New blog: Changing Channels

I'm shutting down this blog and starting a new one at http://changingchannels.ca/blog.

The new blog, and the new site at changingchannels.ca, will focus on the coming world I call Media 3.0.

Alan

Upcoming CRTC BDU hearings

A print reporter asked me some questions about the upcoming CRTC hearings on BDUs (cable TV, satellite and telco-IPTV providers), leading me to write the following diatribe (I have not proof-read this rant, I must confess).




When it comes to television, the CRTC has a two-fold responsibility: it must ensure that Canadians are well-served both by the provisions of the telecommunications act (distribution) and the broadcasting act (content). Historically, these two were inextricably intertwined, making it easier to define regulatory policies that balanced the disparate interests of the distributors and the broadcasters while simultaneously promoting and protecting Canadian content and culture. Twentieth-century distribution channels had limited capacity and there was clear and reasonable justification for prioritizing and protecting Canadian players and content in that environment. Changes in technology, however, have created a distinct separation between the medium (distribution) and the message (content). Alternative (and unregulated) distribution channels exist today that can offer an infinite range of content, and even within the regulated BDU distribution environment, technology is eliminating the scarcity of spectrum that has been an overwhelming factor in determining what content should be made available. Accordingly, policies based solely on a scarcity that no longer exists need to be reconsidered. However, that being said, we need to transition toward an unregulated (or less regulated) environment gradually lest our entire system crumble as younger viewers increasingly tune out from traditional TV delivery channels.

Sadly, Canadian broadcasters have, on the whole, been very slow to embrace alternative distribution channels -- in large part because they have little incentive to do so in the profitable, protected world in which they live today. The reality is, though, that the audience is on the move, ad dollars will follow, and there's little chance that the CRTC will attempt to regulate content on the Internet. Here, too, the broadcasters are benefiting from an artificially defined eco-system. Geo-blocking is being used by media companies in both Canada and the United States to create artificial boundaries on the Internet. This is done in large part to respect the profitable relationships that exist for conventional TV distribution rights. The result, though, is that American producers aren't reaching as large an audience as they can with their content -- and money is being left on the table. How long they'll continue to tolerate that is anyone's guess but I think it's safe to say that unless the Canadian broadcasters step up to the plate they will be by-passed sooner or later.

The tragic part of the story today is that while some nameless Canadian broadcasters blame their lack of activity in alternative distribution on the challenges of clearing rights for the content, these same broadcasters often demand that Canadian producers give sign away all new media rights to them -- and then proceed to do nothing with them, preventing the producers from benefiting from other opportunities that exist by way of alternative distribution channels.

The best thing the CRTC can do at this critical juncture, where we find ourselves somewhere between a tipping point and a breaking point, is to send a clear message to the industry that while the status quo will be preserved, more or less, for a little while, today's unsustainable protectionist system will be dismantled gradually over the next few years. There's really no choice -- dismantle it gently or watch it come crashing down -- and the sooner the industry realizes that the better it will be for all concerned.


Genre exclusivity (or genre protection): should preserve genre protection only where clearly warranted. That is, where a service exists that is of distinctly Canadian value that could not otherwise survive in the face of foreign competition, genre protection should be provided in the interim -- but those benefiting from it must be made acutely aware of the realities of the future world where we will inevitably move to a world of multiple distribution channels that won't offer the same protection.

As the various distribution channels will increasingly vie for consumer attention, dollars, and advertising revenue, a level playing field is inevitable at some future point. Today, though, while traditional TV distribution remains the dominant format, and continues to garner the lion's share of consumer dollars and ad spending, we're likely to see little emerge in the course of this review that will rock the boat. And that's both good and bad. We'll likely see the commission make efforts to balance the conflicting interests of the various corporate constituents and to, more or less, preserve the status quo for the time being. But that's not going to sustain our artificial ecosystem for long in the face of overwhelming challenges from unregulated content sources. Perpetuating a system that is already highly artificial and increasingly misaligned with emerging consumers does nothing to address chronic problems.

The fee-for-carriage issue? It's a band-aid that won't serve any long-term purpose. If the commission does yield to this recurring demand, it should insist that a large part of the funds received must be spent on the further development of alternative delivery channels. It's not a question of whether these channels will one day dominate, it's merely a question of when will they come to dominate?

Market forces are at odds with CanCon as we know it. In an environment of scarcity (i.e. traditional TV distribution) it's easy to protect and promote Canadian content. However, as we increasingly move to a world where scarcity isn't an issue, opening the traditional TV market too quickly to foreign competition will kill CanCon and do irreparable damage to the domestic production industry. That being said, foreign competition through alternative (and often unregulated) channels is inevitable -- and is already occurring. The sooner Canadian broadcasters ramp up alternative content distribution approaches the stronger their chance of survival. Failure to do so, individually or collectively, will lead to their demise.

Technology is available to shift the balance of power to the BDUs, away from the broadcasters, by way of video on demand (VOD) offerings but current CRTC-imposed constraints on BDU advertising are inhibiting the deployment of significant VOD offerings. For now, this protects the broadcasters, but we have to question whether it's right to put the broadcasters ahead of the consumer -- and that's what we're doing today.

This week saw the introduction of a limited HBO -branded service on Bell Mobility -- and that's just the tip of the iceberg. The commission will spend the next three weeks grappling with its role in the conflicting world of TV 2.0… but TV 3.0 is on the horizon already and that will change everything.

The Canadian media industry can have a strong a prosperous presence in the future, but we must start taking steps today to adapt to the change that is all around us and we can't depend on twentieth-century approaches to preserve an artificial and unsustainable ecosystem that isn't viable in the twenty-first century world.

Quarterlife tanks on network TV

Hmmm... how 'bout that?

Quarterlife debuts on broadcast television

The expansion of Quarterlife from a web-only presence to the network television world last night gives legitimacy to the web as a serious content development and validation platform.

Because it combines social networking and Web 2.0 elements with a conventional TV element, Quarterlife on the web offers a rich, interactive and multi-dimensional experience. It will be very interesting to see how it fares in the passive, ‘one-dimensional’ world of conventional broadcast television. While TV audiences can still partake of the online experience, it will be done, for the most part, at a different time and in a different manner.

There’s no doubt that broadcast exposure will boost the web audience significantly, nor that many of the existing web community will follow the program to the ‘big screen’. The question is, though, whether the broadcasts can find sufficient numbers to justify continuing existence on the network program schedule. Being the first of its kind, it’s anyone’s guess how successful it will be. It will also be too limited an experiment to determine one way or the other whether this approach is any more effective than the often unreliable method of audience testing of pilot programs traditionally used, and perhaps now being eschewed, by the networks.

Beyond the obvious web-spawns-TV importance of this event, though, lurks another potential landmark shift. When networks offer web rebroadcasting of traditional made-for-TV fare, it’s common for the local broadcaster in each country to limit access to the content to consumers who are from that country. For example, Canadian viewers can’t watch Heroes on NBC.com and American viewers can’t watch it on GlobalTV.ca. This approach, though, is rooted in a world where web broadcasting is almost exclusively a second window for the content and the web itself is of only limited ancillary value to the viewing experience. With Quarterlife, though, the experience is holistic. Denying Canadian consumers access to the ‘real’ Quarterlife world, and channelling them into a ghettoized made-for-Canadians world instead, won’t cut it. This potentially has a huge impact on advertising. Canadian advertisers don’t get the same tax write-offs for dollars spent in American media and American advertisers won’t be very interested in subsidizing foreign consumers, so who’s going to foot the bill? As we move increasingly toward a world where an integrated multi-platform and multi-faceted experience becomes the norm, watching how this shakes out will be very interesting.

