LAS VEGAS – Every year, broadcasters and content creators arrive at the National Association of Broadcasters convention to talk about the opportunities there are in new media, often ubiquitously called “digital.”
But for most big media companies, the amount of revenue earned on the web or on mobile phones or with podcasts amounts to little more than a rounding error within its billions of dollars of revenue. So a Monday afternoon session here at NAB sponsored by Deloitte Consulting attempted to answer the question: “Why hasn’t it happened yet – or why is it happening so slowly?” asked David Rips, a partner with Deloitte.
A recent survey undertaken by the company pointed to a vast number of reasons why consumers are frustrated with their digital experience, from the fact it is very difficult to search for content on the web, or even within their cable company’s program guide, to the fact that they can’t take their content with them from device to device or place to place.
Unreliable connections and poor quality video and audio are also key negatives, added Rips.
And repeating the mantra that “the consumer wants what they want when they want it” isn’t all that helpful because there is so much “confusion around what the customer actually wants,” he added.
Rips unveiled a huge list of consumer desires and wondered how in the world media companies would be able to provide for them all. Customers want, he said: Customized and personalized entertainment, personalized recommendations, an extensive content selection, sophisticated search, active and passive viewing, free/ad supported content; support for multiple platforms and devices, a similar menu on each platform to be able to transfer content licenses across platforms, integrated cross-platform billing, off line viewing, single integrated sign on, to share content with friends, high speed real time streaming, and high reliability
Oh, is that all? “That’s a lot to accomplish,” said Rips.
And the prevailing myth with all of this is that the internet will provide for all of this and that traditional media companies are of little use in the future as everyone will go direct to the consumer.
With the lone exception of iTunes (which still has huge limitations) “no companies successfully distribute media today,” said Rips.
And it’s a complex undertaking to deliver media over the world wide web as well as other platforms, all at the same time, as the consumer is assumed to be demanding. Using an hour of drama with a 1.5 Nielsen share, distributed over all platforms and taking into account different languages to be broadcast in, different resolutions and devices viewed on and times viewed and the fact some will be able to pause programming that show’s owner would need to produce about 7,600 configurations of the same show, said Rips.
A total of 24 terabytes would need to be stored just for this one program, delivered at a rate of 1.6 terabits per second as 13.5 million “transactions”, meaning buys or rentals or free viewing, would happen.
All for a single episode of network drama. “And this is a tiny fraction of a tiny fraction of the world of media,” said Rips.
“The internet, from the perspective of a rights holder and a rights licenser, does not make distribution of content easy, for a number of reasons,” added Mark Pearson, SVP 20th Century Fox Television. For example, the company can’t just webcast whatever it wants because it has affiliate agreements with local broadcasters that prohibit it from competing with them. There are other considerations, too, such as paying additional fees for music in certain shows where the company has not bought the web rights to it.
However, the concept of ubiquity, as Deloitte presented it, is also not quite right, added Mark Peisanen, director of strategic partner development for Google TV Ads. Consumers have different expectations depending on where they are and what device they are using. They will accept “a different level of experience,” he noted, pointing to sports fans who will huddle by a lousy radio to listen to the game if they can’t find any other way to do it.
Designing the user interface for everything and everyone and making content available everywhere all the time isn’t necessary – and planning on trying to do that is like “designing the church for Easter Sunday,” added Peisanen. “Not every consumer requires that kind of complexity.”
And ubiquity, added Pearson, “is not necessarily a good thing for the content owner… it may not be the best thing for the business case of the properties.”
And the reason why media companies are not distributing everything everywhere are “strategic business decisions that we have made,” to make certain things scarce, thereby building demand, said Pearson.
“That makes the presumption that you are in control,” said the music guy on the panel, Sony BMG’s EVP of digital operations Scott Dinsdale, who would know a little about losing control of content distribution.
If media companies choose not to distribute popular content somewhere, it doesn’t much matter because “consumers will grab it regardless. It’s about how you manage giving up control.”
That’s nice, retorted Pearson, but there are “cash cows” that have to be protected. “We have to go slow on certain things, “he said.
And so far, when it comes right down to it, there’s nowhere near enough money in new platforms to pay for content the way there is on television. Can Pearson’s company make a $3 million drama hour and support it through web distribution? No.
“There’s just not enough eyeballs there,” he said. “There’s not enough money there.”
And that’s the reason why it’s taking so long.
Cartt.ca editor and publisher Greg O’Brien is in Las Vegas this week covering the NAB convention.
