Tuesday, October 26, 2010

It's still about the content

Local affiliates for broadcast television are in a pickle.

Google TV wants to stream all of those network shows on the Internet for free, relying on ad revenue to cover the cost. Google says it'll share that revenue with the networks.

Not surprisingly, the networks aren't buying it. For one thing, the move would disrupt the networks' distribution vehicles -- the local affiliates. For another, Google ad revenue wouldn't generate enough money to support the level of programming now available.

If you're an affiliate, here's some news that should make you uneasy: Google and the networks are negotiating.

For now, the networks are blocking Google from streaming their programming. But the future of local network affiliates is uncertain, at best. Here's the view of Cory Bergman of lostremote.com:
Of course, this is all very interesting from the perspective of local affiliates. If people can watch network shows a la carte on their TV sets, then the highest-rated daypart known as primetime risks becoming an artifact. And economically, that’s not good news. The urgency for local TV is simple: produce and aggressively distribute unique, compelling local content that you control. For the networks, well, we’ll see how this battle plays out. Remember, many of them have cable TV channels of their own, so they’re not inclined to make enemies with cable companies. (And in NBC’s case, Comcast will soon become its majority owner.)
Newspapers face the same challenge -- produce unique local content or die. The differences are, first, that newspapers have always been local news producers first and foremost; second, there's often just one newspaper in a market that may have three, four, or more network affiliates vying for viewership, and; third, producing news and information for print and online is a lot cheaper than doing it for TV.

Netflix is in this mix, too. We have all learned recently that the streaming of Netflix movies now accounts for the use of about 20 percent of U.S. bandwidth. Netflix has been smart -- it pays for the content up front and charges customers to view it, instead of attempting to make its money via advertising on the back end. This is potentially a much more attractive model to TV networks, but it circumvents the local affiliates.

Here's what Mark Cuban thinks:
All you internet pundits want the broadcast networks to give the content away for free. THAT IS STUPID. Get Netflix to pay you on a per subscriber basis on a par with what your other TV providers pay you. Netflix becomes a competitive TV provider. BRILLIANT. You get paid. You reach Google TV users and non Google TV users.
OK, Cuban is a goofball, but when it comes to the business of the Internet he's been pretty spot on.

Live streaming across the Internet isn't going to replace traditional TV distribution channels any time soon. For one thing, the current Internet infrastructure can't support that much data. But here's one thing that's all but certain -- if you don't produce your own high-value content (in the case of small markets, that's local news and information), you're eventually going to be in trouble.

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