It's the weekend of September 8-9, 2012 and I have had a chance to catch-up in some detail on technology news this past week. In addition, I had a chance to review my weekend entertainment choices. Despite my bias (of being in the consumer internet space), I thought the impact of the Web was an undercurrent in the expanding entertainment choices competing for our time and dollars. Consider the happenings just this past week....
Jay Leno took a 50% pay cut as part of the 20% belt-tightening at NBC's "The Tonight Show". Looking deeper into the market dynamics behind these austerity measures, most late-night shows on TV saw viewership shrink by 5% from the previous year. Not surprisingly, advertising dropped as well to the tune of more than 25% across Leno and Letterman's late night shows. Why? While cable-TV shows and the DVR viewer habit increasingly have had an impact, it's clear that viewers are voting with some of their time on Web programming and online channels.
TV Comedy of a different kind....Viacom's cable channels that include Nickelodeon and Comedy Central have seen viewership drop by 29% at Nickelodeon. To maintain ad revenue, Viacom is increasing the advertising time by over 9% over a year ago. This is a established yet controversial short term adjustment technique in this industry. The difference now though is the growing availability of internet video. Should viewers get impatient with ads, they can turn off their TV and turn to the web. For example, Nickelodeon's "SpongeBob SquarePants" can be watched commercial-free on Netflix.
On a slightly different but TV related note, investors are buying small, struggling TV stations in major markets for the value of airwaves or spectrum. Two impacts of the internet playing out here. One, the strategic acquisition of airwaves are targeted towards addressing the bottomless demand for wireless broadband services. Two, competition from the Web is one of the primary reasons cited for the struggles and often demise of the small TV stations.
Turns out, the summer box office was less than spectacular with a movie "The Oogieloves in the Big Balloon Adventure" having an all time worst opening in 2000-plus theatres, attendance being the worst since 1993 in North America and overall a summer box office down 2.8% from last year. The speculation is many factors contributed to this decline including the Olympics, the economy, the Aurora, Colorado tragedy but no doubt, newer online channels and web programs had an impact.
In the movie streaming business, this past week, Amazon bolstered its movie streaming offering through a multiyear licensing deal with cable channel, Epix. This deal will bring a set of popular films like "Iron Man 2" and "The Hunger Games" from several major studios like Lions Gate Entertainment, Paramount Pictures, MGM Studios. How big is video-streaming? According to the Wall Street Journal, Amazon subscribers have access to 25,000 TV shows and movies, Netflix about 50,000, Hulu more than 58,400. Is that enough entertainment for you?
Apple is reportedly jumping into Radio and it looks like iTunes users will be able to create their own virtual 'radio stations' along the lines of the Pandora, Spotify etc. Regardless of the consolidation and competitive battles ahead, and the problem of the high music licensing costs, one thing is clear. Online music services are here to stay and serve as an increasingly valuable revenue source for record companies. And here is the challenge to terrestrial radio (traditional radio). If as reported, Apple is successful in negotiating past restrictions to online radio such as a current ban on playing a given song too frequently, online radio will become more of a direct competitor to terrestrial radio.
I am a big believer in the potential of the 'Second Screen' products/emerging segment. A decent explanation by wikipedia can be found here. In essence, we are increasingly watching TV with an accompanying 'second screen' device mostly a tablet or smartphone thus increasing our social engagement (Tweeting, FB posts etc.) and deeper consumption of the content - "What song was that?" "What location was that?" "What shoes is she wearing?" "I have to share this play with my buddies" etc. etc. This past thursday, MTV introduced a new type of multiplatform ad service called Reverb whereby a Pepsi commercial will appear simultaneously on TV, MTV's website, or an MTV mobile app. No escaping! While the "Second Screen" is largely a social media phenomenon, the increasing impact of the online world on the traditional media of TV is compelling.
A new e-book pricing landscape is on the way and if you are a consumer, it's the good kind. E-book price cuts from three leading publishers are only a month to three months away. How low are we talking about? One past indicator, Amazon had priced e-book best-sellers at $9.99 before 2010. Not an internet phenomenon per se but definitely e-commerce impact.
There you have it. All within the past week. What's ahead of us?
- Second Screen Growth. More interaction with TV content through your tablet or smartphone by apps and more context-based advertising. Not just subtle product placements like Cameron Diaz's Christian Louboutin red-soled shoes in the movie "Bad Teacher" or Daniel Craig's Omega Seamaster watch in his James Bond portrayals. But increasingly, through your second screen, this is the model he/she is wearing in this scene and here is a pointer to merchants where you can get one of your own.
- More lobbying and court-room drama. Expect players like Pandora and now a heavy-weight like Apple to aggressively seek assistance to solve the high royalty costs that are weighing on the net radio business model.
- The exclusivity of ESPN or HBO as a cable only offering will crack under market pressure. Alternate offerings will evolve for streaming services especially for the newer generation that grew up without ESPN.
- Entertainment coverage such as listings will evolve to include original web programs. For example, this friday's Wall Street Journal covered the 2012 fall season from a traditional media/entertainment standpoint i.e. theatre, movies, TV, Art, Books and Music. Some day soon - a listing of upcoming web offerings in articles such as the before-mentioned WSJ article.