Like Quarterlife, the Canadian-produced Sanctuary has also struck a deal with conventional television, but it’s critical to note that both Quarterlife and Sanctuary were created by experienced television producers. Because of that, it’s not a matter of chance that the quality is suitable for television. We shouldn’t assume that these two successes – if, indeed, being picked up by a TV network is in fact a measurement of success for a web property – indicate that there’s a wealth of content on the Internet that can make the same leap. What this does demonstrate, though, is that there are alternative means of content development for the conventional TV world – and, importantly, those that make the grade bring a pre-built audience with them.

In the final analysis one thing is clear. While network TV programmers need more web breakouts like Quarterlife and Sanctuary, Quarterlife and Sanctuary have proven that they don’t need network TV to succeed.

Two Solitudes to run Introduction to New Media for Film and Television Professionals one-day seminar

The Two Solitudes Journal and Two Solitudes Consulting are offering a unique one-day seminar entitled Introduction to New Media for Film and Television Professionals. The session will be held in Toronto on November 22, 2007.

There’s no question that we’ve got some great new media conferences in Canada, and even our conferences that focus on traditional media are all trying to address new media in some way.

What’s missing, though, is a broad-based introduction to new media – and that’s the gap we’re trying to fill with our one-day new-media introduction seminar.

Think of it as a new-media boot camp. One intense day of explanations, insight, and myth-busting coupled with insights into where the ever-increasing technology- and consumer-driven changes are taking us.

Limited to a maximum of 20 participants, this interactive and dynamic session is targeted at those who are new to the new media world as well as those who may know certain areas well but don’t have a good sense of the big picture and all of the various aspects of the new media world.

Although specifically targeted at those in the film and television industries, the content will be of interest to anyone who wants – or needs – to understand new media and the massive impact it is having.

Early-bird registration discounts are available until October 24th.

For more information, please go to http://twosolitudes.com/seminars/nov2007.htm

Warner Bros./Rogers/CTV deal: TV viewing an evolution, not revolution

Google plans to bid in U.S. wireless spectrum auction

An interesting letter from Google to the FCC.

Seems Google wants to get into the wireless game -- in a manner that points to an open and friendlier future for mobility (in the U.S.).



July 20, 2007

Ex Parte via Electronic Filing

The Honorable Kevin J. Martin

Chairman

Federal Communications Commission

445 12th Street, SW

Washington, D.C. 20554

Re: WC Docket No. 06-150; PS Docket No. 06-229; WT Docket No.
96-86

Dear Chairman Martin:

Google shares your bold vision of using the upcoming 700 MHz
spectrum auction to encourage much-needed competition in the wireless
and broadband markets. I want to personally applaud your leadership
and courage in making the public case for new market entry, and the
tangible benefits it will offer all American consumers, including
greater availability, higher speeds, and lower prices.

As you know, Google submitted an ex parte letter on July 9th
explaining that, in order to promote genuine competition, the
Commission must include open platforms as part of the applicable
licensing requirements for paired commercial blocks in the Upper 700
MHz Band. In particular, our July 9th letter requested that the
Commission should extend to all CMRS-type spectrum licensees clearly
delineated, explicitly enforceable, and unwavering obligations to
provide (1) open applications, (2) open devices, (3) open wholesale
services, and (4) open network access.

The Commission's draft order for the 22 MHz "C" Block in the Upper
700 MHz Band reportedly allocates this block on a REAG basis subject
to combinatorial bidding and includes some reference to "open access"
principles. While these all are positive steps, unfortunately the
current draft order falls short of including the four tailored and
enforceable conditions, with meaningful implementation deadlines, that
consumer groups, other companies, and Google have sought. In short,
when Americans can use the software and handsets of their choice, over
open and competitive networks, they win.

It is also my understanding that the Commission's draft order
includes a reserve price of $4.6 billion for the "C" Block, apparently
to address unsupported claims about any impact from adopting open
platforms conditions. We hereby inform you that, should the Commission
expressly adopt the four license conditions requested in our July 9th
letter - with specific, enforceable, and enduring rules - Google
intends to commit a minimum of $4.6 billion to bidding in the upcoming
auction.

Sincerely yours,

Eric Schmidt

The Two Solitudes Journal -- July 2007 issue now available

The July issue of The Two Solitudes Journal is now available at http://journal.twosolitudes.com.

In this issue:
ICE 2007, nextMEDIA, Banff World Television Festival, targeted advertising, catch-up TV, my vision of what the CBC should be, a look at Statistics Canada's 2006 TV numbers and more...

About The Two Solitudes Journal:

The Two Solitudes Journal discusses trends in the media industry and examines the simultaneous ‘convergence and collision, co-existence and conflict’ that exists within and between the traditional and new media worlds across a variety of media including publishing, radio, cinema and television. The Two Solitudes Journal is primarily focused on the Canadian media industries.

There's gold in that copper

The big business story of the day is a possible deal involving TELUS and BCE.

The main focus of the stories in the press is the wireless business. That's a very important consideration with respect to the possible deal, but folks are missing the rest of the story.

BCE controls Canada's largest wired-line network. Reporters and analysts are dismissive of Bell's wired-line phone business as a major factor in the deal -- and rightly so, I think. But let's not throw the baby out with the bath water.

That network is already being used for more than just telephony. For a long time, Bell has been an Internet Service Provider (ISP) using that network. And, for years, they've been working on an Internet Protocol TV (IPTV) service that would use that same network infrastructure. Future converged services will also run atop that network. So... unlike a real estate ad that says "and broadloom where laid", we can't be dismissive of this proposition that effectively includes "network where laid".

TELUS, like Bell, is a telco at its roots, and, like Bell, it is using its telephone network for much more than conventional voice traffic. TELUS is an ISP and TELUS is also deploying IPTV (more rapidly than Bell, from what I can tell). For TELUS to grow any segment of their business that isn't based on wireless, what are the options? Well, you can build a new network in another geography, but that's a huge capital expenditure (and telco's are capex averse these days), or you can buy a network that's already built like Bell's.

And let's not forget Bell ExpressVu, BCE's satellite TV business. TELUS is developing a TV business (via IPTV)... why not extend that to satellite? And what easier way than to buy an incumbent, and avoid all of the licensing application costs associated with launching such a service, only to risk being turned down? And hey, at the same time, TELUS would get to compete with arch-rival Shaw Communications (operator of the Star Choice satellite TV service). For Darren Entwhistle, President and CEO of TELUS, it probably doesn’t get any better than this.

Analysts are saying that any proposed deal would fall apart if the CRTC forced divestiture of one of the mobile operations (Bell Mobility or TELUS Mobility). Well, I think the CRTC would be right to make that a condition of any deal -- we need more, not less, competition in that space. However, when we consider the value to TELUS in the Bell Canada network and Bell ExpressVu, I'm not convinced that such a divestiture would be a deal breaker.

TELUS says “the future is friendly”. If they can buy Bell at a reasonable price, the future will be friendly for them indeed.

