OF ALL THE CONFLICTING complaints we’ve heard so far about the hearing still ongoing in Gatineau which will decide the future policies to govern specialty channels and BDUs, the question in the headline has been the most often repeated – from all sides of the debates.
The issues are so numerous, so complex, then again so connected to each other, it’s a wonder the five-member CRTC commissioner panel can make sense of everything. And there are just so many unanswered questions.
Last week at the National Association of Broadcasters convention, one couldn’t help but marvel at the utter sense of déjà vu when walking the trade show floor or sitting in on some of the sessions. Oh sure, some of the new technology was pretty cool (those mobile HD cams are getting so small, the professional mics and lights can now dwarf the little hand-held cameras, making the whole setup look cartoonish) but in the panel sessions there, it just seems like the TV industry is still just continuing to talk itself in circles about what our new media world might bring us in the not-too-distant future.
To be frank, many of these sessions now all sound the same, year after year, conference after conference. But after so much time talking about it, shouldn’t we be closer to those new platforms delivering much revenue by now? Seems we’re not.
One session featuring a bunch of big brains from some of the world’s largest media companies talked about how the revenue earned by the likes of the Internet, mobile TV and VOD is still at the level of a “rounding error” when compared to the tried and true historical methods (mass advertising and subscription) of collecting billions in revenue.
That doesn’t mean I think the future won’t eventually bring in rich returns from new digital platforms. After all, Sony BMG’s EVP of digital operations Scott Dinsdale, noted during NAB that of his company’s overall revenue (they’re a music company), 40% comes from digital delivery. That type of split will likely one day extend to video.
But if the largest, the most prolific, the most diverse media companies in the whole wide world haven’t yet figured out how to maximize VOD, how on earth is our Commission going to create new rules for broadcasters and broadcast distribution undertakings that can deal with, well, everything?
Take video on demand for example. It’s been one of the key centrepieces to the cable presentations where all of the MSOs have said they believe the platform is one of the best ways to keep viewers “in the system”, if only broadcasters would co-operate and agree to have more of their programming carried on VOD.
Long story short, cable wants to do much more with its exclusive platform simply because they can do it and DTH can’t. It’s a big competitive advantage and they want as much popular programming as they can lay their hands on to build on that advantage before the terrestrial telco TV providers who also do VOD get too big.
Cablecos also want the ability to sell ads within the VOD streams, perhaps sharing revenue with the originating broadcaster.
But the broadcasters fear the monopoly. Cable is the only place for VOD (high quality, TV-centric video streams, that is, since we know on demand video is everywhere on the web) and broadcasters have an inborn distrust of cable anyway, so Canadian broadcasters have not been all that co-operative when it comes to providing programming to Rogers or Shaw or Cogeco or Videotron or others for on demand viewing. That, and the broadcasters may not have purchased the VOD re-sale rights from the producer – be they Canadian or American.
One of the fears among broadcasters is that the MSOs, if they get the rights to sell ads in VOD – with the additional advantage of being very well targeted to demographics, or at least postal codes – they’ll have additional monies to buy popular American programming which would normally be seen on CTV or Global and instead be exclusive to Rogers On Demand, for example.
And what about all that VOD viewer data that exists in the background? “Like an iceberg, many of the consequences of relaxing VOD rules are hidden below the surface,” said Pelmorex SVP of regulatory and strategic affairs, Paul Temple in that company’s presentation before the Commission last Monday. “Cable operators control menus, the programming guide, marketing and promotion. They enjoy a powerful competitive advantage through their ability to extract subscriber behavioural profiles from the digital platform. If left unchecked, they can use this business intelligence to identify top programming, acquire it directly, counter-program with on-demand content and undermine the specialty programming and over-the-air sectors.”
Some of the broadcasters have pointed to the limited ways already where they believe MSOs have gotten around the rules on foreign channels by launching, for example, the Anime Network. It’s not on the eligible satellite list, but it is largely available through Rogers and Cogeco within their VOD platforms. It’s not a linear channel and that move doesn’t violate any regs, it just fuels broadcasters’ fears that the mighty MSOs may one day want to buy up the next season of Desperate Housewives or Prison Break to create their own DHOD or PBOD channels.
Of course, because VOD usage is still very limited and no ads can yet be placed in the stream by cablecos, there is no way such a programming buy for the on demand platform could pay for itself any time in the near future.
But these new policies being developed are rules that may stand for a decade, and given the changes we’ve seen in TV and video-delivering technology and new revenue sources since 1998, it’s a pretty safe bet the VOD platform will mutate in many ways we haven’t thought of yet.
Which is why Pelmorex, for one, called for a moratorium on creating any new VOD rules with this proceeding, instead asking that VOD policy be subject to its own hearing.
“It just simply boils down to who gets that new piece of the pie and this is a turning point because now is the time to get the rules right,” said Temple during questioning last week. “We want to make sure the rules that apply to VOD advertising are firmly established, everyone understands what is going on… (VOD) is a monopoly service.”
“They are tremendously excited about VOD because they know their main competitor can’t offer that service. So what is the cost? What is the cost going to be to transcode the programming? Who is going to do that? Can I do that or will they have a monopoly to transcode programming?… They won’t let us do it and it is too expensive to have them do it, so we don’t have programming on VOD. Will they be able to counter program? Will they be able to bid on rights of programming?” Temple continued.
“All these issues have to be resolved before we open the door to these new services, otherwise we could get the system wrong and it will be very difficult to turn back. So excited we are but we are worried that it be done properly.”
And VOD is just a small piece of what the Commission has undertaken here. This is a monumental responsibility, a massive hearing examining oh-so-complex issues where many of the questions will remain stubbornly unanswered for some time, post-decision.
What do you think? Is this hearing too big? Drop us a line at editorial@cartt.ca.
We’ll keep your answer confidential, if you wish.
