Tuesday, May 18, 2010

TV: “We Need to Get Paid”

The Variety headline from Sunday tells the story: “TV eyes online, races to save biz model.” The TV industry knows it is losing its captive audience as viewers have more options, but it is only running in its sleep, planning the future as if 2015 will be soon enough to face its current challenges.

How deep is the denial across the television industry? This passage from the Variety story sums it up:

“There is going to be tension between our business models and the immediacy and ubiquity consumers demand,” says Tom Rothman, chairman of Fox Filmed Entertainment. “We need to get paid.”

Indeed, “we need to get paid” was the mantra of top execs who spoke at the Cable Show confab in Los Angeles last week. TV Everywhere initiatives and the enhancement of on-demand services of all kinds were the dominant topic at the event, the annual conference and exhibition hosted by the National Cable and Telecommunications Assn.

The problem with that “mantra” is that in a competitive economy, it is not the executives but the customers who decide who gets paid. The television industry got used to the idea that they could squeeze more money out of TV viewers because, for a quarter century, they had an effective monopoly. Cable companies provided the only practical channel to get hours of video into homes, so anyone who had a deal with the cable companies was sitting pretty. They could deliver any kind of high-quality content and people would watch.

Meanwhile, the same weekend the television industry was huddling to try to decide the future of our collective eyeballs, YouTube passed the 2 billion mark — that’s 2 billion movies per day. From Wired:

YouTube’s viewership now exceeds that of all three networks combined during their “primetime” evening time slot, with more than 2 billion views per day, Google announced Sunday.

In the real world, where there are not three, but four or five major television networks, depending on how you count them, along with hundreds of other channels and more than 100 other countries, it’s clear that YouTube has a long way to go before it can claim to be bigger than television. At the same time, though, it is also true that YouTube contains only a small fraction of the video seen on the Internet (40 percent according to comScore, but the actual share is less than half of that after you add in the video sources not hosted by advertising networks). And you have to consider that YouTube has been at it for only five years.

So if the message from TV executives, “We have to get paid,” the message coming back from viewers is, “You have to compete in the real world now. Where do you fit in?” It’s a message that the TV industry isn’t yet ready to hear.