COMMENTARY: What is Happening to Our Network Television Model?
Issue: What Becomes of Advertising as Web Video Becomes Mainstream?
Commentary by: David
AdAge reported yesterday that ABC will release hit shows including Lost, Desperate Housewives and others on its website. These videos will be advertising supported. Disney CEO Bob Iger noted that the advertising on the web video would not necessarily be the same as on the network broadcasts. He did not specify whether the video would be downloadable or streaming.
It is hard to imagine that just twelve months ago, conventional wisdom held that whatever the future, network television was thriving. Then AdAge pubished “The Chaos Scenario” by Bob Garfield which suggested that the network model was about to explode and the wreckage could be messier than people expected. Shortly after, Procter & Gamble, the pack-leader amongst CPG companies announced that they would be moving a significant portion of their network television budget to other vehicles. Then when Apple released the video iPod and started selling new episodes of Lost and Desperate Housewives for $1.99 the day after they aired and Google and Yahoo almost immediately joined the effort, all hell broke loose.
There are two big unanswered question in the middle of all of this chaos. First is the question of whether this diffusion of media will kill network television or boost it. It is not impossible that the effect of video coming online will do for network television what the VCR did for Hollywood: promote it. But it could also fracture the viewing audience enough that networks will no longer be able to survive on the conventional advertising-supported revenue model.
The second question is what the role will be for advertisers with online video. There are a couple of possibilities:
- The iTunes Model - In this model, advertisers get cut out as there is a direct payment made to the content provider through iTunes.
- Online Video with Commercials - What ABC has announced is a literal translation of the current network model online, with commercials placed in the video.
- Other advertising model - Sponsored video, linked promotions, click-able product placements and other solutions to-be-devised.
Of course, we wonder what will grow to be the big new idea in option #3. As advertisers, option #1 is not at all appealing - it cuts us out of the equation entirely. On the other hand, we are not at all certain that a direct translation of the network television model with TV-like spots running during the web video will work for online content. So the question is what are the options, and how are they being created?
It will be a fascinating next twelve months as we see the continuation of chaos and hopefully the emergence of some order. One thing is for certain: our viewing habits are about to change.
NOTE:
This Advertising Blog is actually putting our money where our mouth is on this question. We are co-sponsoring a conference in New York on April 25th with the Business Development Institute. If you think you have an important opinion or contribution, let us know.