[Note: I've already been taken to task for not discussing copper's limitations, or the need to continue to upgrade the network to fibre optics, but I wanted to keep the post short. My bad.]

nextMEDIA and Banff World Television Festival 'must see' sessions

I've posted a special Two Solutides Journal Banff preview at http://journal.twosolitudes.com that lists the 'must see' sessions at the two upcoming Banff conferences.

skypo

skypo (noun)

i) a call made by accident using Skype;
ii) a Skype call to the wrong person;
iii) a typo in a Skype chat

a term coined by me, Alan Sawyer, on 2007 05 22... I can't find it on Google so it must be original ;-)

CSUA: IP DELIVERY OF NON-TRADITIONAL PROGRAMMING

I'm depicted speaking (and am extensively quoted) at the Canadian Digital Broadcast Summit (the Canadian Satellite User's Association conference) in April's Broadcast Dialogue magazine issue

http://www.broadcastdialogue.com/article_view.asp?action=view&idnumber=672

ICE Cubes... podcasts for ICE 2007

Here's the RSS feed for all 13 of the ICE Cubes podcasts created for ICE 2007.

Below are links to the bios and audio player for the individual interviews:

- Brady Gilchrist, Executive Vice President of Strategy for Fuel Industries

- A discussion about the blogosphere and social media with Brian Oberkirch, who runs an Internet Consulting Company called "Small Good Thing"

- Christopher Coppola, President of EARS XXI, a new media studio

- Damir Slogar, CEO of Big Blue Bubble, a video game development company from London, Ontario

- David Weiser, Executive Producer at Sulake Canada – best known for their Habbo Hotel virtual world

- Paul Sullivan, Editor in Chief at Orato.com, a Canadian-based citizen journalism site

- Ron Moravek, VP and COO for Electronic Arts Canada. Electronic Arts is the leading publisher of interactive media worldwid

- Ryanne Hodson is co-author of the first published vlogging book, The Secrets of Videoblogging, on Peachpit Press

- Scott Steinberg, Managing Director of Embassy Multimedia Consultants, a full-service international consulting firm

- Shel Israel, consultant and the author of Naked Conversations, a book about business blogging, and author of the forthcoming book, Global Neighbourhoods

- Stephane D'Astous, general manager of EIDOS' new Montreal game development studio

- Tamera Kremer, Director of Client Service at Thornley Fallis Communications, 76 Design, and founder of Wildfire Strategic marketing

- Wayne Helman, President, A51 Integrated Marketing and Communications

Interview with Christopher Coppola

Producer Christopher Coppola has posted a podcast interview I did with him for ICE 2007 on his website.

Look for "CHRISTOPHER COPPOLA SPEAKS AT ICE '07 ".

Profectio on ICE

Dave Forde of Profectio interviews me about ICE 2007 in this podcast.

CNM on ICE

The March 9th issue of Decima Reports' Candian New Media report contains a story on ICE 2007. Access a PDF version of the story here.

ICE 2007 agenda on-line

The program agenda for ICE 2007 is now on-line at http://www.ice07.com/html/conference.php.

CBC summoned to Ottawa

Playback Magazine reports that "CBC's mandate [is] going under the microscope in Ottawa this week as representatives from the network... are called to speak before Parliament's Heritage committee. "

Read more at http://www.playbackmag.com/articles/daily/20070205/heritage.html

Good!

My 2-cents on the CBC (although I'm sure it really costs me much more than that!)

The CBC shouldn't compete with commercial broadcasters and it shouldn't be dependent upon winning revenue-generating blockbusters like football and hockey in order to survive. If TSN wants to broadcast the CFL and The Grey Cup – let them. If Rogers Sportsnet, The Score or TSN want to bring us hockey on TV – let them. We need the CBC to bring us the programming that others won't.

There's an increasingly large void in Canadian programming as private broadcasters increasingly turn to cheaper foreign (i.e. U.S.) content. We need the CBC to fill that void. Instead, the CBC made a disastrous foray into the world of foreign content itself this past summer with the short-lived airing of the equally short-lived ABC reality show The One: Making a Music Star. The rationale behind this was that this would form the spring-board for a Canadian version of the program. If there was any doubt that the CBC was adrift, this move, which would have seen The National bouncing around the schedule (in parts of Canada), was clear confirmation. National news programming is as quintessentially a part of a nation's identity in the free world – and CBC clearly lost sight of the importance of this. Bumping the news for hockey or the Olympics is, arguably, acceptable, but doing so for an American reality show is completely beyond the pale. Furthermore, the CBC is not providing a service to Canadians by bringing U.S. reality programming into our living rooms –we've enough of that happening already. And the plan to introduce Canadian reality programming to the network is an act of desperation – reality programming is, relatively speaking, cheap to produce. Does it add value to our lives? Is it reflective of our national fabric? Will it have an enduring value as a legacy for future generations? The answer, I think, to all of these questions is a resounding "no".

While the CRTC contemplates the role of Canadian private broadcasters, and, possibly re-considers the 1999 move away from mandatory Canadian content spending conditions-of-license, one thing is clear: we are witnessing the end of television as we know it. We are moving into an on-demand world. In fact, I call 2007 "the year of on-demand". The concept of network-scheduled programming is going to increasingly give way to self-programming. While some on-demand delivery channels will fall under the jurisdiction of the CRTC, many won't, and government-mandated Canadian content requirements will become increasingly ineffectual soon.

Which brings us back to the CBC. The mandate of the CBC should be to produce content that is uniquely and distinctly Canadian – the content that no one else is producing. [In French Canada, this is less of an issue as French-language broadcasters commission and air much more original domestic content than is the case in English Canada]. That mandate must be clear, reasoned, viable, and in the interest of Canada and Canadians.

The economics of producing Canadian content are a challenge. Consumers today truly have a world of content from which to choose. Canadian content must compete against global content sources. There's no question that good Canadian content exists that is on a par with the best of the rest of the world, but it's becoming increasingly difficult to make money producing this. The Canadian market is small, and without foreign sales, it's very difficult to make a profit in the Canadian content business. Of course, the CBC's mandate isn't to make a profit and the CBC shouldn't be measured like a conventional business, but, like any business, the CBC can't operate at a loss. The CBC needs serious funding to pursue that mandate. The government – and Canadians – need to decide whether uniquely Canadian programming is important to us. Adequate funding must be a priority if we are to preserve our national identity by way of high-quality Canadian television production. Repeated funding cuts have stripped the CBC of the wherewithal it needs to fulfill this mandate. Restoring proper funding is the only way to ensure that we have a viable, relevant public broadcaster.

The CBC has proposed to the CRTC that it shut down most of its over-the-air transmitters rather than undertake the expensive conversion to digital transmission (or, even more expensive, operate simultaneous analogue and digital transmission facilities). In today's world, transmitters are an unnecessary expense that are of benefit to few at an enormous cost. CBC research shows that few in rural areas use the over -the-air signals, as satellite usage in these areas is very high. Perhaps surprisingly, CBC's submission to the CRTC says that most over-the-air television reception occurs in urban areas. As a result, the CBC proposes that only these areas would continue to be serviced by over-the-air transmission.

However, these are the very areas that are already best-served by alternate distribution mechanisms including cable, satellite, and, increasingly, IPTV from telephone companies. High-speed Internet, too, is readily-available in these areas and provides an increasingly-viable alternate distribution mechanism. So… in fact, the CBC should take things a step further and be allowed to discontinue all over-the-air transmission – it simply doesn't make sense for CBC (or other networks) to spend massive amounts of money maintaining or upgrading the physical plant for the exclusive benefit of a small minority of the viewing audience. While eliminating any transmission capability will certainly arouse the ire of a vocal minority, the reality is that over-the-air transmission is no longer necessary given that all Canadians who receive these signals can also receive the content via alternate means. [Note, though, that at the present time, satellite services don't carry all local stations (this, too, is part of the puzzle the CRTC is trying to sort out).]

