Broadcast television is about to be turned on its head. While many media proprietors (including free-to-air, pay-tv, cable and satellite operators) are still breathing a sigh of relief from the costs to switch to digital, the real battle for supremacy has only just begun.
At stake, is control of the entire television advertising business model, worth globally in hundreds of billions of dollars. With it, is control of the global television syndication and distribution business as we know it.
To say that television has seen better days, is an under statement. Gone are the days when owning a local television station was a license to print money. Local television broadcasting is about to face its greatest challenge yet, if left uncorrected, will eventually result in the systematic, if not total elimination of free-to-air television broadcasting.
Television without spots
The problem with television is that it has not changed its engine in more than fifty years. What started out as shows brought to you by, resulted in the highly successful, albeit conventional 30-second spot commercial.
The spot is stale and completely out of date in an on-demand world. If television continues with it, it risks alienating audiences even further, who have all but grown accustom to personalising their viewing habits and time shifting their favourite television programs, all thanks to a device called TiVo. Moreover, if television fails to ignore the fundamental audience shift away from advertising interruption to one of invitation, then it will surely risk the very livelihood of its own industry at its own peril.
Television everywhere and Catch-up TV has resuscitated television to some extent and in part, is a strategy which importantly recognises that audiences everywhere want to experience television on the Internet, but is not a solution to halt declining television advertising revenues.
The traditional television business has to aggressively move its content online, build a critical mass of content that the traditional buyers of airtime will understand. Moreover, to keep television’s bottom line apace with technological change in a time of recession, television must adopt the following Internet-to-TV strategies in order to achieve 2.0 status:
T-commerce
In order to replicate the current financial TV model in the U.S, up to 20 different brand integrations over 40 minutes of program content — or around one product placement every two minutes would need to occur every night for every scripted TV show, where there are 10 minutes of national TV commercial messages per hour of prime-time programming — plus two more minutes for local advertising time, as well as additional minutes per hour of network promotion time.
T-commerce on Connected 3D TVs will be a big revenue driver and will join search and display advertising as the next billion-dollar ad market on the Web. Searchable TV content is the main reason why Google is currently testing its TV search technology with Dish Networks. T-commerce will become an opportunity for viewers to search and click on items of interest in the field of view to learn more about them, or purchase products in-program via shopping cart.
Managing digital content has its obvious rewards: streamlining production, managing archives, repurposing assets, just to name a few. But in the future there may also be an added revenue bonus if multiplatform assets can be connected to automatically trigger audience response.
Introduced in 2008, Harris Corp.’s Dynacast interactive Internet broadcasting solution enable broadcasters to automatically deliver Web URLs directly related to their programming to viewers, without the need for third-party distribution agreements.
This Multi Layer TV Advertising (MTLA) strategy would allow consumers to “pull” information via clicks rather than have TV commercials interrupt their viewing experience.
TV Widgets
Just as Apple’s iPhone app store revolutionised the mobile phone by allowing people to download information streams called apps to their iPhone, TV widgets will enable audiences to download live information via streams that they will be able to see on screen as they view other programs.
Sports scores, weather updates, news and share market tickers and social networking services, such as Skype video and live Twitter feeds about the show you are watching should be created and sold by television to advertisers.
In the US, Yahoo has launched a range of TV widgets in partnership with manufacturers including Samsung, Sony and LG. Television must step up to the plate and create its own developer platform in concert with the manufacturers or risk loosing ground to Yahoo! and Google.
Conceptronic’s unique Widget Channel Technology, which brings Internet applications (”widgets”) to CE devices, lets users tap into the YuiXX widget store with two clicks of a remote control for a menu of options to incorporate into their personal viewing experience. For example, the Media Widget can store and organize personal videos, music and photos onto the TV set, where it can also be accessed by computers in the home. Other widgets provide video on demand, news, traffic or weather information, and games.
Social TV, Social Commerce and the Social Media Broadcast Center
New technologies are born — radio, TV, the Internet — and either kill what came before or render it less relevant. Just so for years, the story of big-network TV has been how it’s slowly losing out to cable, video games and the Web.
We call things like Facebook social media, but contrary to its image, TV is also inherently social, at least when it comes to big games, big galas or American Idol finales. People throw parties around it; they watch it to be able to talk to other people about it. Social media enhance rather than replace events like the Oscars and — important when DVRs let people record shows and skip the ads — make watching them in real time worthwhile so people can be in on the conversation. Because as much as we like to watch, we like to talk.
As Facebook revolutionized the way advertisers can niche-target their online demographics, Social TV, such Skype video and Twitter TV widgets will profoundly change the ad agencies and marketing departments will offer their wares in the television realm.
NDS, partially owned by Rupert Murdoch’s News Corporation, which has a reach to over 107 million pay-TV subscribers worldwide, is developing their Social TV widget product. Audiences can access the synchronized Web content during the scheduled airing of the shows or during playback from a personal video recorder, VOD server, or DVD.
Boxee has plans to enable users to transfer their digital content from computers to their TVs and eventually turn the TV set into a social-media center.
IPTV, Connected TVs and the New Contents
The unlimited sourcing of programming from the internet is at hand with new television sets boasting direct-to-the-internet broadband connections. These will allow programming to be streamed to the TV without the use of a computer as an intermediary, will perhaps most of all pose the single biggest threat to traditional television.
Internet-enabled television sets currently being deployed from Sony, Samsung, Panasonic and LG all look set to acquire their own content.
Sony has joined the race to lure eyeballs from PCs back to big screens. The electronics giant has begun negotiations with television networks and producers to deliver their TV shows to television sets at home through the internet. Philips Net TV, the connected TV platform of the Dutch consumer electronics manufacturer, is to offer direct access to its on-demand movies.
While local TV networks preoccupy themselves on combating global IPTV programs, the very TV set manufacturers themselves look intent on creating, acquiring and licensing their own TV content.
It is crucial that broadcasters, producers and TV service providers rapidly identify and implement these new and effective advertising models or risk the viability of their industry altogether. After all, Enzo Ferrari didn’t add more oil to his cars to make them go faster, he just built a better engine.
James Grant Hay is a digital entertainment consultant and founder and CEO of InShot. The Connected TV World Summit takes place at RIBA in London on 18 May 2010.
