Monday, April 30, 2012

Consumers Embrace Media Choice, Industry Fears It

     The tale of woe continues for the broadcast industry . This last week’s light reading included articles about  cable rating drop offs. 11 of the  15 top cable networks have lost audience this year. The article could give no clear reasons why the sudden loss of audience. There are a number of factors at work here. The first in my opinion  being price.  The price has continued to go up for all involved with the industry. from content producers, to distributors  and finally vendors, such as Netflix and Amazon who are constantly being asked for more money every year. In the broadcast world retransmission rights are the big deal breakers, along with sports  franchise,  brokering deals worth billions of dollars that will eventually have to be paid for by both the sports fans, and the non sports fan alike. in the final analysis  the one paying for all of the “deals”  and retransmission fees that are being charged back and forth between the local and national broadcaster such as Dish Network, and other cable companies will be passed to the consumer either directly in the form of higher bills, or add-on charges for services.

On the other side is the changing habits of viewers.  No longer are they tied to the couch for 3-4 hours every evening guided by a set schedule. With the advent of the VCR and now the DVR  consumers can now timeshift whatever they want and watch it whenever they want. and skip cominicals.  Networks and content produces have just begun to learn how to embrace timeshifting, and figured out metrics to count what watched on the DVR in the total rating game. Now they have to contend with many new forms of competition for viewers eyes. With the advent of game systems that get online and allow consumers to stream content, granted a very limited amount of content, and just plain hooking a computer to the tv, which is ridiculously easy theses days. the  whole world of internet content is suddenly available to the big screen in the living room.  Now there  is a wide range of ways to bring content into the tv, though various set-top boxes ranging from Blue-ray players, to the PS3, Xbox360, and the Roku, and Boxee, and, and other lesser know OTT boxes the open up a limited amount of content from the web to be streamed directly to the tv at the consumer’s convenience. Now there is no more “must See” tv. Its now   I’ll see it when I get around to it” On whatever platform is handy. It's also possible to switch platforms  mid viewing, going from one platform say the big tv, in the living room, and finishing watching the content on the Ipad, or other mobile device, thus freeing up the consumer to take their content as they like it.

A very recent article was just released with some very interesting statistic about the change in the numbers of households with connected tv, and the devices that connected to the tvs and what makes a tv a connected tv.
It can be read here;
On the broad stroke, 38% of all households have at least one tv  hooked  to the internet via a video game system, Roku, or other OTT device, up from  30% last Year and 24% 2 years ago.  The are a host of other very interesting statics in the article.  The bottom line, to me, consumer are embracing OTT platforms and the offering they have. I don’t think traditional tv is anywhere near dead, and has many more years to go., If it is to continue to  evolve and be open-minded about that way it handles its content deals. Retransmission deals and sports deals need to regulated preferably by the industry itself  If they can’t keep the numbers down to reasonable rates, then the FCC and possibly the FTC needs to step in and set up new guidelines if not rules about the amounts that can be charges in theses deals.

    One of many questions is what are media distributors, and content producers going to do about the changes in the ways that consumers are using their media.
Some are already embracing the shifts in available venues. Such as HBO, they are continuing to open up their “HBO to Go” Concept to work with more devices.
Comcast has been slowly opening it walled garden to allow more networks to be viewed on more devices.  All of theses players need to compete with Netflix, amazon, and other OTT players who have been reaching to other means to get content in the face of rising bill for traditional  cable/sat venues. Particularly if one does not need sports, or 10 channels of news and shopping . If one is  not paying for the extra movie packages, ala, HBO, Showtime, etc, then the OTT venues start looking better and better.

   Last Week, Netflix posted Q1 numbers.  They showed  that they are back to growth, although much slower.  You can read the whole article here
 The main point which I commented on is that  they did make some mistakes last summer which they’re paying for. The Achilles heel of all of this,  is the content owners who have  routinely demanded more and more in licence fees, Thus leaving Netflix and its fellow  players between a rock and a hard place in keeping prices down for consumers and still paying licenses and operation expenses.

    The consumer is demanding more choices about what content is available, and on what platforms. One may wonder if content producers and distributors actually watch the content they produce or distribute.  If they used the many options available today they would be embracing ways to make deals work for all parties. Instead of making its almost impossible for for places like Netflix and Amazon to do a decent deal that's fair to both. In the end it's the consumer that pays the price in one way or another.