The Big Picture: Frank Beacham
TV Milestones – Connecting the Dots
Tracking movement within the television industry these
days is like watching grass grow. The DTV transition – if one
actually exists beyond cable and satellite – is in slow motion.
The economic slump seems to have cast a pall over many developing
technologies.
Yet, change is taking place. One just has to look
closely to find it. Often, the first hints of these trends come
at industry conferences where the key players in the television
business are momentarily cut loose from their PR flacks to find
themselves in heated exchanges with competitors.
Industry observers take note of these rare nicks in
the corporate shield and then later look for hard evidence that
a prediction is becoming reality. Sometimes it takes years, but
tracking change is often just a matter of connecting the dots. Two
recent developments, previously predicted in unguarded moments,
fit this category. Each is a small milestone that may be a harbinger
of more significant trends ahead.
NOT SO ‘FREE’ THROW
One prediction made repeatedly in recent years was
that premium content (translation: anything worth watching) is migrating
away from free, over-the-air TV to pay services. We’ve seen
it happen with dramatic programs, as with HBO and Showtime, but
a spate of recent newspaper articles brought a more harsh reality
to the remaining viewers of terrestrial TV – the days of free
sports broadcasts are numbered.
In January, NBC refused to pay the high price for
continued broadcast rights to the National Basketball Association,
losing future NBA games to cable. The $4.6 billion price for six
years of games paid by Disney and AOL Time Warner for broadcast
rights on pay media was too rich for the network and its parent,
General Electric.
NBC Sports Chairman Dick Ebersol put it bluntly: "For
the first time a major sports property has largely migrated from
network to cable. In the future it will become almost impossible
for broadcast television sports to match the power of those subscriber
fees, which are unique to the cable world."
So there! One of the great engines of free TV viewership
is vanishing. It will be years before the disappearance is total,
but the migration to pay media has begun. NBC chairman Robert Wright
has predicted it many times in previous years, lamenting the fact
that terrestrial broadcasters have only one revenue stream –
advertising – while pay TV services have income from advertising,
subscriptions and transactions.
Howard Stringer, chairman and CEO of Sony America
and a former CBS programming executive, warned last April at an
industry conference that the biggest threat to the traditional broadcast
networks is cable channels.
"Cable television is really now in its heyday,"
he said. "Individual cable channels are forging a distinctive
identity and spending more and more money on original programming,
which was our worst nightmare 10 years ago ... though we ridiculed
it at the time. But now, cable is fully engaged in giving niche
alternatives to the audience."
One wonders what is the end game for free TV. The
best dramatic and sports programming is moving to richer territory.
Even local news, the mainstay of the call letter station, is now
finding its way to pay media through 24-hour news channels. DTV
or no DTV, what programs will drive viewers to watch free television
in the future? Answers are in very short supply.
MURKY WATERS
A second milestone – one a bit more murky in
its "ultimate" resolution – was news that Microsoft
is disbanding the 420-employee unit that makes its UltimateTV set-top
box. Launched only a year ago as part of Microsoft’s overall
television initiative, UltimateTV offers digital video recording
and ‘Net access through a set-top box on DirecTV’s satellite
network. The company claims it will continue to produce the product,
but with no support organization behind it, UltimateTV’s future
seems very cloudy.
Word is UltimateTV will become part of the division
at Microsoft that includes MSN TV (formerly WebTV). Neither of these
previously high-profile technologies has been successful with subscribers.
MSN TV, after several years of aggressive marketing, has only about
1 million customers. Subscriber numbers for UltimateTV are unavailable,
but one would suspect they are dismal.
The tales of woe from Microsoft’s TV initiatives
strongly suggest that two once-hot TV technologies – the personal
video recorder and television-connected Internet appliance –
have fallen on hard times.
Eddy W. Hartenstein, the Hughes Electronics executive
who oversees DirecTV, made a foreboding comment at the time of the
UltimateTV launch last year that may have revealed at least a personal
doubt. "The biggest challenge will be keeping it simple,"
Hartenstein said of the new set-top box.
Sony’s Howard Stringer, in musing why the company’s
branded TiVo personal video recorder had experienced poor sales,
suggested it might be related to consumer technology overload. "There’s
resistance to too many devices in the home. Everyone [who] has a
TiVo likes it very much and swears by it. The only explanation I
can think of as to why the sales haven’t absolutely gone through
the roof is that there is consumer resistance to the technological
chaos in the home," said Stringer.
"Too many set-top boxes and remotes look like
the cockpit of a 747. When the consumer staggers home, he doesn’t
want to take a degree in consumer electronics engineering to operate
the equipment. We are going to have to work very carefully on the
electronics side to find a way to link these objects seamlessly
so that there’s more than one person in the household who can
turn something on," Stringer said.
The dots are connected.
Frank Beacham is a New York City-based writer and
producer. Visit his Web site at www.beacham.com,
or e-mail him at: frank@beacham.com.
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