For five decades or so, the television industry's main mission has been to come up with hit programs, get them on screens, and hope people will stop and watch. Now, that is just the starting point.
As an era of ordering TV shows at the push of a button gets under way, new challenges are clouding the landscape in the year ahead: What business models are going to work and who is going to get paid what?
These questions loom behind attention-grabbing announcements in recent weeks from some of the biggest TV networks, cable operators, satellite companies, gadget-makers and Internet players, including Apple Computer, Disney, NBC Universal and Comcast, offering what is expected to be the first of many new video-on-demand and downloading services.
"The video segment of the content industry is trying to be out ahead and not have happen to them what happened in the music industry," said Saul Berman, a partner specializing in media with IBM Consulting, referring to the widespread illegal downloading of music in the absence of appealing legal ways to buy online music.
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But the road to video convergence is crowded with convoluted business relationships and potential conflicts. Behind the press releases, a major power struggle is unfolding among a wide group of stakeholders--from studios to satellite operators to manufacturers of consumer products--as new ventures are being devised for the digital age.
"We've taken a couple of steps forward, but there really isn't a clear business model yet," said David Zaslav, the president of NBC Universal Cable.
One issue is whether consumers ought to pay for their shows individually or whether on-demand access should be a free component of a subscription to video services provided by cable or satellite operators or newer competitors like Internet or telecom companies. Another is whether the shows will be sold for viewing during a set time period, or will be permanent so that consumers can collect them like DVDs. And, not surprisingly, a big point of contention is how the revenue generated by these new services is shared. As a result, only a handful of the most popular shows on television are available on-demand so far.
Zaslav and other industry executives and analysts said progress is slow because of the longstanding and often convoluted relationships that exist among the companies that create content, the networks that package and market it, and the distributors who deliver it into households, which can sometimes all be tentacles of the same conglomerate. News Corp., for example, owns the Fox TV network and production studio and also controls DirecTV.
Conflicting tracks
Also, the broadcast TV networks that reach the biggest audiences and have relied on advertising as their sole source of revenue have had to run on two parallel and seemingly conflicting tracks.
First, they've had to explore new revenue models as TiVo and similar digital video recorders threaten conventional advertising by allowing viewers to fast-forward through commercials on the shows they record. At the same time, they've had to ensure that marketers and especially the network affiliates that own the majority of the big networks' local stations around the country are not alienated by these new ventures. For example, making a popular show available on demand via cable or the Internet within hours of its airing may lead fewer viewers to tune in during its scheduled time slot. That, in turn, would mean reduced advertising revenue and hamper the ability of the local affiliates to promote other shows in their lineup.
Because of this, CBS, for one, will begin offering reruns in January of hit shows like "CSI: Crime Scene Investigation" for 99 cents an episode, but only in markets where Comcast offers cable service and CBS owns the local TV affiliate. And, like NBC and ABC, CBS is so far only offering programming that it owns a large piece of and has the right to rebroadcast. Notably, the CBS
Paul Grusche Dec 6, 2005, 10:46 AM PST
Keith J. Dec 5, 2005, 8:49 PM PST
J M Dec 5, 2005, 9:55 AM PST
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