For Linear TV, Move Beyond Legacy Thinking

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You know, the cable business used to be pretty simple: Operators buried cable plant in the ground and collected money by sending TV program signals to consumers. Programmers made programming and collected money from operators and advertisers.

Lots of people made lots of money. One plus one truly equaled three.

Fast forward to today, or better yet, tomorrow. The linear world of television is giving way to a multiheaded hydra: more devices and various platforms providing different consumer experiences.

The complexities of this world are evident in the Cable News Network story on page 10A of this supplement. This article focuses on CNN, but you could substitute any cable or broadcast network — or even content provider, for that matter.

CNN was once a linear television network. It launched in a world without the Internet, VOD servers, interactive television or wireless devices with liquid crystal display screens.

Now CNN and its information brethren in cable — Fox News Channel, MSNBC and ESPN — are confronting a multiplatform world that wants their content. For these networks, the multiple platforms are both intriguing and elusive.

What's tantalizing is the number of services that content providers can shower on consumers. Again, let's take CNN. The network offers 24-hour linear television on both the flagship service and Headline News. It offers 20 to 25 video clips daily on its Internet-based broadband content service. Road Runner, AOL Broadband and Real Networks SuperPass subscribers can see that today.

Cable subscribers with digital set-tops that include Data Over Cable Service Interface Specification modems could see that same content tomorrow. So could cable systems with VOD servers.

Consumers with either a TV remote, a mouse or a wireless phone could be their own CNN news producer, picking and choosing among short- and long-form features, regardless of the display device. It would a veritable Chinese menu of video news. What an empowerment shift.

But it's not the technology that's slowing this evolution, as much as it is the elusive business model.

Let's turn to the general-entertainment networks. Some of the more popular TV shows have strong online followings, whether it's Survivor, Big Brother, American Idol
or
The Real World. The two-screen, PC-and-TV interactive experiment is working for those programs and their advertisers. In cable, it's also working well for Game Show Network.

These are examples of programming's new frontier, beyond ratings, storylines and ad sales.

Think about Home Box Office. Will there come a day in the next year or two where it generates more revenue in a given quarter from SVOD than from new DBS and cable subscribers? Probably.

That's a landmark change, and probably the first example of a new business model — driven by technological evolution — that will work.

Every year, marquee TV sporting events see increases in Web traffic. As broadband nears 20 million homes, content providers are paying attention. Major League Baseball may expand the amount of game video on the Internet this season, another indication broadband is nearing primetime.

The point that shouldn't be lost on operators is that they are players — prime players, in many cases — in the evolution that's taking place. Operators have a strong play in the VOD and high-speed Internet arenas. They certainly have a connection to the TV-PC applications, by virtue of their cable-modem deployments.

And even though wireless isn't a core business platform, operators should pay attention to that sector and understand why networks like CNN and ESPN, gaming companies and movie studios are prime players in that space, because the same content will be delivered to multiple platforms.

Nobody knows the right business model for most of these applications, but mainstream content providers — stung by the advertising recession, a maturing subscription business and criticism of yearly rate increases — are looking for answers. Advertising, sponsorships, underwriting, subscriptions and fee-based content are among the prime solutions.

All this means that it is in the operators' best interest to care about things they normally could care less about, like getting Nielsen Media Research ratings for VOD programs that contain advertising — a seemingly simple step in the annals of time, but a huge issue for content providers. Or making their high-speed home pages a clearinghouse for subscription broadband content packages. Or including convergent TV-PC applications in ad sales. Or pressing content providers for DVD-like material to further differentiate VOD content.

In many cases, it will require the elimination of legacy thinking (I stick to my business, you stick to yours). That, in the end, may be the biggest hurdle of all.

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