Friday, May 4, 2012, 10:52 AM ET|Posted by Webmaster
I'm pleased to be joined once again by Colin Dixon, senior partner at The Diffusion Group, for the 131st edition of the VideoNuze Report podcast, for May 4, 2012. This week Colin and I discuss how fundamental battle lines have been drawn between the traditional TV ecosystem vs. the numerous digital outlets that are launching online-only original programs. To be more specific, the former group seems intent on erecting ever-higher paywalls to access its programs, which is in turn opening up a gigantic opportunity for free, ad-supported programs to be provided by the latter group. How this battle unfolds will have far-reaching and profound implications for everyone involved.
For the traditional TV ecosystem, there appear to be two core drivers at work; first, the desire by broadcast TV networks to morph themselves into cable TV networks, and second, the role that TV Everywhere is taking on as a foundation of paywall economics.
It's no secret that broadcasters' push for retransmission consent fee payments has continuously blurred the lines between their historical positioning of "free, over-the-air" vs. subscription-only. But news that NBCU will only allow authenticated pay-TV subscribers to gain access to digital streams of the upcoming Olympics takes things to the next level. The message is clear to viewers: if you want to enjoy greater coverage, you have to pay up.
Meanwhile, should Hulu decide to require some level of authentication to access even programs on Hulu.com (as was reported this week - and which Fox implemented in a limited form almost a year ago), that would be yet another sign of broadcasters' full embrace of subscription-only TV. For Hulu, which has prided itself on an easy-to-access, friendly user experience, authentication would introduce friction that would surely lead to a decline in usage.
Enabling this shift is TV Everywhere, which when introduced three years ago was portrayed positively as a "value-added" feature for pay-TV subscribers. Flash forward to today, and TV Everywhere, which still suffers from a range of unresolved issues, is starting to look a lot more like a padlock for traditional TV players to keep paying subscribers intact.
As Colin accurately points out, the traditional TV players' efforts to heighten their paywalls has created a huge opportunity for an alternate universe of free, ad-supported, online-only originals to emerge. And, as if on cue, that's exactly what has occurred over the last two weeks at the "Digital Content NewFront" presentations. Boasting programs involving established talent from the worlds of film and TV (e.g. Katie Couric, Tom Hanks, Jon Avnet, Jennifer Garner, Heidi Klum, Seth Meyers, etc.) - the digital outlets, led by YouTube, Yahoo, AOL, VEVO and others, are challenging the notion that the traditional TV ecosystem has a "monopoly on creativity" (not to mention distribution, promotion and monetization!).
This week Google Chairman Eric Schmidt coyly replied to a reporter's question that YouTube's originals are "not a replacement for TV, but rather an augment." While that statement helps manage expectations for this grand experiment in online-only originals, it's surely a head fake; Google and other digital outlets see a confluence of connected devices, shifting viewer behaviors and advertiser willingness as a seismic, disruptive tailwind helping their cause. In reality, there are a finite number of viewing hours and advertiser dollars to be had. In other words, online's gain can ultimately only come at traditional TV's loss. The higher and more expensive the TV ecosystem's paywalls become, the more likely the digital upstarts' dreams will be realized.
Click here to listen to the podcast (19 minutes, 6 seconds)