Lastly, we need to consider whether the CBC is making the best possible use of its funds and revenue opportunities. While CBC TV has long been subsidized by advertising, CBC radio programming remains commercial-free and generates no revenue in return. The inequity between these two worlds seems illogical – why, on the one hand, is CBC television programming subsidized by advertising content (like most broadcast television) yet on the other CBC radio programming is delivered commercial-free and subscription-fee-free to consumers (unlike virtually all other radio content)? Yes, the CBC needs more government funding to survive and deliver on its mandate, but it must also act with fiscal responsibility and must pursue other available revenue opportunities that don't conflict with that mandate.

ICE 2007 announces preliminary agenda and speaker highlights

We've just announced the preliminary agenda for ICE 2007, the Interactive Content Exchange conference and market being held March 21st and 22nd in Toronto at The Carlu.

Noted futurst and Hugo- and Nebula-award wining author Robert J. Sawyer will deliver the opening keynote address: 'Think Outside The Cube'. Robert will combine his training and experience in the broadcasting business with his speculative insights to give delegates a vision for the future of the business of media, entertainment, creativity and technology.

Other speaker highlights announced today:
Shel Israel, co-author of Naked Conversations, the best-selling book on business blogging. He is currently working on a new book called Global Neighborhoods that explores social media and how “power is moving from the organization into the community”.

Dr. Michael Cowpland, a luminary in the Canadian business world. He is currently the owner and CEO of Zim Corporation, a peer-to-peer content delivery company. He is the co-founder of Mitel Networks and founder of Corel Corporation.

Passport, please

So... as of yesterday, people flying from Canada to the U.S. need a passport. Next year, you'll need one for any form of travel (land, sea or air).

What is a passport, really? Well, if it is a bona fide document, it’s essentially an assurance by one government to another that the bearer is a citizen of that country and it is, theoretically, an irrefutable description of the person that can be used by another government to ensure that the bearer is who they say they are.

I had a number of conversations today about geo-fencing on the Internet. What’s geo-fencing? It’s the practice of limiting access to sites and services based on the supposed location from which a person is accessing the Internet. I say ‘supposed’ because geo-fencing is a flawed technology that relies on often inaccurate or easily manipulated information. Even when it works properly and is not circumvented, geo-fencing only identifies from where the access attempt is being made – it tells nothing about who is attempting the access. Geo-fencing will block a Canadian travelling in Helsinki from accessing sites that he could readily access were he in Canada. The most common usage I’ve seen for geo-fencing is to protect media access from other countries. Canadian-based Internet users, for example, can’t stream Studio 60 from nbc.com. Likewise, American-based users can’t watch Studio 60 at ctv.ca. And if someone circumvents the system and does get the content from the wrong side of the virtual border – so what? The consequences are insignificant in the great scheme of things. The fundamental difference will only be in what advertising they see (which has minor related financial impact).


But what about content / data that has more serious implications? This got me thinking about electronic passports. Will the day come when we need one to establish our identity in cyberspace? Will someone surfing the web who wants to go to, for example, an American site need to present some sort of electronic equivalent of a passport each time they cross the virtual border? I know it sounds a bit far fetched, but stranger things have already come out some governments — including the current U.S. administration. Wouldn’t some governments love to control – and track – all access (domestic and foreign) to their portion of the Internet? We tend to think of the Internet as being without boundaries, or at least we do in the free world. In the current – and probably perpetual — climate of global terrorism, though, is it really inconceivable that a government might create virtual border crossings to control (and track) cross-border cyber travel -- both inbound and outbound? And, at least to some extent, maybe that’s not such a bad thing. If it makes sense to prevent undesirables from physically entering a country, does it not, perhaps, make similar sense, in this era of hyper-computerization, to prevent them from electronically crossing the border, too?

The upside of everyone having an irrefutable and infallable identification mechanism could be the end to the tens or hundreds of unique user identifiers and passwords we tend to have today. That one credential would serve as your identifier for every site you ever visit.

The scary downside of this, of course, for the honest and law-abiding citizen, is the huge loss of privacy. I wonder, though, if that may someday be considered the inevitable price of ‘freedom’?

ICE 2007 is on upcoming.org

ICE 2007 is on upcoming.org. Event link here.

ICE 2007 is on eventful.com

ICE 2007 is on eventful. Event link here.

AppleTV

Iwas asked last month to "name the moment/event in 2006 when you knew that prime time as we know it was going to be a thing of the past".

Here's what I wrote, and it's all about AppleTV, which was announced yesterday (although the product was code-named iTV at the time I wrote this):

For me, the defining event in the impending death of prime time as we know it came this fall when Apple pre-announced the product that is currently code-named iTV.

Why was this so significant? The writing has been on the wall for prime time for quite a while, and many technologies are already on the market that are contributing to this. These include Personal Video Recorders (PVRs) and the broadband streaming offerings from U.S. and Canadian networks that are now-common but were non-existent at the start of 2006.

But what makes the announcement of the so-called iTV product the defining event is that it promises to allow consumers to bridge the computer-TV set divide. Although it is already quite feasible to connect a computer to a TV set for viewing of streamed or downloaded content, it's often not a 'user-friendly' undertaking. Apple has built their name on making the complex simple, and I've no doubt that their foray into the interconnection of the computer-based world with the television set will do just that. Ultimately, it doesn't matter whether consumers turn to Apple's product, or a competing product... what matters is that Apple, a very trusted name in the consumer's mind, will show how easily the worlds of computers and television can be combined. Once that happens, the world of Internet-based on-demand content will open up to the masses in the comfort of their living rooms, and prime time -- and TV in general, as we know it -- will never be the same again.

A new year... a new world order... all because of you.

The new media / interactive media world has matured to the point where it is now having a significant impact on the established media-world ecosystems. Indeed, long-established ecosystems are threatened, and long-established players must change how they do business – if they are to do business at all in the coming years.

New ecosystems are developing, with redefined roles for the distributors (mobile carriers, cable and satellite distributors), the networks and record labels (traditionally, the content aggregators), the content producers, advertisers… and the consumer. Content aggregation, once a task performed solely by the gatekeepers and the networks, is now a role unto itself, with companies from outside the traditional media value chain claiming major stakes in that world (for example, Google).

New challenges and new opportunities exist for everyone, including the huge media conglomerates, small niche players, and the individual.

Traditionally, content that reached a level of consumer accessibility was only a small subset of all content created – and gatekeepers, whether they be networks, mobile carriers, record labels, gaming console companies and the big game distributors – determined what content received exposure. Garage bands had few ways of finding an audience. Individuals had few means with which to share their thoughts. Gatekeepers have acted as the filter mechanism that determined what content ultimately reached the consumer. These gatekeepers include record labels (who determine what music to produce and distribute to radio stations and retail outlets), networks (who determine what programs make it onto TV schedules), mobile carriers (who determine what content is available on their ‘walled-garden’ decks), game console companies and big game publishers (who determine what content will be created for their consoles), and even government agencies (like Canada’s CRTC, that determine which channels and content fill the ‘air waves’). The role of the gatekeeper has, in part, been that of a filter that, for better or worse, determined what content was available to the consumer. But new distribution mechanisms are opening up an unprecedented array of content to the consumer, by-passing these traditional filter mechanisms.

