesive unit of programming, then we must think about shows and the segments from which they are built. We must also consider promos and sound bites as meaningful units of communication.

Here we have a true obstacle. There are no common form factors, packaging or distribution methodologies for random-access or on-demand video. And because of this, there is no common currency to do business with. To move the industry forward, we are going to have to develop nomenclature, measurement standards, and a way to associate value with each of the component parts, thereby creating the "currency" of networked television.

One last point: People acquire video in a linear fashion, no matter how the video is stored, sliced, or diced before it is presented. You can start, stop, pause, and fast-forward all you like, but in the end, if you are going to watch a video, it's going to be a linear presentation with a beginning, middle, and ending.

Ed. Note: The preceding excerpt comes from the just-released Television Disrupted: The Transition from Network to Networked TV (Focal Press, April, 2006)by Shelly Palmer, managing director of Advanced Media Ventures Group, LCC. Palmer, a recognized authority on new media technologies and their impact on the business of television, is chairman of the Advanced Media Committee of the National Academy of Television Arts & Sciences, the organization that bestows the Emmy Awards. He's also a member of MediaPost's Online Spin Board.

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