Thursday, March 19, 2009, 9:26 AM ET|Posted by Will Richmond
A highlight of the this past Tuesday's Broadband Video Leadership Evening was our panel discussion with Albert Cheng (Disney-ABC Television), Daina Middleton (Moxie Interactive/Publicis Groupe), Greg Clayman (MTV Networks), Karin Gilford (Comcast) and Dan Beldy (Steamboat Ventures) sitting in for John Edwards.
As moderator, I was trying to listen to panelists' answers, formulate the next question, and scribble down notes. We'll be posting a video of the discussion soon, but in the mean time, here are a few of my key takeaways (also pictures are here):
For ABC, no economic parity for broadband-delivered shows vs. traditional on-air delivery yet, but progress is happening - Albert opened the discussion with an update on ABC.com's profitability. He said that broadband-delivered programs are profitable on a gross margin basis, but that they are not yet as profitable as when viewed on-air. He resisted using the "analog dollars, digital pennies" reference, instead saying it's like comparing "a teenager to a full-grown adult." (I'm still trying to decode that as well)
Albert noted that ABC thinks of itself as a multiplatform entertainment company, with numerous distribution avenues, not simply a traditional broadcaster any longer. That's a distinction that it believes will keep it from facing the dire situation newspapers are now in. Albert said that newspapers trouble began because they didn't pay sufficient attention to changing consumer behaviors and respond effectively, whereas broadcast networks are proactively trying to stay out in front. One example he provided is that in the U.S. where ABC's programs are available online, it has measured file-sharing at just 4% of overall views. Preempting the file-sharing alternative is big win for preserving its ad model.
Cord-cutting not happening, cable's subscription value proposition to grow - "Cord-cutting" or dropping your cable/satellite/telco service in favor of online-only viewing, has become part of the market's mythology. Even some cable CEOs have propagated it. Yet Karin echoed recent Comcast statements that cord-cutting is not yet happening in any significant way. Comcast (and others) will build more value into the subscription by offering online access to cable programming. That's a "natural extension to their business," which was a key theme I heard from all panelists. Cable networks should be excited about this plan, and Greg reminded us there's a strong "culture of collaboration" in the cable industry.
2009 will be a tough year for standalone aggregators - There was strong consensus on the panel that online-only aggregators will struggle in '09 (this was one of my year-end predictions as well). The reasons for this included not getting a big enough share of the ad pie, not having an existing business to grow from, not being able to differentiate, etc. This was a very hot space for investors just a year ago, now it looks like it's going cold.
The "democratization of video" only goes so far - The panel cautioned that the appeal of broadband's openness allowing everyone to be video producer and reach their audiences only goes so far. The realities are that it's difficult to build audience and generate ad dollars. A goal for many independent broadband producers will still be to get on TV, where most consumption happens. A side conversation I had with someone who's very involved with various indies confirmed much of this and predicted a shakeout in this space will be coming as well.
Broadband ad model has a lot of maturing to do - While the broadband ad model has come a long way, it has a lot further to go. Daina provided lots of insights on the challenges of shifting TV ad dollars to broadband. She noted that many agencies still split their online and TV media buying and research teams, making integrated pitches and pricing difficult. Greg described the "happy place" everyone is striving for where broadband ad revenues become large enough to really augment traditional ad revenues, but quickly reminded us that day is a long ways off. He and Albert agreed there needs to be more collaboration among content providers to demonstrate the value of the broadband medium.
There was lots more, but I'll leave it at this for now. If you attended and have other observations, please leave a comment!