However, having a world of content at their fingertips in and of itself does little for the consumer. Without some form of filtering, the choices are overwhelming and perhaps even paralyzing. Thus, new filter mechanisms have emerged to put order to the chaos – and, increasingly, do so at an individual level. These filters range from the highly personal (recommendations from trusted friends) to the quasi-personal (recommendations form within real or virtual communities) to the contextual (the Amazon-type approach that says “if you like this book, you may also be interested in this book” and are based, in part, on the buying patterns of others). Lastly, new ways to self-filter are changing the world, too. We can now view, and selectively apply, product and content reviews from complete strangers, not just in newsgroups or magazines, but also right there on electronic retailers’ web-pages.

Accessibility to the consumer, too, was traditionally limited to a macro-level approach. Advertisers could target demographic groups that ranged from the very-broad (say Oprah’s audience, or the fans of Desperate Housewives) to the only-somewhat broad (the audience of a gardening, car or cooking show). The relative scarcity of spectrum on radio or within conventional radio and television distribution mechanisms limited the degree to which niche audiences could be served with content and, thereby, limited how niche audiences could be addressed by advertisers. Because there are no spectrum limitations, niche publishing has been way ahead of other media. But that is changing, and other media are catching up – and advertisers have embraced opportunities that now exist to address smaller audiences, with well-defined demographic groups, and, increasingly, we’ll see advertising cater to ‘the audience of one’.

Mobile carriers and BDUs (Broadcast Distribution Undertakings – in layman’s terms, cable, satellite and, now telephone IPTV operators) must accept the fact that they live in a different world now. Mobile carriers no longer have exclusive control over content. BDUs are no longer the only alternative to over-the-air content delivery.

Content producers must address multiple distribution platforms that require varying forms of content, must vie for attention of the consumer, and must compete with user-generated content. Paid content must compete with free content. If inexpensive or free content tells a compelling story, consumers have demonstrated that Hollywood-style production quality, with its inherent high price tag, isn’t an over-arching criterion when it comes to consumer content selection.

Time Magazine’s Person of the Year for 2006 – ‘You’ – is now at the centre of these new ecosystems. An unprecedented world of choice in all forms of media content, from radio and TV and recorded music to print and gaming, has empowered the individual in ways never before possible or imagined. The consumer is in the driver’s seat and the consumer is no longer limited to content selected for them by others, and they are influenced by ‘big media’ hype to a much lesser degree than before in their content acquisition decisions.

The times they are a-changing, indeed. And it's all because of YOU!

Radio interview - television content distribution

I'll be on the radio today (December 28th), sometime between 3:07 PM and 3:30 PM EST, on Toronto's AM640 discussing the changing world of television content delivery. AM640 broadcasts live over the Internet as well as conventional radio waves. The live Internet broadcast can be accessed via AM640's home page at www.640toronto.com.

The Winter Solitudes of Canada

We're just past the winter solstice now, and it's an interesting time to consider not solstices, but rather, solitudes.

I often talk about the ‘two solitudes’ of media: traditional media and new media, and their sometimes contentious co-existence. In some ways, 2006 both brought those worlds closer together and, at the same time, the changes we saw sometimes only served to further the divide.

In Canada, the term ‘two solitudes’ historically refers to the separate worlds of English and French Canada. 2006 saw change there, too, with the Canadian parliament officially recognizing Quebec as a ‘nation within Canada’.

But there’s another meaning to ’two solitudes’ that’s particularly relevant to Canadians at this time of year. These are two solitudes that seasonally emerge and then seemingly seamlessly re-converge every year. They do so without tension or conflict, yet these ‘seasonally adjusted’ solitudes are, in a way, definitive of the Canada that many of us live in today.

These two solitudes of Canada at this time of year are those poor saps who stay at home, freezing their asses off, and those &^#*@! ‘snow birds’ who flock to Florida and other warm destinations for the worst of the winter. (I think you can guess to which solitude I belong).

But in the spirit of the season, whether you’re reading this pool-side in Miami, in a café in Savannah, Georgia, or, like me, you’re somewhere north of the 49th parallel, it’s time to put our collective climactic differences aside and join in the celebration of the holiday season, with family and friends. If you’re lucky, you can do so in person. If not, consider the fact that you can now connect with friends and loved ones around the world in real-time at little or no cost through tools like Skype, instant messaging, SMS and video-conferencing – it’s a wonderful world indeed.

I wish you all a happy holiday and health, happiness and prosperity in the new year.

It's time for our networks to catch up on catch-up TV

Once in a while, my DVR (Digital Video Recorder) lets me down. Sometimes it misses recording a show because the hard disk is full. Sometimes recordings mysteriously don’t occur. And sometimes the content expires before I get around to watching it or flagging it to be retained until I explicitly erase it.

Such was the case this month with two shows I wanted to see. I lost part one of a two-part A Touch of Frost episode, and I lost the second part of a two-part episode of Studio 60 on the Sunset Strip.

What’s a poor TV viewer to do? Of course, this question arises for non-DVR owners, too, and to an even greater extent.

Depending on the show and the broadcaster, different ‘recovery’ options exist. Historically, the only way to watch a missed episode was to wait for summer repeats. That approach isn’t very satisfying if the program is a serial drama where the storyline of subsequent episodes builds upon prior episodes. And there’s no guarantee that ‘summer re-runs’ will even occur – take Studio 60 as an example. Rumours of its imminent demise due to low ratings abound. If it is cancelled, there’s a good chance that it will vanish from program schedules entirely – meaning no reruns.

But today, we’ve got new alternatives, and I used two of these in executing my recovery strategy.

In the case of Studio 60, my timing was good. CTV had just announced that Studio 60 had been added to their broadband station, including past episode availability to provide ‘catch up’ capabilities. Off I went to CTV’s website and watched the episode I missed. This is an option that has been available for a while to viewers of U.S. network programming – but only if they were accessing the Internet with a U.S. IP address (that’s the unique identifier that is used when you connect your computer to the Internet). Canadians have only recently, and on a limited basis, begun to have access to U.S. prime-time programming over the Internet through our domestic networks like Global, CHUM and CTV. This is a great step forward for Canadian viewers – and we need more of it!

In the case of A Touch of Frost, which I normally record from TV Ontario (TVO), I had to pursue other means. TVO doesn’t provide broadband television so I couldn’t do the same sort of catch up that I did with Studio 60 thanks to CTV. Alas, I was driven underground… BitTorrent to the rescue. If you’re not familiar with BitTorrent take a quick look at the Wikipedia entry (http://en.wikipedia.org/wiki/BitTorrent). A quick search of various torrent sites allowed me to find a torrent for this lost program – as I knew it would. Virtually any imaginable TV or movie content is out there – ‘free’ for the illegal taking. After a couple of failed attempts (this is still sometimes a challenging technology to use) and a slow download process, I had the missing episode on my hard disk. [See below for my rationalization for committing this illegal act!] I copied the file to the Media Center PC that is connected to my big-screen TV and watched it on my TV. [Interestingly, both my wife and I felt that the image from the torrent was of superior quality to the up-converted standard definition (SD) broadcast we normally receive from TVO via cable.]

These two different approaches to catching up have one significant difference: one is legal, one is not. By watching Studio 60 on CTV’s broadband site, I was operating entirely within the law. The content owner’s rights were respected. By downloading A Touch of Frost via BitTorrent, I was committing an illegal act. The copyright of the content owner was not being respected. Now normally I am a law abiding citizen, and I am very respectful of copyright laws. But in this instance, I wasn’t. Do I feel guilty about it? No. I financially support TV Ontario and TV Ontario pays the content owner for the right to broadcast that content. Somehow, I missed the opportunity to record (or view live) this specific episode during the broadcast window of opportunity. In my rationalization, the content owner was paid for me to see that content and, although I missed the broadcast and had to obtain the content through unorthodox and unlawful means, the bottom line remains that payment, at a macro level, was made to the content owner for me to see that show. I would not download content for which I could not provide a similar rationalization – but a lot of people do.

