"Adversarial" Fox Affiliates Meeting at NAB Illustrates the Accelerating Change in the Business of TV
Bill Niemeyer, Senior Analyst
April 15, 2011
I attended NAB in Las Vegas this week - the big annual conference of the National Association of Broadcasters. OTT had a large amount of mindshare at NAB, reflected in meetings, colleague conversations, panel sessions and vendor booths. "Connected TV" and "OTT" was featured on booth signage and product demos for many vendors across the video production and distribution spectrum. Those vendors are eager to provide services and solutions to help OTT change the business of TV.
Behind the scenes, there was more indication of how the business of TV is changing. As reported by tvnewscheck.com, Fox and their TV station affiliates held a closed door meeting that was an "adversarial afternoon." Much of the meeting was taken up by a "tense" discussion of Fox's plans to charge stations a flat fee to cover the network's share of retransmission revenue paid by multichannel operators.
Adding to the contentious atmosphere were recent private and public statements by Fox Networks President of Affiliate Sales and Marketing Mike Hopkins that they would consider "alternate distribution", which could include moving to new affiliates or even taking the Fox broadcast network direct to cable on a market-by-market basis if local stations are unwilling or unable to pay the fees.
While Fox saying it's willing to take the Fox Network direct to cable may be surprising, it's also a direct extension of a decades long trend of programming moving from broadcast to cable. Award winning first run entertainment series and major league sports were the exclusive province of broadcast. Increasingly, those now appear on cable.
The opportunity and challenge for OTT is how it can do what cable did starting in the early 80's - offer more choice for consumers, content providers and advertisers.
Ironically, broadcast networks' and stations' demands for retransmission fees can be an opportunity and challenge for the expansion of OTT. On the one hand, this will drive consumers' costs for multichannel operator service even higher, making OTT delivered services a more attractive alternative. On the other hand, accepting fees from operators may well bring contractual restrictions on how broadcast network programming can move to new platforms like OTT, just as it does now for cable networks.
One lesson to draw from the early days of cable networks - OTT needs to drive success by being more than a "me too" platform. Namely, offer something new. Netflix and ESPN3 are examples of new premium quality video services offering consumers something they can't get "on TV." OTT can also offer advertisers something new. How? By leveraging existing Net technologies to deploy new ad capabilities advertisers have been asking for (and in the main not getting) from operator TV platforms.
ShareThis