Drowning upstream

Here’s what I think is a pretty solid business tip: I wouldn’t back or bet on a company and industry that’s described this way in today‘s New York Times (my emphasis):

Like newspaper owners, media moguls are looking for new ways to protect their investment from the ravages of the Internet. And, as with the newspaper industry, the answer remains elusive.

I’d rather invest in a company that will take advantage of the new opportunities of the internet, not seeing ravages in the future but instead growth and profit. I’ve said often that protection is no strategy for the future. An industry whose strategy for the future is built on trying to keep us from doing what we want to do and resist the flow of the internet is an industry that is merely biding time. That should be the lesson they learn from newspapers and music.

Yes, I think that the tactic described in that story, put forward by Time Warner’s Jeffrey Bewkes, of enabling us to watch shows we’ve already paid for online makes sense. Indeed, I refuse to use HBO on demand on cable today because they want to charge me extra to watch what I’ve already paid for. So I’ll rush to the chance to watch my shows without having to go through the bother of recording them or paying for them twice.

But the real future is an on-demand future, an unbundled future. Once freed from the forced march of cable bundles, I will buy only the content I want to buy online, no longer being bribed into supporting the 90 percent of cable channels I never watch so I can get the 10 percent I want.

For that matter, what’s a channel? I was an an event last week with entertainment moguls of various camps and one asked another whether the channel would die. The second exec didn’t think so. At first, I agreed, as I pictured myself on the couch watching one of the channels I do care about.

But then I pictured my kids on the couch. They’re not doing what I do. They never just watch channels (tennis matches excluded). They live on-demand. They watch programming only through the web, Hulu, the DVR, on-demand channels. Some look at that future, our kids’ future, and see “the ravages of the internet.” They’re not long for this world; they’re only trying to delay the inevitable. They’re trying to swim upstream against the internet. But they’re only going to drown there.

  • Marko Faas

    I wish that the Dutch miniter of Education, Culture and Media hired you for a report on the state of the Dutch media, instead of Mr Brinkman, who wrote in an official report that the use of internet should be taxed to pay newspapers.

    • Yes, Marko, that is truly one of the worst ideas I’ve heard. Jeff should start a “Worst Idea of the Week” category and launch it with taxing the Internet to pay newspapers. :)

  • Cable TV can try and protect itself but the world is changing and they will fail. Old distribution methods are falling away in video, as they are in written and audio media. Satellite and Cable TV will hang on for another 5 years but their future is bleak.

  • I am constantly amazed by the fact that people can’t seem to understand that the “ravages of the internet” and the effects of other technological innovations are largely inevitable and unstoppable. At best you can slow things down, but raw economic forces cannot be resisted indefinitely.

    We *know* today that the “channel,” as currently defined, will eventually die. The only question is: “How long will it take?” In the future, rather than transmitting the same content to all system subscribers, what we’ll have is “all-on-demand-all-the-time.” The Cable providers will become just ISPs. Each subscriber will choose what content flows to them. This is not a guess. It is what will inevitably happen. It is just as inevitable as the decline of news on paper, photos on film, music on physical media, movies on tape or only in theaters, etc.

    Sometimes, we can see the future long before it happens and sometimes others who see the same future can act to slow its arrival. But, the best they can do is slow things down. For instance, my grandfather worked on “on-demand” delivery of movies to home televisions back in the late 1940’s and early 1950’s (Zenith’s “Phonevision” had several hundred subscribers in the Chicago area for a short period.). It was clear even then that on-demand movies were inevitable. The mere fact that it took 40 years before the technology became widely deployed is irrelevant. My grandfather’s problem wasn’t in seeing the future, it was only in not realizing how long it would take to arrive.

