something old, something new...

New media is not so new anymore but finally its impact broadcast television can be quantified. Though not a perfect causality, estimates for this year’s total broadcast television upfront has decreased to $8.9B (from $9.1B last year and $9.3B the year before) correlates with the most common reasons given by ad buyers, reported NYTimes recently. The networks are no longer gatekeepers who have the advantage over ad buyers especially in this world of new media such as online video, mobile, podcasts, iTunes, etc. (sidenote: it’s ironic to think of them as gatekeepers since their the content owning relatives are trying to bypass their own gatekeepers, the cable MSOs and the like.)

Another possible explanation is that advertisers are taking a chance on the scatter market when they are more sure about what tv programs to advertise on (since most new tv shows get cancelled unceremoniously – “Emily’s Reasons Why Not” - and the actual fall tv schedule will bear no resemblance to what was unveiled during the upfront) and on which platform. Definitely a smart move since 3 months is an eternity in new media time and who knows what the television business would look like in May 2007!

Smart networks (ABC & Scripps) have already been testing ad-supported broadband video and with much horn-tooting (11M streams in 29 days!). However, can they deliver their ROI promise? In this world of online traffic analytics & accountability, there’s no more hiding behind the fuzzy measurement (ala Nielsen Tv ratings).

A slight caveat – this being a mid-term election year – local tv tends to better ad sales than odd-numbered years, because of political ad spending. So, overall tv ad numbers may end up being flat, compared to last year. However, are the campaign managers smart enough to repurpose their spending somewhere else with ROI? Most likely not this year. Maybe in the 2008 elections, with the maturation of SEO & SEM.

If you build it, they will come

In the last couple of weeks, larger media companies have been buying small online sites. Logo (owned by MTV Networks) bought three websites (365gay.com, AfterEllen.com & AfterElton.com), while Gemstar-TVGuide bought Jumptheshark.com. Prices for both sets of acquisitions were not disclosed, most likely because they are too small to attract attention of financial reports reader (and the acquirees are not public). What’s remarkable here is that the buyers are getting an established brand as well as the niched community it services. It certainly doesn’t make sense to build your own community from scratch, while all these niche websites out there already built their own loyal community. When they get acquired, they get access to the media companies’ library of content & their connections, while the media companies get access to a loyal community built over time (and their eyeballs for advertising & promotions). More content and low user–acquisition costs – a win-win for everyone.

I deeply suspect that the days of buying large sites are winding down, the most recent being NBC Universal’s acquisition of iVillage ($600M), mostly because the ROI from the purchase is still not significant. Profitability may come eventually but it sure is difficult to convince the street that your acquisitions were spot-on, especially if their contribution to your balance-sheet is currently irrelevant in the short-term, according to Henry Blodget’s blog.

More proof about the value of independent content creators – even the journalistic ones – ContentNext (parent of my favorite new media news site – PaidContent.org) received funding today. Of course, funding amount is not disclosed. Note - I rarely start my day without look at PaidContent first and I have it on my RSS feed so I can follow new media news throughout the day.

Disclosure: I am currently advising a new site (launched July 4, 2006 - www.dreadcentral.com) that will be a genre-specific content & community site. My immediate goal is to help the content creators to be self-sustaining (the site will be ad-supported to pay for server and development costs) – they are passionate genre-experts who are doing this for their love of the genre. Of course, getting the site acquired by a larger media company and helping them get full-time gigs out of it, would be a great consequence and good karma.

Update: WSJ reported that ContentNext received less than $1M in funding. Alan Patricof also told WSJ that starting a magazine cost $15M-$25M and it'll take 3-5 years to get profitable. In this new world (using Open Source apps and supported by ads), that barrier to entry almost doesn't exist anyway (as I am finding out from my current involvement). Om Malik of GigaOm also got less than $1M.

the box office is now closed

The NYTimes published a great story last week on some research by Adams Media Research on the revenue breakdown of movies. From each of the follow delivery mechanisms, studios earned :

$17.26	DVD	63.0%
$2.37	Movies on Demand	8.7%%
$2.25	DVD rented	8.2%
$2.00	Pay TV	7.3%
$3.5	Box Office Sales	12.8%

The percentage revenue take box office does come close to Edward Jay Epstein’s own analysis that in Q1 2005, only 14% comes from box office revenue. A decline in that category is made by strong DVD sales in the last 12 months.

Even with the expected slowdown of DVD sales growth (due to competition from DVDs of TV series and old movies for same physical shelf-space), that breakdown should still be similar. A boffo summer 2006 box office may improve that slice of the pie slightly especially come end of this year, since it’s becoming the norm that a movie’s theatrical release is just marketing for the eventual DVD release.

Moreover, the war of competing high definition DVD standards (HD-DVD vs Blu-Ray) will end up hurting high-def DVD sales, since sales of high-def DVD players will not expand past early adopters until there is a winner.

time and time again

According to a recent comScore analysis in May 05, online video viewing went up by 18% to about 3.7B online video streams in Mar 06 when compared to Oct 05. The M/F split was pretty close to the middle. While male viewers watched 2 hours of online video a month, female viewers spent only 80 minutes for the same. However, males 25-34 are more engaged, coming in at 140 minutes.

The study also revealed that viewers are watching about one hour a month from work during the month of March. I think that is highly influenced by the free NCAA video streams. Previously, I think less online videos were available that was worth watching. The NCAA video streams would also have converted new viewers (sports fans – more males than females?) who then returned for more online video (sports or otherwise) since then.

Chances are, those comScore numbers would be even higher today. ABC.com reports 11M video streams in May as well as the premiere of DisneyChannel.com and Jetix. Other recent higher profile video streaming site openings are CBS Innertube and Fox’s IGNTV. Of course, the world cup is likely a big factor this & next month.

Also, Pew research in Mar 06 stated that 42% of American adults (about 84 M people) now have broadband access at home. That is consistent with where the other hour (or so) online video is consumed. In comparison, Pew’s research in Mar 05 put that number at only 60M people with broadband access at home (40% growth rate).

stream of consciousness

Not new but numbers geeks like me might enjoy them in the same place

* AOL's Live 8 coverage (summer '05) had 175K simultaneous video streams at its peak.
* NCAA's March Madness (2006) had 268K simultaneous video streams on the 1st day alone. It garnered 19M total streams throughout the entire tournament.
* The granddaddy of simul-streaming is Yahoo's coverage of the Discovery shuttle launch (July '05) with 335K simultaneous streams. Has there been a new record yet?


Bob Iger of Disney reported ABC.com streamed out 11M servings in the 1st 29 days of it's launch. Then DisneyChannel.com launched on June 2 and reported 11.4M streams during it's first weekend.

Does this mean that at least some "Massive Passives" are joining the "Kool Kids" & "Gadgetiers" in exploring online video, or is that still too early to tell.

Note1: These numbers were reported elsewhere (ie PaidContent & others).
Note2: My friend at IBM co-authored a white paper where the terms "Massive Passives", "Kool Kids" & "Gadgetiers" came from.