A Letter To Schubin - BUSINESS: But How Do We Make Money? - TvTechnology

A Letter To Schubin - BUSINESS: But How Do We Make Money?

The emergence of new technology historically has alloed older media to focus on just what they do best. But what if what broadcast TV does best is simply not very lucrative, now that audiences have other media to attend to? ...
Author:
Publish date:

Dear Mark,

In your Final Thought in July’s Television Broadcast, you summed up my broadcast TV viewing along with your own: “I watch broadcast TV most often during emergencies,” you said. And you mentioned that your favorite channels are all commercial-free. You neglected to mention that much of any station’s disaster coverage is commercial-free, but we all know that.

You continued from these points to talk about reception issues. But they made me think about the core business issues of broadcasting. The floodtide of new technology now is high enough to necessitate a rethink: if broadcasters can’t make any money on you (or me) as audience, how will they stick around long enough to cover the next disaster?
A few years ago, and back to the beginning of the business, this question would have been easy to answer. TV didn’t need us. A few oddballs spending all their time with other media didn’t matter. TV was a true mass medium, and there weren’t many channels. But now, Mark, I don’t think you and I are so weird in our noncommercial video preferences. Rather, I think we’ve been in a vanguard that we didn’t know existed. My child watches even less ad-supported TV than I do, and most of his friends don’t watch much, either. The broadcast, ad-supported TV audience is rapidly growing so old and downscale that only politicians and drug companies should really be enough interested in it to buy it.

What about the tale the Nielsens tell? These are the common yardstick that everyone in the industry agrees to believe, but deep down does not believe at all. When Nielsen tries to get more accurate, as has happened the last couple of years, ratings go down and its customers scream. As someone who makes a living parsing the damn lies of statistics, I would suggest that ratings go down with new Nielsen methodology in direct relationship with how much more accurate those methodologies are, and that truly accurate sampling would show that TV viewership is far lower than any advertiser is paying for.

Just consider: Nielsen samples the same order of magnitude of households per the U.S. total as Gallup or Zogby samples voters in a presidential race. The pollsters are looking for a very simple answer and they’re almost always wrong by from 3-10% of the total electorate. Nielsen is looking for very complex data, in which being off 10% of the total audience is the difference between a monster hit and no viewing at all.

So what if actual attentive viewing is 20% lower than Nielsens now suggest, and if this is not a constant 20%, but 20% on average of data that are all over the map for each show in each demo in each market? This is surely within the range of probability. And what if multiple new technologies, including increased use of DVRs and Internet search engines for most viewing, and continuing erosion of the total audience to games (rapidly becoming measured media) and the Internet, proved this mismeasurement and decline of TV beyond doubt?

Is the part that would be left of broadcast TV’s revenue enough to pay for a semblance of the industry we know today? Not if, as many suspect, daytime, fringe and primetime are all tremendously overcounted. That would suck all the profit out of broadcast TV as we know it.

The only longterm hope is for broadcast TV to develop some new technologies that utilize its basic resources—spectrum, transmitters and sticks, production facilities typically focused on news and sports, etc.—and that raise new revenue in ways that are sympathetic with continuing current operations. Otherwise, current operations will become untenable economically, and broadcasting won’t be there to give much needed information and some comfort in the next disaster.

What kinds of technologies are these? Qualcomm’s MediaFLO is pretty interesting. You may recall that Qualcomm now owns the 700 MHz range that used to be channel 55 across the country. MediaFLO plans to go live with its service in 2006, offering upwards of 50 website-like “channels,” many audio channels and roughly 15 full-time, live feeds of from 24 to 30 fps video. The service will be aimed at new cellular digital TVs and videophones. “FLO” stands for “forward link only:” this is a one-way broadcast service, but one tied to a cellular return path so users can press “soft-keys” to talk back to broadcasts, download ring tones, etc.

MediaFLO’s rivals include DVB-H and MobiTV. DVB-H is the European digital mobile TV standard now being tested in Pittsburgh by Nokia and Crown Castle. Crown Castle has nationwide rights to the 1.6 GHz band for the service. MobiTV, owned by Idetics, Inc., is already on-air with 12 channels of 6-10 fps/low-res video. It is available to subscribers of Sprint and Cingular. Programmers distributing content include Fox News, NBC-Universal, and the Weather Channel; Newsweek recently reported that HBO is talking a deal here.

According to Omar Javaid, Senior Director, Qualcomm Enterprise Solutions, “We’re just beginning with channel 55.” He says, “We think broadcasters will want to supply programming along with some of their digital spectrum.”
This is but one of many suggested uses for “extra” spectrum that will be unneeded for either legacy analog service or HDTV. The most common, surely, is multichannel digital broadcasting.

But MobiTV, MediaFLO and DVB-H may be blind alleys. Mobile TVs might just wind up being video iPods using RSS automated downloads, with Apple Computer or Microsoft being your partner instead of Qualcomm or Cingular. Stations may also discover some new wrinkles in consultation with FLO Forum (just created in July) members Harris, Huawei, Korea Telecom, Kyocera, LG Electronics, Sanyo and Sharp. Or with Texas Instruments, which claims its forthcoming “Hollywood” chip set will receive all mobile video systems and support HD playout rates.

Which of these will succeed and which will fail? It’s hard to know, so stations need to experiment with a few. Is there really demand for HD on a cell phone? If there is, broadcasters will need to be there... if we want them there when we really need them.

Neal Weinstock is editor-in-chief of Weinstock Media Analysis and can be reached through www.weinstockmedia.com.