Hey, people are reading my blog. And not understanding it… oh great. One reader asked if I could explain the MIT Enterprise Forum discussion in plain English.
Sure… at least I can try. A lot of television content is going to be available on the internet (a lot already is). Companies that make money today by showing TV programs are predicting they won’t be able to keep making money when that happens. So every company that makes TV content, or that shows TV content, is trying to figure out what to do to save their business. At the same time, new companies (like Google) that don’t have traditional TV businesses are also trying to figure out how to make money showing TV content to people on the internet. And finally, viewers are starting to realize they don’t have to rely on broadcast TV or cable or satellite TV to see their favorite shows. The loss of viewers for traditional TV is reducing cable/satellite TV subscriber revenue, and is also causing advertisers to spend less on TV ads, and they aren’t shifting that money to internet sites showing TV programs. So the session was designed to highlight new ways companies can make money on internet TV.
And those new ways boil down to three basic strategies: 1) keep subscriber revenue coming in by allowing cable/satellite subscribers (and no one else) to also see programs on demand on a website; 2) create the same size audience for each program that used to watch it when it was broadcast or shown on cable, by making it available on lots of websites and charging advertisers for all the viewers no matter where/when they saw it; and 3) making it possible for anyone to pay directly for each show they want to watch. The future of TV will be a combination or coexistence of all three strategies.
And no one knows which of today’s companies will make the transition successfully to this new TV land. They’re all trying to navigate a treacherous path.
An insightful article from Keith Richman of Business Insider pointing out that video/entertainment content producers have new obligations to take on in ensuring their content is most effectively distributed to its intended audience. No longer enough to hand over both physical distribution AND building of the audience to a distribution partner.
Keith didn’t include examples, so it will take some work to uncover some best practices in this regard.
He mentioned many distribution companies are producing their own content. I’ve heard that the opposite is also true: low cost of “distribution” to certain audiences is leading content companies to do their own distribution in ways they’d never have dreamed even just three years ago. We’ve passed some kind of inflection point for non-traditional distribution of entertainment.
Also, the jargon in the digital media space is getting confusing to me. The web of interconnections between companies in this ecosystem is generally blurring what categories a particular company does business in. So it’s hard now to mention categories like “distribution” and know just who the heck you’re talking about.
UPDATE: And here’s an interesting tidbit from RampRate analyst Steve Lerner on MGM Studio’s impending bankruptcy. According to Steve, “distribution” was the ball game for MGM, because starting in 2000 it erroneously built business plans based on robust DVD sales projections that shouldn’t have been believed.