90 Days That Shook the Industry

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Inflection points — people talk about them all the time. We know they are of historical importance, but we’re often not quite sure when we’ve really seen one.

Ladies and gentlemen, I’ve got news for you. In the last 90 days, the mainstream media business has blown past a series of history-making inflection points.

The key takeaway: Content is flying everywhere: initiated not by consumers but by the owners of the programs themselves, as they eye consumer-controlled experiences like portable media, digital video recorders and peer-to-peer file sharing.

The list is as long as a 6-year-old’s letter to Santa Claus:

ABC is selling Desperate Housewives and Lost on video iPods for $1.99.

NBC is downloading top series to DirecTV digital video recorders for 99 cents.

CBS is selling CSI: Crime Scene Investigation and other prime time series to Comcast for 99 cents.

Warner Bros. is releasing older TV series episodes to AOL Broadband subscribers.

NBC has shuttered Trio, the linear cable channel, and created TrioTV.com, the broadband channel.

Comedy Central, MTV, ESPN and Scripps have introduced broadband Internet-only content services.

These content players are either:

  • A, genuises, in seeking new business models from advertisers and consumers;
  • or B, absolutely running scared.

The answer is a little bit of both. It’s taken the major media companies quite a long time to figure how to experiment, let alone play, with the new technologies. There is nothing like the combination of fear and greed to get the creative juices flowing.

What we’ve seen over the past 90 days are business strategies that these same content companies have summarily rejected, countless times, over the past three years. Why the change?

There are a number of factors at play. The major video-content creators — whether they’re studios, cable networks, broadcast networks or even sports leagues — have all feared that peer-to-peer technology, which crippled the music business, could cripple them.

They just couldn’t figure out a way to play offense while playing defense. Leave it to Apple Computer Inc. CEO Steve Jobs to show the way. Jobs’ 99-cent music model made increasing sense to The Walt Disney Co. chairman and CEO Robert Iger. Credit Iger with making the first huge leap by a media titan, rewriting the rules of the game and single-handedly raising the question: Michael who?

Although the NBC and CBS digital-video-recorder/video-on-demand deals were in the works, Iger legitimized a per-episode consumer-pricing model for TV shows. It was a shot that will now ring throughout this decade.

At the same time, it combines the pay-per-play model with mobile video, incorporating both a brand new business model — and one of the new platforms with which content providers are wrestling.

Talk to any content provider and most are much more excited about such new developments as mobile video or TV programming on cell phones, etc. than they are about the telco-video opportunity. That’s because it’s an all-new revenue stream to them.

Broadband moves by AOL, Trio and Comedy Central provide yet another important inflection point: the broadband Internet can be monetized. Content is in libraries or is being produced. Broadband penetration is surging past 30 million homes. And most important, advertisers are ready.

In fact, advertisers are moving with their feet, drawing money away from TV budgets for “new-media” vehicles. That’s why AOL is creating TV Land-like TV channels on AOL Broadband, to capture eyeballs and the wave of ad revenue it sees coming its way.

MTV Networks and News Corp. have said their Web sites will generate $75 million to $100 million in revenue this year. News Corp.’s Rupert Murdoch wants to hit $500 million in five years.

Maybe it won’t even take that long.

Strap yourself in folks. All the old ways of doing things are being questioned. Will consumers pay individually for TV episodes on iPods or through VOD? Will advertisers spend money on the Internet?

It almost doesn’t matter if the jury is still out on those questions. Most major media companies are plowing ahead.

Go back five years and try to remember 2000 looked like. An Internet bust, a telecom meltdown. It’s barely recognizable.

Then fast-forward five years — to any content, anytime, anywhere — and remember that the whirlwind is starting today.

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