Kevin Wassong is the president of Minyanville Media Inc., a digital network that creates branded content about the world of finance. Prior to joining Minyanville, he built one of the first “new-media” advertising agencies, digital@jwt, within J. Walter Thompson, and before that was assistant to the chairman of Creative Artists Agency as well as a development executive with network TV shows including Golden Girls and Empty Nest.
This is the most transformational period in the history of media. It is the true conversion from analog to digital and from individual channels to a converged media landscape. Oftentimes, I live in the past as my proxy for the future. For those who remember PointCast, BMW films or the launch of Instant Messenger, you can hopefully relate.
Looking to the past, the year was 1994, when I first truly fell in love
I don't think you get it. We love Hulu because it gives us great shows when and where we want them without many commercials. That's what younger audiences demand and HULU gives it to us. Television is so XXth Century.
There is no such thing as network loyalty among anybody under 40. In the premium world, HBO has some brand value because of its fairly consistent quality over the years. But that's really it.
The best networks can do is to focus on delivering the best content they can on television, using its best programming to drive the audience to other programs (with neighboring time slots or heavy promotions during the best stuff's time slot), and get the most value for that programming on all platforms.
The days of any post baby boomer turning to NBC because they trust the network's quality are over. They might give Parks and Rec a try because they saw the promotions on The Office and thought it looked funny, or because they read a good piece on it, or more likely because their friend recommended it, but NOT because they assume every new NBC show is worth a shot because it's on NBC.
There are other valid arguments to make against putting content on Hulu, but this isn't one of them.
The issue is not whether people like Hulu or the generational gap if there is one. Fundamentally it comes down to business. If you like to watch shows with less commercials, then be prepared for some really bad programming!.
Here's a little history about TV – In 1967 an NAB survey found that the public was dissatisfied with TV; 63% preferred TV without commercials. In 1973 by a margin of 5-1 Americans said TV ads are "a fair price to pay for being able to view programs." (Iconocast – 2001)
In other words – who do you expect to pay for the creation of good programming?
The assertion that the most important aspect of digital media and the internet for the networks is to create and maintain brand equity is erroneous. Furthermore, the notion that distribution platforms like Hulu and its brethren represent the âgreatest destruction of media value in our lifetimeâ is unfounded.
Akin to physicists search for a unification theory, I contend that media value â while it is created â is not destroyed: it is shifted. TV and film are facing the same giant: new media threatens the economic model and weâre struggling to strike the balance between the legacy structure and the emerging economic model. This does not indicate that value is being destroyed. Instead, like the print and music industries, the surplus is steadily being shifted to the consumer. One key indicator from the previous two industry shakeouts is the consumer view of brand. The efficiency, immediacy, innovation, creativity and commerce of new media contribute to an erosion of the network brand, and a blanket response like the recording and print industries to strengthen brand at the expense of the aforementioned benefits to consumers is debilitating. The value NBC has offered former generations over the past 70 years does not fit the value-price proposition of the current and burgeoning generation. New media was not at the forefront of network brand erosion: do not forget that time shifted programming a la DVRs and VOD has been just as guilty a contributor to network brand erosion. When the consumer signals that the content is the driver and technology offers a mechanism that increases efficiency, satisfies immediacy and lowers the price point to obtain the content, clinging to brand equity is a foul solution.
That being said, Hulu has yet to prove itself to be the solution. While the consumer enjoys the price point Hulu offers and the content diversity available, the profit shift to the consumer can only be sustained for so long: there will be an optimal point achieved where the decrease in revenues warrant a decrease in content production. Content producers must find an economic model which consumers are willing to support in order for current production levels to continue. This is a nuance the consumer fails to grasp.
But how much time can you dedicate to trying to figure out the model and protect your existing revenue streams? Before long, youâre going to find yourself in catch up mode like print and music. When the cost structure shifts so strongly to consumers, the response from traditional media players has been less than stellar overall and in those areas that have been successful from a publicity and consumer standpoint (i.e. Hulu), the cash flow story is TBD.
