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NATPE: Digital content firms channel cable biz

Maturing sector emulates TV-style strategies

MIAMI — From Mark Cuban to execs from YouTube, Facebook, Yahoo, Machinima, Alloy Digital and Vuguru, heavyweight players in digital content were all over the NATPE confab this week. And some of them are sounding a lot like TV programmers these days.

“We’re starting to see the cable-ization of the Internet,” said Rob Barnett, founder/CEO of My Damn Channel, which unveiled a comedy production initiative on Monday. “It’s shifting into zones of niche programming that viewers can (surf) through just as you do when you turn on cable.”

Barnett and others say it was inevitable that high-end digital content would adopt more of a network programming-esque model if only to help bring some navigable order to the vast landscape of the Internet and draw the sustained repeat viewership that advertisers prize. Certainly that’s what YouTube has sought to do with its expansive content-funding initiative.

Alex Carloss, YouTube’s head of global entertainment partnerships, said that the push to offer an array of themed channels from notable names and established producers is an effort by the vid behemoth to hand users a tool that “solves the discovery challenge” on the site that typically sees a staggering 72 hours of video uploaded every 60 seconds.

The behind the scenes rise of multichannel networks, or MCNs, that bundle dozens, sometimes even hundreds, of digital content sites into omnibus offerings for advertisers, has also fueled the “network effect,” according to Jordan Levin, prexy of Generate, an arm of Alloy Digital.

Levin served as chair of this year’s confab and worked with NATPE’s new prexy to put a distinctly digital spin on this year’s conference sked, starting with opening keynoter Cuban (who wound up staying all three days after initially planning to parachute in and out).

Producers once came to the NATPE confab hoping to get on the air by convincing TV station owners to part with a scarce resource — a timeslot. Today, digital producers can get themselves on the air, in some fashion, but the challenge is to stand out enough to make an impact. Increasingly that means aligning with a bigger entity that can help funnel traffic from likeminded or demographically compatible fare.

“More of our sites are programmed like networks now. YouTube has become a programmer. They are a distributor of professionally produced content that viewers turn into personalized networks,” said Alloy Digital exec VP Barry Blumberg.

Blumberg, a Disney TV vet, has shepherded the rise during the past six years of what is currently YouTube’s most subscribed channel, the comedy-centric Smosh, aimed mostly at young men. It has recently spawned two popular spinoffs, Shut Up Cartoons and Smosh Games.

The sense that the digital entertainment marketplace is maturing — and the gap between professionally produced fare and the DIY masses — was palpable in the halls of the Fontainebleau hotel this week. Netflix and Amazon didn’t have much (if any) presence here but both companies’ looming experiments with original, TV-style series were much discussed by NATPE-goers, particularly with Netflix’s David Fincher-Kevin Spacey drama “House of Cards” bowing on Friday.

The dizzying growth of mobile video and other options also led to some sobering discussions of how TV’s old guard will be impacted by the upheaval, and the viewing habits of a generation growing up untethered from the TV set for entertainment.

“Everything is becoming a screen,” analyst Richard Greenfield of BTIG Research said. “The whole framework for how video works is changing.”

Barnett, who spent 12 years at MTV and VH1 before launching My Damn Channel, said the tipping point for original digital series came last May at the “NewFront” events hosted by Google, Yahoo, Hulu and AOL. “That’s when these guys signaled to the market that they were going to be writing big checks to fund original content on a big level,” Barnett said.

Larry King was the poster boy this week for boldface names migrating to the online world for regular series gigs. He was tubthumping for international sales of his “Larry King Now” talkshow on the fledgling Ora TV online channel, which is distribbed by Hulu and funded by mogul Carlos Slim.

King’s push to bring in international partners for his show points to another question looming as digital production at the pro level expands. Who’s going to pay for it all? At present, digital entertainment is largely a single-revenue-stream business entirely dependent on advertising sales and brand integration. Even the major broadcasters have been able to wade into the dual revenue stream world thanks to aggressive retransmission consent dealmaking with cable, satellite and telco operators.

While the ethos of the Internet remains focused on free and unfettered access to anything that’s out there, bizzers predict more Netcasters will take a cue from Netflix and Hulu Plus and begin putting up a few toll booths in exchange for extra content or deeper access. Published reports earlier this week suggested YouTube may begin its long-anticipated entry into this realm.

“In the next five years I think you’re going to see a subscription layer begin to emerge for more content,” Levin said.

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