Convergence makes a comeback at NATPE’s 2006 conference

Predictions about the future of television abounded at the annual US National Association of Television Program Executives (NATPE) conference, held January 24-26 in Las Vegas. The "Digital Strategies: Evolve and Prosper" panel was stacked with titans from the world of US convergence. CBS Digital Media president Larry Kramer, Fox Interactive Media president Ross Levinsohn, Disney Internet Group president Steve Wadsworth and NBC Digital president Jeff Gaspin all agreed that the industry is in an experimental phase and revenues currently generated by emerging digital distribution platforms are minimal. Instead, today’s deals – and those to come in the near future – are more marketing experiments, intended to gauge consumer wants and needs and position firms for supremacy once demand for digital entertainment really takes off. Tempering these initiatives is the need to preserve existing revenue streams and relationships with key stakeholders such as viewers, content producers, distributors and advertisers and analysts. During a panel titled "The Changing Face of Cable," Comcast Programming Group president Jeff Shell explained that TV is ultimately about discovery. Instead of the old paradigm of channel-searching, viewers are now not only platform-searching but engaging in multiple activities at the same time, such as text messaging and Internet surfing. As a result, there is an added layer of complexity in delivering content, especially to younger users, while still maintaining advertisers. However, Doug Holloway, president of cable investments at NBC Universal Cable, explained that the current economics don’t support individual downloads. As a result, bundled content propositions offered for a subscription fee or offered for free with advertising remain the dominant distribution models. On a panel dubbed ‘The Value of Video: How real are the new distribution opportunities?’ Josh Bernoff, VP and principal analyst at Forrester Research explained that content and advertising revenue models do not yet exist for video-on-demand and mobile platforms. He listed online streaming as the most promising of the new distribution platforms due to its growing advertising model and user base. In America, 34 million homes currently watch online video through their broadband connection; by comparison, penetration figures for other technologies include 25 million homes with camera phones, 11 million homes using video-on-demand services, and four million homes with portable digital media players such as iPods. In addition, online advertising spends have increased by almost 10% in the last year. As a result of the increasing technological presence in home entertainment, a plethora of broadband content initiatives were represented at NATPE including CinemaNow, a service that offers downloadable movies for a fee, ESPN’s broadband channel ESPN 360, and online content syndication solutions provider Brightcove, to name a few. However, Bernoff did stress – as did most of the NATPE panelists – that TV still drives the revenue and establishes the brand. Lucy Hood, president of Fox Mobile, underlined the importance of strong branding in the creation of any successful interactive entertainment product. Hood referred to shows like Fox’s Todd TV, which was designed with an innovative interactive component where users can affect the outcome of the show. Although the response rates to the interactive campaign were high, the television show itself did not rate well and was eventually pulled. Larry Kramer, president of CBS Digital Media, presented the case of CBSnews.com, where an established news brand with a team of 1,600 people working worldwide to produce a 22-minute show was leveraged to create an interactive property. In addition to creating the television property, the team was mandated to work towards updating the CBSnews.com website. With the existing news television property’s strong brand, CBS was able to sustain the resources needed to create an interactive presence and experiment into extending into new markets. Similarly, Sean Bratches, executive VP of sales and marketing at ESPN, talked about ESPN’s initiative to offer historical XGAME footage for download to portable media players, while Lifetime TV executive producer Sibyl Goldman said multi-platform digital initiatives were first and foremost designed to promote the television programming, and secondly to extend the brand. Goldman’s television audience – made up primarily of women – spend most of their time on Lifetime’s site playing games, while entering sweepstakes and watching videos battled for the honour of second most-popular activity. Lifetime’s approach to the production of original content for broadband is to provide additional access to talent by offering behind-the-scenes footage. Their "advanced platform" initiatives this year include creating an original broadband series that is a spin-off from an existing television property, a strategy demonstrated to be effective by Fox Television with its animated Family Guy property. Content producers such as Blair Witch Project co-creator Dan Myrick and Evan and Gregg Spiridellis, creators of Jib Jab Media Inc., see the Internet as an accessible and affordable platform to produce and monetize original content. After Jib Jab’s initial viral success "Our Land," the Spiridellis brothers signed a two-project deal with Yahoo and, most recently, a five-project deal with MSN. Meanwhile, Myrick has produced a dramatic episodic series titled The Strand: Venice, designed to be distributed via the Internet and direct-to-DVD. However, in response to challenges of financing original broadband content Jon Vlassopulous, VP of new media at Endemol USA, explained that for production companies, the idea of producing something now to make money in the future isn’t so appealing. A traditional network television environment gives a production budget up-front, whereas advanced platform production does not. However, Jeremy Allaire, president of online digital distribution solutions provider Brightcove, spoke to the direct customer relationship and the dramatic control over payment and user experience that online content distribution affords. This direct customer relationship ties in with one of the more neglected issues at the conference: the notion of leveraging opportunities to build communities around content. Google Video, Current TV, Flickr, Myspace and Youtube, to name a few, are all banking on social networking tools, virtual communities and broadband distribution of content to create entirely new models around content aggregation and content distribution. In his keynote address, titled "Social Networking and Content in the Mobile World," Fox’s Levinsohn addressed the issue. Fox Interactive spent US$2 billion on digital initiatives in 2005, mostly around building communities and on the acquisition of social software site myspace.com. Communities, Levinsohn explained, are passionate, diverse, social, self-promoting and self-creating – in short, a marketer’s dream. Myspace is one of the largest such communities with 32 million monthly users, 15 billion monthly page views and an average of 78 minutes per visit, not to mention the 160,000 new members that sign up daily. While it is apparent that there is a large shift underway in the manner in which digital entertainment content is delivered to viewers and users, the hows and wheres of navigating this territory still remains a mystery to most. However, the heads of digital distribution networks at the large American networks – including NBC, ABC, CBS and FOX – all agree that while we are in an experimental phase right now and it is crucial to maintain "old economy" competencies and business arrangements, the monetization of new convergent content and distribution is not far off.

Convergence makes a comeback at NATPE’s 2006 conference

News | 02/10/2006 5:00 am EST

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