In both cases, I availed myself of new technology alternatives to solve my problem. One happened to be legal, the other, not. In the end, though, the fact that I had no legal option to catch the missed episode of Frost (short of renting a DVD, if it is even available) underscores the fact that we’ve still got a long way to go.

Technology has changed. The expectations of viewers for alternate viewing and catch-up opportunities have changed. ‘Appointment TV’ is on the wane. Content on-demand is waxing. In one case (Studio 60), the broadcaster had taken steps that provided a solution that addressed my needs and expectations. In the other, (Frost), the broadcaster hadn’t. Now I well understand that TV Ontario is a public broadcaster and CTV is a private one. TVO has limited resources, especially when contrasted with the likes of CTV, but it really is time for all networks to recognize that the viewing paradigm has changed, as have consumer demands. All content needs to be available through alternate channels if we are to meet the consumers’ expectations. The old world order for content distribution isn’t going away, but there’s a new world order coming to the forefront and if TV is to continue to be a compelling experience it has to deliver the flexibility and ‘on-demand’ nature that other content delivery mechanisms provide.

Targeted advertising

Advertising has always been used as a way to offset the true cost of many services and provide a profitable business model. This has unquestionably benefited the consumer, and that's arguably truer today than ever before, given the increasing demand (and expectation) for 'free' or low-cost content, information and services.

As is the case with the recent announcement that Sprint Nextel is starting to sell advertising embedded in the mobile ‘deck’, we sometimes see advertising spring up where it wasn’t before. Downward pressure on pricing usually means that companies need to find alternate revenue streams – and advertising has always been the stream of choice. In the U.S., and many other geographies, there is far-greater competition amongst mobile carriers than there is in Canada. Our less-competitive market means we haven’t seen the same degree of downward pressure on pricing, but the evolution of mobile devices into much more than just telephones will drive significant increase in data traffic, and, correspondingly, in consumer demand for cheaper data plans. The increase in traffic drives up operator’s costs – and advertising-based subsidization of services is a logical route for them to pursue to maintain profit margins. So, as is the case with Sprint Nextel, we may see our carriers turn to advertising sales to continue to provide consumers with what they want at an affordable price point. And, today, effective advertising is targeted advertising.

A wealth of data can be (or is) collected about computer-based users of the Internet, television viewers, or those using mobile devices to access the Internet or other mobile services. This data enables much more accurate targeting of advertising than was ever before possible. More and more, we will see a shift away from broad demographic profiling of consumers toward much more specific consumer profiles that dynamically evolve to reflect their individual actions (for example, searching the Internet for car dealers could cause automobile advertising to be prominent in the ad content they receive from sources unrelated to the actual search activity that they performed. They might see a car ad the next time they go to a newspaper website).

Naturally, advertisers love this as it greatly increases the likelihood that their messages reach a relevant audience. Consumers, too, should appreciate this – if they are to be presented with advertising content, isn't it better for everyone if that content is of interest to them? However, this does, as always, raise privacy concerns.

The issue of consent is important. Privacy policies are a common feature of Internet sites today and they usually tell you what will be done with information provided by the consumer (active disclosure), and, sometimes, what will be done with other passive data that is collected. Carriers (ISPs and mobile operators), too, should provide similar disclosure with respect to how they will use data that they collect. So, too, should search engines, portals, etc. In all cases, an informed consumer has the option of participating in this collection – or taking their business elsewhere. But consent is only meaningful if it is informed consent entered into by an adult or, on behalf of a minor, by a responsible parent or guardian – and that's a challenge. More often than not, in the electronic world, the granting of consent is a passive action. While privacy policies may be available, it is incumbent upon the consumer to look for these to investigate what will be done with information they actively or passively provide – and few consumers read these. As well, it is difficult, and sometimes impossible, to know with certainty that the person giving consent is of legal age to do so.

The advertising ecosystem in the new media world is still nascent and is only beginning to test the true potential of targeted advertising. At times, this may be taken too far and, when that happens, consumer push-back will help in finding an acceptable balance between the use of profiling and the need for privacy. In the interim and at times going forward, advertisers will test consumer tolerance to specifically targeted advertising.

What are the acceptable limits? Well, of course, that will vary from consumer to consumer and will, in part, be a factor of what he or she is willing to give up in relation to what he or she gets in return. If a consumer’s mobile carrier is part of the same conglomerate that delivers their Internet connection and their television, is it acceptable to use the information collected on one service to affect advertising content delivered to the consumer on another service? Perhaps. Is it acceptable is I’ve consented to that being done in return for a 5% discount on all of the inter-twined services? Absolutely.

In Canada, the three main mobile carriers are all part of enterprises that offer Internet connection services, television services and voice services. This tends not to be the case in the United States or elsewhere, so our Canadian operators have some unique opportunities that may lead to some innovative ways to address the consumer relationship holistically, from an advertising subsidization point of view. Will they pursue these opportunities in the long term? Perhaps. Perhaps not. On the television side, there are still some technical limitations to be worked out. And the television world is highly-regulated – and policy change would be needed. But, long term, it will depend in large part on how receptive the consumer is to this. But it would not be surprising to see or media empires dip a toe in the water to see what the temperature – and appetite – is for this kind of incentive. Personally, I’d welcome such experimentation and let the consumer decide.

New issue of The Two Solitudes Journal now available

A new issue of The Two Solitudes Journal is now available. It was delayed many times (it was first targeted for September publication) but hopefully it is worth the wait.


It may be downloaded at http://www.twosolitudes.com/journal

This issue's articles:

- Will new media mean the end of physical media?
- NBC makes deep cuts, restructures for a new era of a television
- Video On Demand (VOD) -- the end of television as we know it?
- Really Simple Syndication (RSS) for video content
- A look back at IBC 2006
- Introducing iCE 2007 and a new name for the New Media Business Alliance

Private equity buying traditional media companies

I was asked today why I thought private equity investors were buying media companies like Reader's Digest (today) and Clear Channel Communications (Tuesday).


Here's what I think:

In the case of Clear Channel, the simultaneous announcement that they are selling their TV business (all in small and mid-size markets) and their small-market and mid-market radio holdings would lead me to think that the private equity investors are looking at the out-of-home (OOH) advertising component as the strategically significant part of things – and they are probably right. OOH has great growth potential due to technology innovations and an almost unlimited 'spectrum'. Radio and TV are both industries that are facing considerable challenge at the moment, in particular TV. Broadcast TV, at least as we know it today, is an endangered beast – even more so for small operators and network affiliates. So... perhaps the buyers looked at Clear Channel and saw one unit with great long-term growth potential and other business units that could be divested today and still command a reasonable price that they won't be able to get down the road. Perhaps that makes the sum of the parts, today, greater than the whole and a good time to break up the operations. There's little synergy between the OOH, TV and radio pieces and, therefore, no added value from a media convergence point of view.

