While still basking in Beijing Olympics gold, NBC Sports is already contemplating the proper mix for web and TV content during the next Games — reluctant to risk trading “analog dollars for digital pennies,” as chairman Dick Ebersol told the New York Times.
In the current media environment, this song would be titled “Pennies From Hell” — referring to the transformation that has undermined the economics of the music and newspaper industries. In each case, more people consume the product online but the companies receive less revenue — unable to replace lost dollars from the analog world with commensurate advertising gains in the digital space.
Yet as the public makes the change-over to digital television, flocking to retail stores to purchase flat-screen TVs before next year’s government-mandated analog-to-digital metamorphosis, studios and networks could be ignoring a key opportunity and closing window to try revisiting that equation.
Put simply, the faith and hope that advertising alone will fill the great digital divide — that media companies can give their product away and expect online ads to compensate them — appears wrong. That means sooner or later, producers of everything from episodes to articles must find some way (even if it’s slightly roundabout) to prod consumers into paying for content.
So why is this such a significant moment? Because it marks the start of what will almost surely be a frantic race to up-convert TV ownership prior to the official analog-to-digital TV transition Feb. 17.
To keep watching an analog TV, consumers will need to purchase a converter box or replace their old set with a digital one. Prices for the new TVs continue to drop, but we’re still talking about a sizable expense for anybody choosing to upgrade to high-definition TV who hasn’t.
In essence, this shift forces people to think about what TV is worth to them, after being encouraged throughout the medium’s existence — including the digital revolution — to take that mostly for granted, a monthly cable bill notwithstanding.
As the Los Angeles Times reported, Wilmington, N.C., is making the switch this month as a pilot program for the Federal Communications Commission. A survey of consumer awareness in January was less than encouraging, finding “widespread confusion” about what the transition means. Even with a public-education campaign kicking into gear, that response raises the daunting prospect of several million Americans turning on their sets to watch the Academy Awards six months from now and seeing nothing but snow.
The good news for the TV industry is that an affluent segment of the audience has already embraced a pay-to-view mentality. Some well-to-do friends living in Europe, for example, download “Lost” on iTunes to keep pace with the series — uncomplainingly shelling out roughly $8 a month for the one ABC show they devotedly watch. Others I know do the same Stateside, simply because they’re more willing to pay than bother remembering when it’s on.
Networks, meanwhile, have sought to redefine the measure of success, especially on narrowly viewed properties. Take NBC-owned Bravo, which has begun including “page views, monthly uniques and video streams” in its rah-rah monthly ratings releases.
Frequently, the altered emphasis touting web downloads feels like little more than a smokescreen or alibi for tepid ratings. Nevertheless, the CW network has found the media surprisingly receptive to claims that its teen drama “Gossip Girl” plays to a crowd so young, hip and tech savvy that they defy the shackles of primetime schedules and evaluation by Nielsen’s dated yardstick.
Despite sporadic breakthroughs, however, pay-to-view’s viability seems limited without a serious change in the public’s mind-set. As firewalls have come down consumers have grown accustomed to receiving online content free, and in a sluggish economy, cash is tight.
At the same time, the ad market is clearly finite, and there’s reason to fear newspapers’ fate — leaving editors gloating about record page views while simultaneously gutting their staffs. Pretty soon, you wonder if anybody will be left to produce any pages worth viewing.
Television hasn’t reached that crisis point yet, but the audience flow undeniably keeps being dispersed into smaller streams. And unless execs can find a way to rub more pennies together, before long you may hear them asking, “Brother, can you spare a dime?”