WGA strike illustrates perils of prediction
The next programming revolution won’t be televised. Or will it?
As viewers — particularly younger auds — start dumping their TVs in favor of watching series on the Internet, the traditional network TV delivery system is in flux.
That fear of the unknown has helped fuel this fall’s Writers Guild strike. Any writer on the picket line will tell you that “the Internet is the future” of this business and a key source of income in the approaching years.
The companies, of course, say that the income is too much of a question mark to deal with at this point. And both sides have studies that back up their claims.
But a key question is how accurate this forecasting is. Some are eager to predict things with great certainty, but a look at past prognostications shows that their rate of success so far is not so great.
This much is certain: Writers receive little or no coin when their shows are downloaded or streamed on the Web, which has many of them fired up enough to stay on strike for a long time.
The scribes are still smarting from their decision nearly 25 years ago to not aggressively pursue sizable residual fees on homevid sales. The WGA insists it won’t make the same mistake with the Internet.
Congloms, still not quite sure whether Internet revenues will offset potential declines in on-air advertising or off-net syndication, fear locking into a deal now, when things are still uncertain.
That’s led to some confusing messages coming out of the studios, which seem to want to spin the Web’s prospects both ways. They’ve told writers it’s too soon to determine how they’ll make money off online video. Yet they’ve also assured Wall Street that Internet revenues will be huge in the not so-distant-future.
But is this Enron-style business forecasting? And will viewers really be watching all of their TV online in five years?
No one knows. Forecasting future media trends is close to impossible, as no one can predict what consumers will gravitate toward. Yet everyone still tries.
In a 1983 issue of TV Guide, one reader complained that they’d heard a decade earlier that a “flat, picture-on-the-wall” TV set was imminent. Columnist David Lachenbruch replied, “It’s been 10 years off for as long as I remember, and it still is.”
Good answer, except Lachenbruch himself was off by a decade. It took 20 years from that issue for wall-hanging plasma and LCD TVs to reach critical mass.
Similarly, today’s predictions are still vague of just when and how viewers will unhook their antenna, cable or satellite dish and plug the Internet into their TV.
Just last week, a survey conducted by Teletrax and Myers Publishing found that industry players are bullish on the Internet; the respondents said they believed at least 40% of all video viewing will take place on the Internet by 2012. Yet another study, conducted last year by Jupiter Research, warned that new platforms and consumption models should be treated “as relatively small revenue streams whose primary value is promotion.”
Contradicting predictions aside, consumer and technology forecasts frequently trumpet trends — video on demand! Interactive TV! — that go bust, or don’t materialize nearly as quickly as expected. On the flip side, industry sages rarely predict the real game-changing models. No one saw YouTube coming, for example.
But that may be all the more reason for scribes to get their Internet residual structure nailed down now.
Twenty years ago, scribes agreed to a smaller residual structure for homevideo, as the industry was still fledgling and distribution and manufacturing costs were high. But that 1.5-1.8 residual rate for scribes remained in place even after the business turned into a cash cow — a tough lesson they hope to apply to this year’s Internet residual negotiations.
Indeed, Forrester researcher James McQuivey says he believes the studios’ “nobody can predict the future” argument doesn’t hold water when it comes to the strike; after all, a percentage is just that: Writers would make money only if the studios do.
“When you’re looking at a percentage business, the precedent has already been established,” he says. “I struggle as to why that’s so hard.”
At the same time, McQuivey says he understands if the studios are holding off, because they want to first recover the tremendous amount of investment they’ve made in building their online businesses — or even if they see the Internet more as a way to compensate for future losses from more traditional revenue streams.
But if that’s the case, they’re not articulating it, he says.
“The networks could be so nervous their current money sources of income might be under threat in the future that they’re hoping to get an enormously large piece of this new pie to compensate for what they’re losing,” he says. “But probably the most legitimate concern would be if they express it from the new media side. ‘We had to gamble on these systems. It looks like they’re wildly successful now, but we had to spend a lot of money making a lot of mistakes over the last five years. Don’t expect to suddenly get your share.’ ”
As for the future, McQuivey says his staff correctly predicted the growth and impact of digital video recorders like TiVo.
But he admits the two biggest TV game-changers in at least a decade threw him (and everyone) for a loop: No one foresaw ABC’s decision to make its hit shows available for download at iTunes, followed months later by its decision to post ad-supported streaming episodes on its website.
“That completely came out of left field,” McQuivey says. “That was the revolutionary moment. Once the earthquake was over, every network hit themselves on the head in a Homer Simpson ‘D’oh’ moment.”
And it also led to today’s strike moment. Ad-supported Web streaming of full-length movies and TV episodes has been a key flashpoint of the WGA work stoppage, because scribes receive no residuals for those repeats. And it’s vital to them that they do, because more and more networks are eschewing old-fashioned on-air repeats — the kind scribes do get paid for — in favor of making the shows available on-demand.
But the whirlwind of change can’t last indefinitely, McQuivey says. If the last five years heralded the digital revolution, the next five will be about how the pieces fall into place.
“We should see a more complex future,” McQuivey says. “One medium won’t take over the other, but we may see an uneasy coexistence (between the Internet and traditional TV) the way movies and television had to adapt to each other.”