The Brave New World of TV11/11/2005 07:00:00 PM Eastern
The week that just passed will be remembered as the one that changed television forever. In breathless succession, a slew of alliances were announced: First Yahoo! and TiVo, then an NBC Universal and DirecTV video-on-demand (VOD) pact, followed mere hours later by a VOD deal between CBS and Comcast.
While the industry was still sorting out those bombshells, America Online announced new programming offerings, including one in which AOL will feature TV shows from corporate sibling Warner Bros. Studios (see story, page 20). As if that wasn’t enough, the Associated Press and Microsoft finalized a deal to deliver video online to 3,500 AP subscribers.
Yes, I know that just because last week was the week TV truly changed forever, it doesn’t mean prime time will change tonight. I share the healthy skepticism of this week’s cover story, which makes a cogent case for doubting claims that the Internet giants are going to take over TV as we know it (see page 10).
I feel the pain of those in the station business who believe they’ve been betrayed because their “most valuable real estate” is being washed away by the raging stream of deals, including the one that Disney made with Apple for iPod video weeks ago. It’s easy to understand the station folks’ ire when such hits as Desperate Housewives, CSI and Law & Order: Special Victims Unit are slated to become downloadable staples.
I’m realistic, too, about the near-term threat of these recent deals. There’s still a long way to go before you start receiving TV bills that resemble a Tapas menu instead of a cable or satellite bill.
Still, give what’s percolating now a little time to get going. We’re going to have financial models for a wide range of VOD deals. From the ABC/Disney deal, we now know that major media players believe a monster hit like Lost makes sense at $1.99 per episode, while a cable hit like Monk works at a price point of 99 cents.
Surely, everybody looking to get into this game is now running numbers, trying to figure out the correct price point for their own deals to make sense. This is the time where everyone in the industry is doing some soul-searching, with an eye on a calculator. How do advertisers get involved? What does this do to the DVD market? Is there a piece of the action for syndicators? For stations? How many more layers are there to the back-end—from producers to actors to studios to distributors, who gets what and when?
With an increasing amount of A-list shows becoming available on-demand, how high does the value soar of TV properties—such as sports events and watercooler shows with time-sensitive reveals like Survivor and American Idol—that are VOD-proof, especially if they allow seamless product placement?
We won’t have to wait too long for the answers to these kinds of questions.
The onslaught of deals last week was remarkable because it made clear that virtually all the major media families have come to the same conclusion. They are cutting deals that in some cases—Disney and Comcast jump to mind—mark a major shift in corporate policy from mere months ago, when such arrangements were thought of as sleeping with the enemy.
It’s like the Bonanos, Lucheses, Gambinos, Columbos and Genoveses all decided to go to the zoo instead of the mattresses—or at least split up various neighborhoods with as little violence as possible.
Make no mistake—last week a bunch of giants took much more than baby steps toward that day when there is only one network: the ever-evolving channel that viewers design for themselves.
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