As for Reader's Digest, without looking at the financials, I expect that it is a profitable business and will continue to be so. They will never capture the younger demographic – but so what? There's still that big group that IBM called the "massive passives" who aren't going to radically change the way they consume media, whether that be TV or magazines. They will, however, inevitably turn more and more to the Internet for media content – and who better than a trusted brand like Reader's Digest to address their lifestyle content needs? Despite its enormous popularity, RD is really a niche magazine, at least in one sense – that is, it has a stranglehold on the magazine market for pre-digested and quick-fix content. So, its hard-copy operations probably have a future, but it also has an opportunity – if seized, and executed upon effectively – to build a strong on-line presence to satisfy the same demographic and same niche as the hard-copy magazine – and this could be additive rather than cannibalistic and contribute strongly to the bottom line. In their current incarnations, though, neither the Canadian nor American Reader's Digest websites seem to do much to extend the content or value of the magazine version. There is considerable value in the familiar and trusted Reader's Digest brand name, but that isn't being leveraged well online. Perhaps that's the hidden value that's being seen by the buyers of the company. The brand isn't broken, and it doesn't need fixing, but it could be better – and more profitably – utilized.

[Update: some of my analysis was used by Barbara Schecter in her story in the November 17th Financial Post]

Heads in the sand or muzzles on the mouth?

Stuart MacDonald (of Mesh Conference fame) has a posting on his blog at http://stuart.blogware.com/blog/_archives/2006/11/7/2480838.html in which he makes some observations about a panel I moderated two weeks ago.

The panel was at the Interactive To The Max Big Day! conference and was entitled Broadcast Businesses in a Digital Age. Stuart's blog posting is interesting. He says "listening to [the broadcast company execs] sit there and say that nothing seemed likely to change etc... [when] the fact is that in very short order the world of video is going to be turned upside down, the surrounding economic conventional wisdom is going to be seriously challenged and the "shotgun" ad model is going to be under enormous pressure."

I agree with Stuart about the impending impact to the broadcasting industry. I hope that he is wrong, though, when he says "those broadcast kids seems violently ill prepared". Here's the comment I wrote with respect to Stuart's blog entry, explaining why:


Hi Stuart,

I moderated the panel you discuss here.

I think it's important to note a couple of things. None of the panelists were actually the heads of any networks. They were all heads of the interactive arm of their networks or, in the case of Ron Suter, head of the Canadian distribution arm of a U.S. network. This is important only with respect to my next point.

I tried to get some frank conversation going by, for example, throwing the 800-pound video-on-demand gorilla onto the stage (and by VOD, I mean VOD in all its forms (including broadband and broadcast) and by questioning whether Rogers had disintermediatd Global in their direct-to-CBS on-demand deal for Survivor. Not surprisingly, no one really took the bait. There are at least two possible reasons for this, and for the overall "Holy snappin' are those kids out of touch" feeling you came away with. The first, obviously, is that these execs could really be missing what's happening. But, personally, I don't think that's the case (and I certainly hope that's not the case). I think it has a lot to do with the fact that this was a public forum, with press in attendance. Had any of these folks come out and said anything along the lines of "the days of broadcast television are numbered" or "the role of broadcasters in the entertainment value chain is endangered", their careers at their respective companies would have been over the moment those comments hit the street. The big broadcasters are all publicly-traded companies and none of them are likely willing to publicly acknowledge the true battles the industry is facing. So, I think, while the interactive folks have their marching orders, which may include "save the company!", they probably are also somewhat muzzled, whether by command from on high or by self-preservation instincts.

I hope I'm right about this, but, of course, you never know what others are really thinking (or not thinking, as the case may be).

Alan Sawyer

Reader's Digest versus YouTube

It was just announced that Reader's Digest has been sold for $US 2.4-billion. That's about 1.5 times as much as Google paid for YouTube, which got me thinking.

I think that these two media operations are at opposite ends of the spectrum, and I doubt that there's an overlap in their audiences. I think of YouTube as being very aligned to a younger demographic and, conversely, I think of Reader's Digest as having a primary readership in the 40+ age group. And, according to Wikipedia, RD reaches more $US 100,000+ readers than Fortune, The Wall Street Journal, Business Week and Inc. combined.

Over the years, RD has expanded to include numerous international editions. YouTube had an instant international presence.

YouTube is purely an electronic forum while RD is primarily a paper-based product although it does have websites associated with, at the very least, the American and Canadian editions.

YouTube is primarily based on user-generated content with some legal commercial content (and much illegal commercial content) in the mix. RD is primarily based on commercial content, supplemented by a small amount of user-generated content.

YouTube is a few years old; the venerable RD was founded in 1922. RD is the best-selling magazine in the United States. YouTube is one of the most popular websites.

I haven't looked at the financials of either operation, but RD has a clear and traditionally profitable business model -- you don't last 84 years without being profitable. YouTube hasn't been around long enough to be said to have a track record and its on-going profitability is uncertain given a potentially very fickle audience.

RD commissions much of its own content has been dealing with rights clearance for its acquired content for years. YouTube has serious copyright issues to deal with and may lose audience share by following what much of its audience likely views as the heavy-handed removal of copyright-infringing content.

These two operations couldn't be more different, yet both serve a similar purpose. They provide short-form content to their audiences, though these are vastly different audiences and, arguably, in the long term, one audience demographic is waxing and the other waning.

What has me thinking, though, is whether the 1.5 times price difference between the two is appropriate. Putting a dollar value on a company like Reader's Digest is easy, though projecting long-term trends in these changing media times is a bit tough. Putting a dollar value on a company like YouTube is much more difficult.

Is RD worth 1.5 times what YouTube is worth? Is it worth less than that? Or is it worth more than that? I have no idea... but, like I said, it's got me thinking.

VOD: The End of Television as we know it?

The following is a first draft of a future Two Solitudes Journal article. Comments are more than welcome (they might help shape the article)...


For viewers who long for full control over their viewing experience, Video On Demand (or VOD) may mean just that. It may also mean the death of the Personal Video Recorders (or PVR). PVRs, a powerful replacement for VCRs in the home, have seen slow consumer adoption (about 6% in Canada and about 12% in the U.S.) and, when the consumer has access to a robust VOD offering, they may find their expensive PVRs unnecessary. Time-shifting and convenience are the big advantages of the PVR – and VOD offers all of that… and more. DVD rentals continue to be popular because they give the consumer greater content choice, but VOD may make that a thing of the past soon, too.

The term VOD is used in many ways. VOD is sometimes used to refer to Pay-Per-View offerings (PPV), but this is a weak positioning of VOD given that most PPV is limited to a small set of programs that start at pre-determined times (usually on the half hour). Another way the VOD term is used is with Near Video On Demand (or NVOD). With NVOD, a program will have multiple staggered start times, perhaps every 10 or 15 minutes. Although with NVOD the consumer doesn’t have to wait too long, it’s still not truly an on-demand experience, and the choice of content is still quite limited. But true VOD is just that: video that begins, on demand, within a matter of seconds of the request from the viewer. Doing true on-demand requires a dedicated video stream for each consumer of the content – and that takes a lot of bandwidth. Both NVOD and PPV allow multiple viewers to share the same stream and therefore reduce the bandwidth requirement considerably.

VOD will change the way we think of the familiar program schedule. No longer is it just the case that Survivor is on a specific day and time – rather, we’ll think in terms of a new episode of Survivor becoming available at that time. Broadband-based TV networks offer the VOD experience, too. The big Canadian networks all have broadband sites carrying recent content and the CBC has also made a vast amount of their archival material available online.

Cable operators are announcing new on-demand deals all the time, and while their technologies are sometimes a bit lacking, improvements are on the horizon. And telco-TV (TV service delivered over traditional telephone lines) offers on-demand content, too. But you won’t get anything close to full-blown VOD from a satellite dish due to signal capacity limits. And while VOD will increasingly be a strong differentiator for cable and telco-TV, in areas where digital cable doesn’t go, or where the phone network isn’t up to snuff to carry IPTV, viewers will continue to turn to satellite for the foreseeable future. For the demanding consumer, though, who does have the choice, the rich offerings of the on-demand world may provide a strong temptation to “ditch the dish”.

