NMF, Presentations, TV

The future of TV distribution

Chapter 3 of my presentation from the Nordic Media Festival. You find the articles I have produced so far from this presentation here.

Some history

Six years ago I made some slides for a presentation at a big media conference in Stockholm. I suggested that we should have a look at how TV is distributed and take a closer look at the business model. Could new technologies change that model? To illustrate my point I made a comparison with the software industry.

Buying software
This is how the business model worked when I bought my first license of Photoshop back in 1994. Adobe makes the software. They pack it and send it to the distributor in Norway called Office Line, they sell it to the shops where I buy my box of software. Illustrated by one of the biggest electronics retailers in Norway, Elkjøp.

Buying software
For the last couple of years, that model has changed. I buy Photoshop directly from Adobe in the US. The product is delivered trough the net as a download. Both the distributor and the retailer are obsolete (for that kind of product).

TV distribution
This is an example of how the popular show called Friends was distributed in Norway. Warner makes it, the television channel TV2 buys rights and distribute trough cable, terrestial and satellite. Could something disturb this model?

More history – Bob the millionaire

One year ago I made a little comic strip to illustrate how horribly wrong the television industry was trying to deal with the problem of illegal downloads and the fact that the internet started to act as a reliable and high quality distribution model for their content. I include the story in my presentation, but here it is much easier that you simply have a look at the original post.

Okay. So what’s the solution to this problem? Availability. Make content available on the platforms that people use. And now, one year later the industry slowly understand this.

Internet distribution
Lost is available through the iTunes music store and ABC are also experimenting with free reruns on the net. CBS put out Innertube after the huge success with SportsLine’s March Madness:

Quote from the Online Reporter:

What added urgency to getting
Innertube deployed, CBS said, was
that CBS SportsLine’s March Madness
was such a success, drawing five million
viewers and sending out 25 million
streams. It was, they said, the
largest live sports event ever on the

The day after March Madness
ended, CBS executives said, the phone
started ringing off the hook.
Advertisers had been so thrilled with
the results that they were looking for
more Internet entertainment videos.

Warner close a deal with BitTorrent and in general, the industry starts to realize that this internet thing is one hell of a distribution platform.

And yes. There is still a long way to go. Lost is available in HD with multichannel sound on BitTorrent. ABC is streaming in something that is worse than standard definition with regular stereo sound.

So, what’s happening with the business model?

Distribution of Lost
Let’s use Lost as an example. This is how it is distributed traditionally. Touchstone produce. ABC broadcast. Cable companies and other distributors carry the content to the home.

Distribution of Lost
Then ABC bypass the distributors and go directly to the consumer. The observant reader will immediately say that something is missing here. Yes, the broadband provider.

Distribution of Lost
And by some strange coincidence one of the biggest cable providers in the US is also one of the biggest broadband providers.

So, status quo. Nothing is changed. Touchstone produce. ABC broadcast. Comcast carry the content to the home.

But hey. The role that Comcast have as a broadband provider is very different from the role they have as a cable provider. The cable providers have valuable control of the content they deliver. They make the packages, they control the equipment. The encryption. They have the customer relationship. They decide what channels are going into the different packages.

As a broadband company the control has shifted entirely to the user and the content provider. Big difference. New rules. Of course they don’t like it. They try to make bottle necks. They try to limit certain kinds of traffic. It will be interesting to watch this space during the next couple of years.

The broadcaster’s nightmare

The day Warner find a way to earn more money distributing the content directly to you they will do that. Rendering the broadcaster and the traditional cable companies obsolete. Bad news for some television companies that lives entirely of content they buy, package and distribute.

Seriously bad news.

Yes. We still need the broadcaster to reach a big audience. We still need them to get attention to new content. We still need them because the risk capital often lies in the broadcaster. The production company wouldn’t even start producing without a broadcaster. But all of this can change. You won’t see huge amounts of broadcasters die tomorrow, but during the next couple of years some business models and traditional thinking have to be revised.

What’s next

It’s not about distribution. It’s about getting attention. In my next chapter from this presentation I will tell you why we don’t need the broadcasters to get that attention. I will point back to this post about the new face of marketing and commercials and give you a couple of thoughts on the future of the 30 second television ad.

Digg this story here.