Television is not the only place in Medialand where crisis will be the principal catalyst for altering the status quo. Few traditional media players are going willingly into the digital revolution that plays by a new set of rules and expectations. Transforming a business can be intimidating--until it's clear that change is not an option. In the case of the writers' strike, once the creative scribes take their craft to independent places in television, films and the Net, and digital rivals Big Media economically, it's game over.
Before there was the iPod and the iPhone and Internet addiction, there was the video game. What was once child's play has evolved into a global adult pastime. Today, video games represent one of the most successful, enduring and revitalizing forms of interactive media. And all the major players in TV and online have gotten the message: When it comes to in-game advertising, the sky's the limit.
The only thing scarier than the rampant dissemination of personal information on the Internet is the apparent willingness of consumers to exchange privacy for interactive convenience. That may be good news for advertisers and marketers that want to maximize transactions. It's great for financial services, since business is less costly online. It's a boon to Internet's social networks and search engines, whose fortunes are tied to bartering such data. But it is really bad news for consumers.
The reinvention of advertising form and value--media's most formidable and exhilarating sea change--will intensify in 2008 as an unintended consequence of the writers' strike. The Internet has been the catalyst for advertising's seminal moment--making it active and transactional. The lingering strike has stripped TV's vulnerable ad-supported framework of any semblance of normality: the fall prime-time season and its attendant upfront. The combination of the two is lethal.
It is the ultimate irony that the $5.6 billion acquisition of Dow Jones represents a formidable growth opportunity for News Corp. because the scion of global business news has been one of the most poorly managed of all media companies, with an industry-low 3.5% operating margin. Rupert Murdoch is about to change all that.
Rupert Murdoch's real battle is to save the newspaper industry (his lifelong passion) by reinventing it for digital advertising-supported consumption and distribution. The boldest way to accomplish that mission is to catapult a formula-powered, self-important business titan like The Wall Street Journal into a broader, livelier interactive financial filter. And he's got the muscle and vision to do it.
The multimedia home hub is a good concept that no one--not even the great minds at Apple--can master, even though digital devices and platforms hope to interface with what remains media's most universal outlet: the television. Analysts say all key players working on the home hub solution are more concerned about protecting their turf than building something bigger--and lasting.
The unprecedented woes plaguing the media and entertainment industries come down to just one thing: The stats used to monetize and value content and advertising are outdated. While it is too early in media's digital transformation to have a full slate of reliable new metrics, alternative business models are gradually being formulated. Implementation, however--as evidenced by the writers' strike and the related advertising predicament--is another matter.
Wall Street is growing more uncomfortable with intensified TV viewer erosion, its permanent drag on ad revenues and the waning of the DVD after-market. Equity research analysts and investors view these as irreversible blows to an already vulnerable entertainment sector. So it is not surprising that a second major equity research analyst has lowered his rating on the entertainment sector, not just because things are bad, but because they are likely to worsen.
Making the case for traditional media advertising is no longer easy, given the fervor about game-changing interactive platforms teaming with targeted user information. In less than a decade, they will be the status quo. Yet there is still time for television, radio and newspapers to get their digital houses in order and cash in on the lucrative transformation.