The entertainment industry managed to ignore the net for a decade. Only 250 miles apart, Hollywood and Silicon Valley might as well have been on different planets. Happy with their structural oligopoly, TV networks resisted change, and (just as buyers and sellers keep each other coming back to eBay) the talent and the audiences stayed loyal to the networks.
Back in the 90's a few startups tried but failed to repurpose television talent online--like Den (the most egregious flame-out of all), and my own doomed investment icebox (but you can still delight in Jesus and His Brothers, Queer Duck, and Hard Drinkin Lincoln). There was neither enough chicken nor egg to shift the center of gravity away from the TV.
Strategically positioned between the audience and the talent, TV networks protected their cash flow by resisting the growing economic pressure to bring the interactivity, e-commerce, and community of the web to TV's huge, loyal audiences. But Tivo cracked that dam, and over ten years the crack expanded to jeopardize the integrity of that industry structure. Exploiting computers and the internet to displace channel-surfing with random access content, DVR's so enhanced the TV experience that viewers changed their habits, causing the Dammed Networks to sprout dangerous leaks of ad revenue.Compounding the Tivo risk, computer and phone screens now attract so much viewership that the vacuum of quality content invites new competition into the distribution game. And so this year, finally, the dam has collapsed, as progressive voices in the entertainment industry have overcome complacent inertia.
Hollywood video now flows through web sites, cell phones, and iPods, as new business models wrestle vigorously for sunlight in the new landscape. Soon there will be no more network loyalty, no more 30-second spots, no more $70 billion a year in brand advertising revenue. So how will advertisers reach large audiences with high impact messages? Who, if anyone, will control the new distribution channels? Will cable providers evolve or stagnate? Most importantly, who will pay Eva Langora, Chris Carter, and Jerry Bruckheimer to keep the yucks coming?Worry not--venture capitalists are waving checkbooks, and the talent agents are tuning the contractual fine print to carve out rights for online and mobile syndication, merchandising. endorsement, ringtones, screensavers. games, etc. Soon enough, new revenue streams will subsidize Desperate Housewives and Scrubs so they're always an RSS feed away.
In the next week I'll post some news on 8 recent investments Bessemer made in the pioneers of Television 2.0.
David:
ReplyDeletedo you think that this trend will expand or contract total advertising dollars?
On the one hand, paid search and other online advertising is clearly more effective in generating sales than print or television. However, web-based advertising still only represents a fraction of the advertising market. My brain tells me that if the web helps companies generate leads more effectively that it should expand the advertising market because all companies need more leads. However, my gut tells me that web based advertising will shrink the market like craigslist is doing with classified ads. Another major shift occurring is that web-based advertising and the growing focus on local search/coupons/reviews/news will open up the very small business market to participate in advertising campaigns, which could generate a huge ground swell of new demand. There are definitely many forces disrupting traditional media and it will be interesting to see how it all shakes out over the next couple of years.
-Andrew
We aren't even at the tip of the iceberg. The really big changes will be in how the internet will change television distribution. Goodbye cable, satellite, fiber optic . . .
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