    The impact of technological innovation is largely inevitable. Those who resist the inevitable will eventually fail. At best, they can only hope to delay change until after they retire or otherwise cash-out.

    bob wyman

  • Jeff,

    I would like for someone to redefine the channel so that a channel becomes learning content listing service. The closest metaphor that I can point today is Amazon. They have the personalized store that suggests items that I would like to buy based on my past history. I’ve seen Tivo try to do this, poorly. My “Channel” would be based on my watching habits but it would also be based on suggestions that I get from “my Friends” in my “TV Social Network”. So we can suggest shows to each other and even send each other clips from our favorite shows.

    Will this happen via Uverse, Satellite or Cable? I doubt it. Maybe Hulu or youTube (Google) will get us there one day. The lawyers and the TV companies that they represent will not go easily. One day soon TV, as we know it, will be in the same position that the newspapers are in today.

  • Well itunes is already capitalizing on these unbundled packages. However, what’s missing is the big screen quality–watching something on a computer is not the same experience as a home theater or a movie theater. It should be offered in a different way, like what you say.

    I don’t think that younger people miss this as much, though. For most of their lives they have been consuming in this way–there have always been DVDs and computers that play DVDs, playstations, etc. How can the channel not die? Who loves CHANNELS? There are a few exceptions of channels who do inspire brand loyalty, like maybe Animal Planet, the Food Network, Cartoon Network, (maybe MTV) where everything is generally really similar, but highly dispensable. It’s dead.

  • A lot of us who are older than about 25 like channels because they’re our friends in a way. If ESPN or CNN or a baseball game are on in the background, I feel like someone is there with me. Playing a pre-recorded thing or an on-demand thing doesn’t create the same feeling.

    But I also realize that for people who are native to the on-demand world, this just isn’t the case. One of my younger employees cut her cable and just does online video and Netflix.

    So overall I’d say “channels” may be a vestige, but “trusted creators” of content are certainly not. In fact, more than ever, people could rally around certain creators of content, regardless of what distribution platform they happen to be on. Whether it’s Josh Whedon, J.J. Abrams, ESPN or Jib Jab, WHO made the content is going to be more and more important than WHERE it is displayed.

  • Great post.

    I would love to be able to describe existing media companies as follows:

    “Like newspaper owners, media moguls are looking for new ways to increase return on their investment given the rapid growth of the Internet.”

    “Channel” was just shorthand for the business who owned a particular part of the broadcast spectrum. It should have been dead a long time ago (since cable eliminated the need to own a chunk of spectrum). How about “content curator”?

  • Hear, hear. I agree with your main premise, which is that a cowardly business strategy is no strategy at all. Protection is a long-term detriment in any form; I can’t help but think of tariffs and domestic job protection when I read this post. If the market’s going somewhere, we better lead it and not run away from it–let alone attempt to hold it back.

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  • Jeff – I don’t know how old your kids are. Mine are 9 and 6, and I can tell you that even though they use On Demand quite a bit, they most certainly have channel (read: brand) loyalty. Anything on the Nickelodeon channel is worth watching (the other night, I found them watching Home Improvement reruns, simply because they were on “Nick at Nite”). And, of course, the Disney Channel. Anything on the Disney Channel is instantly recognizable and granted a certain amount of “cred” with my kids.

    As for the bigger kids, I think ESPN is a good analogy. Also, you can’t tell me that it doesn’t matter if a news/interview show appears on FoxNews or MSNBC, right? Those channels are happy to mess with our national political dialogue to define and keep their brand loyalty.

    It’s not that I totally disagree with you. I think the days of pre-programmed TV schedules are in dinosaur mode. Actual, physical channels (tune to #232 for NBC) will probably go away as well, replaced by menu-driven content categories – much the way On Demand is structured now. But those content categories are the channels. They lend credibility, manage expectations, define social networks, etc. – just like their online counterparts. Heck – even Facebook has “channels,” as defined by how you categorize your friends to read your news feed. I’m more than happy to kick back with my “Friends from College” channel for a couple of hours once in a while…

  • Joss Whedon is a great director, most of the science fiction series that i love are created by him.*;,