For high fixed cost film and television studios, consumers have been poised to capitalize on gaining additional power from significant revenue streams. Like print and music, the cost to distribute content will be reduced by an order of magnitude as in-home broadband capabilities continue to expand. International broadband speeds and the significant piracy issues in foreign markets provide data illustrating the pressures encroaching on the domestic market. A digital home entertainment complex has slowly been emerging, and this will place additional pressure on content providers to satisfy the immediate appetite of content hungry consumers. Media companies will also be forced to streamline cost structures the same way the previous industries have done. Whether or not this includes decreasing content production has yet to be determined.
With the understanding that both television and film studios are being forced to evolve, the goal for the large multi-business media firm is to realize economies of scale across its business units: sources of competitive advantage must be leveraged to survive the disruptive technology curve. Without sufficient evidence regarding a specific economic model, firms must source and harvest its best ideas from its various competitive business units. Ideas must be solicited that establish or strengthen existing cost and value (willingness to pay) drivers. Hulu is one experiment to do this and cannot be dismissed so easily simply based on the idea that it destroys network brands. Consumers have already established that network brands are not primary considerations for their consumption habits. Letâs not waste resources on this straw man.
I'll expect any NBC comedic series premiere to be top-notch….until it proves me wrong. The Friends, Seinfelds and Offices of our time have proven NBC capable of entertaining my particular demographic — and as a result, we'll expect the network's future offerings to be just as good.
So what is the pillar of a network's brand equity? Is it not it's content? If the mode of content consumption is changing, networks must change with it. So yes, networks should (and will) stand by their brand. But if Hulu can simplify media consumption, then the likes of NBC, ABC and FOX are doing their brands a great service.
But Hulu isn't just easier access. It's easier selected access. NBC can no longer hope the spillover from its 30 Rock audience will help sustain a mediocre following comedy…if viewers can hop on Hulu and grab exactly what they want. This puts the onus on the networks to ensure quality amongst all its offerings.
And if that's the case, I'd say viewers and networks will be much better off.
It seems everyone had the same response as I did on first read….networks have brand equity? People watch shows, not networks. While I think the general assumption made is wrong if you tilt the question on it's head a bit a much bigger one pops up…how relevant will the big networks be in 5-10 years? Will shows even need to go to networks to be produced and successful?
Hulu seems to be a safety net for the networks. They might not be networks in years to come but they'll each have transformed their business into Hulu where producers will ultimately go to get their shows produced.
When there were only 3 networks on TV it was about Brand loyalty to an entire network, built on individual shows.
Medias value is based solely on the viewers belief of it's value. What we are seeing is a shift in what viewers value. One of the ways networks have kept control is through limiting access, if you want A you have to do B to get it. There are more options, more choice, and people are willing to start looking for those options. Hulu is a big part of the "awakening" of viewers.
Several years ago I started to question medias value, it felt artificially inflated… Maybe other people were thinking the same thing.
70-years of History is to dictate the entire future?
Human consumption of Content (entertainment) changes over time. Laws change or are invented or destroyed (i.e. Copyright).
Adapt or die. Remember the dinosaurs.
They need to reposition themselves. And they need to use existing old content. As just one example, the CBS Sunday Morning show has an incredible archive of interviews with musicians, artists, and other well-known people. Those interviews are gathering dust – somewhere. Put them online.
Of course, that's one example of thousands.
In other words, rethink the business. And maybe, just maybe, they won't go the way of the newspaper biz.
PaidContent, why would you have this guy and his opinion on here? I'm really shocked, the argument he makes is lame and 10 years too late. There is no mention of what the networks are up against in terms of piracy, failing dvd sales and the economy in general. If you guys are going to have these simplistic arguments on here just because Hulu is a buzzword right now I'm going to stop reading….