Despite the hubbub about digital interactivity, the entrenched business models of movie studios, television broadcasters and advertisers impede the progress that would result in full-fledged Internet Protocol video. They will not shift gears from their old business models until there are enough economic incentives to do so.
Media values are being redefined by best-case digital projections rather than historical multiples of cash flow and other balance sheet specifics. Digital interactivity is no Internet bubble, but placing big bets on digital enterprises supported by strong trends rather than substantiated with real numbers may not be smart business.
Barry Diller and Vint Cerf are straight-talkers about the Internet. They are contemporaries who are powerful media forces in their own right. And they have issued a warning to traditional media companies: get with the digital program or be left behind.
A writers' guild strike--threatened or real--will be a reality check on a system of television economics that has never made sense. A protracted walkout will erode the new digital revenues as well as the strained profits of broadcast networks, whose core content would be at risk. It's a financial hit that TV broadcasters appear willing to sustain to hold the line on new digital revenues they have to share with writers. Some say it is a foolish crapshoot, given that writers are essential to creating original content for new platforms and devices.
Apple Corp. and its founding CEO Steve Jobs are writing the book on how companies can reinvent themselves for digital opportunities -- and it just keeps on getting better. The success Apple and Jobs are enjoying has been hard-won and instructional for media and technology companies struggling to develop new digital business models and services.
The $2 billion-plus bottom-line boost that TV broadcasters will get through 2008 from election-related ad spending, while helping to offset fundamental business declines, is a triumph over the Internet's stream-rolling competition--at least for now. But by the time the next presidential election rolls around, local broadcasters will have learned to capitalize on the digital technology scheduled for a 2009 transition. Or some will literally die trying.
The broadcast TV networks are not getting what they wanted from the much-ballyhooed extension of audience ratings, which include DVR replays. The intended goal was to give new credence to the high price of advertising time in their programs. Based on only first-week results, audience erosion levels are essentially the same in live programming and DVR replays, which are compounded by 66% of DVR users skipping through originally broadcast spots. This confirms the worst-case scenario: Consumer support for broadcast shows and advertising continues its precipitous slide--no matter where it appears.
Seizing control of Dow Jones and its flagship Wall Street Journal will give Murdoch an unprecedented platform on which to mold a more ad-dependent, digital template for news publishing--and the entire newspaper industry can benefit. The most important task at hand is designing new ways to nip the growing disparity between newspapers' $60 billion share of a $235 billion U.S. ad pie--second only to total television--and their rapidly declining foothold with readers and classified ads.
Poor Jerry Yang. It's not enough that he helped create Yahoo at a time when it set the pace for Internet email, search and aggregation. Now he has to fix the 12-year-old Web staple as if it were a big old media company struggling to transition to the next stage of interactivity -- because it is.
John Malone's Liberty Media may be crossing paths again with AT&T, the thrice-reborn telephone giant that acquired his cable systems more than a decade ago, as the country's dueling satellite services -- EchoStar Communications and DirecTV -- become more pivotal in the intensified battle for the living room.