As more and more content becomes available at the click of a mouse or the touch of a remote-control button, viewers will enjoy a virtually unlimited choice of what to watch at any time. But VOD isn’t just good for the consumer. It’s also the Holy Grail for cable and IPTV distributors – and advertisers. VOD presents new ways for operators to make money by charging for the content (either a la carte or subscription-based), selling advertising to accompany the content, or both. As well, with an individual stream for the viewer, the operator can tailor advertising to that viewer. Before that happens, there’s still a big hurdle to overcome. The CRTC severely restricts VOD advertising today, but this may change as a result of the upcoming TV review the commission is undertaking. Content owners, too, stand to benefit in the on-demand world. Consumers can (re-)discover old programs or watch episodes of current programs that they’ve missed, leading to additional revenue. Over the next couple of years, the evolution of VOD will lead to a revolution in how we watch TV.

NBC cuts

Last week, NBC announced 700 job cuts and budget cuts of $US 750-million. News programming is the main casualty but scripted programming in the 7:00-8:00 PM timeslot is also being reduced significanlty in favour of more realty programming and games shows, both of which are cheaper to produce.

Here's the analysis I wrote at that time, some of which was quoted in the National Post on Oct. 20th:


News
There are so many alternatives to national network news broadcasts today, in the U.S., Canada and around the world, that the announcement that NBC is trimming news operations isn’t surprising. Twenty-four hour news operations can deliver content in a more timely fashion than the twice-a-day U.S. network news programs. And, of course, increasingly, people are turning to the Internet for news. On-line newspapers present breaking news throughout the day, as do the numerous news portals like Yahoo!, Google News and Sympatico. Today, these services offer video content in addition to the traditional textual content, making them more compelling than ever. And all of these forms of on-line content allow the consumer to choose which stories they do – and do not – wish to explore, unlike the fixed linear format of conventional news programs. Syndication technologies like RSS and ATOM allow Internet users to subscribe to news feeds on subjects that are of specific interest to them and this allows them not only to filter the content to that which is potentially of interest to them but also to be exposed to a much greater number of stories than can be covered in a conventional news program.
The result is that audiences can be well informed throughout the day without needing to wait for a scheduled news program. The loss of the iconic anchors for the U.S. network news programs – across all of the big three networks – has probably led to a loss of viewers who tuned in, almost out of habit, to hear the news from a familiar and trusted face.
News is becoming commoditized and it’s hard to make a profit on commodity items.

Scripted programming
Content consumers today have many more choices than ever before. The world that existed when David Sarnoff created NBC is long gone, as are the days when specialty channels (the so-called cable channels in the U.S.) represented only a minor viewership drain for the big networks. Today’s broadcast television world is highly fragmented, and that fragmentation is increasing dramatically through the alternate delivery channels of the Internet and mobile TV. But the Internet and mobile TV offer more than just an alternate way to watch conventional television content. More and more, we’re seeing content designed specifically for the Internet or for mobile consumption, and user-generated content on sites such as MySpace and YouTube is increasingly finding an audience. Advertisers haven’t missed this, and, although advertising spend across all media grew last year, nowhere was that growth greater than on the Internet – and nowhere was that growth weaker than in conventional television advertising. Scripted comedies and dramas are very expensive to produce, but they are also very expensive to launch, and few that do make it to air survive. By comparison, reality programming and games shows are cheap and they are therefore more profitable for the networks to run – and there’s clearly an audience appetite for these. NBC, and in Canada, Global have had considerable success with the game show Deal Or No Deal this year. In the past, Who Want’s To Be A Millionaire was a runaway success – even though network greed led to overexposure that ultimately killed it before its time. And, of course, Survivor continues to demonstrate the popularity of reality programming. Thus it isn’t at all surprising that Jeff Zucker says he will focus on cheaper programming.

With increased availability of Video On Demand (VOD) and Personal Video Recorders (PVRs), the viewer is assuming more of a self-programming role, and this may account for weakness in the early prime-time slot. Whereas in the past viewers might have to choose between the offerings of two rival networks in the same 10 PM timeslot, today it’s much easier for viewers to watch both by way of the time-shifting capabilities of VOD and PVRs. So, at 8:00 PM, the viewer may be watching the previous night’s 10 PM content. Platform shifting, too, becomes an option as viewers can increasingly watch the previous night’s primetime content on mobile or the Internet the following day. Indeed, this pattern has led to a redefinition of the ‘prime time’ concept. Conventional TV has a primetime, but so do the Internet and mobile viewing – and these primetimes occur at different times of the day (or different ‘day parts’ in the vernacular of the industry).
While NBC is first to publicly declare cutbacks on news programming and an intent to move away from scripted programming in the 8:00 – 9:00 timeslot, they likely won’t be the last – on either side of the 49th parallel. Our networks face the same fragmentation and financial challenges as those in the U.S.

A reduction in scripted programming content will have a ripple effect for Canadian networks. Canadian private broadcasters rely to varying degrees on dramatic programming from the U.S. as it is costs less to purchase this content than it does to produce comparable domestic content. If there’s a reduction in the volume of this type of programming south of the border, Canadian networks will either buy more of the cheaper programming commissioned by Zucker and his peers, or – and wouldn’t this be nice – invest in more Canadian content.

ROB TV

I did a short interview on Report on Business Television yesterday. It is available unline until about Oct. 30th at
http://www.robtv.com/servlet/HTMLTemplate/!robVideo/robtv0726.20061023.00044000-00044110-clip1/h/220asf///

Unbox unbaked?

Seems to me that Amazon has missed the boat with its new Unbox movie download service, or, perhaps more accurately, has missed their opportunity to strongly differentiate their offering from everyone else's.

You see, Amazon owns the Internet Movie Database (IMDB), and if you've ever gotten lost in this site you probably realize that they are sitting on what is arguably the most extensive repository of metadata related to movies and TV shows in the world (and, with the IMDB Pro version, there's even more data that the average user never sees). IMDB recently increased the granularity of information on the TV side down to the episode level. so, whether looking at a movie entry, or an episode of a TV show, this is a huge opportunity to do immediate sale of downloadable content. But IMDB isn't doing that.

Take Stanley Kubrick's classic interpretation of Stephen King's The Shining as an example. Unbox offers the video for sale via download here and IMDB catalogues the movie here. A quick comparison does show that Unbox draws its metadata from the IMDB, but Unbox doesn't allow you to drill down into the IMDB data. So... if I want to know more about Jack Nicholson (and IMDB knows more about Jack and his career than his own mother), I get nowhere. [I just wrote that bit about his mother off the top of my head then saw this on IMDB: "Abandoned by his father in his childhood, he was raised believing his grandmother was his mother and his mother was his older sister. " Now that's weird! But I digress...]

What I'm saying here is that Unbox doesn't do enough to leverage IMDB.

On the flip side, if I'm at the IMDB page for The Shining, the Shop section in the upper right corner offers me the option of buying, from Amazon, a DVD or VHS copy of the movie -- but not the downloadable version.

Looks like Unbox and IMDB need to work more closely together to capitalize on the IMDB metadata and take advantage of a la carte download sales opportunities.

Come on, Mr. Bezos and company, get it together! Put this back in the oven and fully bake it -- and fully leverage the synergy between IMDB and Unbox.

[For the record... I own shares in Amazon]
[Update: For the record, as of Oct. 25th I no longer own shares in Amazon]