Television Is the New Television

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Television Is the New Television Page 13

by Michael Wolff


  It was cheap, but it was video. Hence, a step up. Premium content.

  In effect, the assumption was that this new kind of video—cheap, on-the-fly, guerrilla, anybody-can-do-it video—was a new form. Many of the advantages of television without most of the costs.

  Suddenly, there was a new sort of video maker, multichannel networks, essentially professional video makers imitating, as yet unprofitably, amateur video makers in order to attract YouTube traffic. (Several have been bought by established studios, not so much for their moneymaking capabilities as for their ability to seed YouTube with promotional videos for the studios’ real productions.)

  But success here (success such as it is) repeated the digital paradigm: every low-entry-hurdle advance is, in short order, adopted everywhere in digital media.

  While the advertising rates for this new premium product were higher than the price of the nonpremium general Web page product (ever continuing to fall), in short order the price of the premium product now glutting the market began to fall too.

  Hence, naturally, there became a market demand for what was inevitably called “premium plus.” That is, better, more original, higher production quality video.

  In some sense, digital media had morphed from its newspaper stage—The Dacron Republican-Democrat—into an early-cable-like phase (with a strong “public access” aura), a new world of low-cost video.

  And, similarly, the digital media hope, or assumption, was that it would now do to cable what it did to newspapers—it would democratize video, free it.

  But among the differences, newspapers had been a diminishing form for many years, with little investment or improvement, and digital media brought innovations in search and speed and access, if not quality. Cable, on the other hand, had been continually upgrading its product, to the point where its own large margins were under pressure from constant new production upgrades and higher budget thresholds. What’s more, it was unclear what technology, beyond streaming (television’s most basic functionality, with performance standards still significantly ahead of digital), actually brought to video. Other than there being vastly more of it (arguably a drawback as much as an advance), digital technology did not really enhance or change the experience of video—neither for the audience nor for the advertiser. Arguably it diminished the experience: lower quality and more awkward advertising integration (preroll was easy to avoid).

  Still, as though a promised land, almost everywhere digital media was turning itself into a cable-like business, but a lesser cable-like business (if cable was once lesser than broadcast, digital was now lesser than cable), and, of course, with more of it.

  One reasonable way of reading this is to see digital not on a hopeless path, but instead on a well-trod one.

  Cable began largely as the creation of infrastructure companies and then yielded, or its programming yielded, for better or worse, to entertainment companies.

  The laughable, low-rent, kind-of-quaint sensibility of cable’s first ten years yielded first to broadcast television’s cast-off and lower-earning properties, building an extraordinary new market for them (e.g., classic TV), and then, almost always under the tutelage of experienced programmers, into a recognizable but distinct television form.

  And, obviously, this is what is happening at Netflix, Amazon, Yahoo, and Google and Facebook to come. Media is an ever-tiered business in which you rise up, often at your peril, from the ordinary and amateur to the more proficient to, sometimes, the unique and original, and on to the slick and professional and then to the search for the one-of-a-kind, perfectly realized franchise.

  In this, digital becomes a video programming platform with more similarities to than differences from all other video programming platforms, partly a new competitor in the business, but also simply an expansion of it, highly reliant on the existing video product and talent pool.

  22

  REPACKING THE UNBUNDLE

  For every direction, no matter how strong, there is the potential, even inevitability, of the opposite direction.

  That is, in this instance, “unbundling.” Remember that television viewers rarely rise up en masse for anything, but a true groundswell has pushed HBO to offer their HBO GO service without having to have cable. Now that HBO has agreed to that, and ESPN has a package for cord cutters, the question has primarily become: who will be next?

  Bundling is, from the digital perspective, what’s wrong with media. And digital’s à la carte model is the historical inevitability that will defeat big media.

  In a bundled system you need to buy everything to get the select pieces that you want—that is, you’re forced to pay for what you don’t want (you may not watch sports, but you’re paying for them, boy are you paying for them, anyway). À la carte is the freedom to choose, and pay for, only what you want.

  The à la carte impulse is, in digital-speak, the motor of piracy, which has been the undoing of the music industry. Why pay for an entire CD when you just want one song? Such a new model, or freedom, has equally undone the print industry: newspaper and magazine articles now float freely and can be selected independently from the whole. Why pay for the whole New York Times when you just want one article—a reading approach that undermines the paper’s ability to spread its costs and to create a whole.

  That last is the traditional media response: be careful what you wish for.

  Bundling is the rational economic model for, in the end, providing you with more of what you want. Forcing the consumer to pay for, in effect, a blind pool of content (i.e., you really don’t know what you’re going to get) is a way to finance the new and untested, the mid-range, the worthy, the experimental, the duds, from which, of course, the hits arise. But if you just sell the hits, you can’t have the other stuff, which, in turn, will affect the quality of the hits. In a sense, Hollywood movies have become something of an unbundled world. Instead of a wide and serendipitous selection, it is a world of predictable patterns: sequels, remakes, and franchise films (what studios know the market wants).

  The new new golden age of television has happened because there is no precise accounting. AMC can produce Mad Men because AMC is part of the cable package, whether you watch Mad Men or not (and, relatively speaking, not many people do).

  Of course we live in an ever more hit-driven world, and that same demand for hits gives packagers the leverage to sell bundles—but it also strains the logic of the system. Why can’t I have only what I want?

  And not only is the system hard to rationalize, it is, for the bundlers, easy to take advantage of. Cable fees hover at what not that long ago would have been unimaginable levels because your need for one thing allows them to blackmail you into paying for it all. What choice do you have?

  Digital says you do, and you should.

  Little occupies the minds of many television executives so much as this threat.

  Not long ago, I arrived for breakfast with one of the most famous agents in the world—his third, or fourth, or tenth breakfast no doubt. As I approached, I saw he was with a recognizable, indeed iconic figure—and I hesitated, self-consciously watching Whoopi Goldberg take a sip of juice.

  “Whoopi,” said the agent, “you know Michael.”

  She rose with a kind of royal resignation and, not knowing me from Adam, said, “Yes, so well,” and took what she immediately understood was her cue to go.

  I replaced her at the table and the agent, leaning in, said of the increasingly past-her-prime star: “She is so fucked in an à la carte world.”

  Except that as much as it is a threat—pursued to its logical end like music, a few people make big sums, the rest of the industry takes scraps—it is a puzzle.

  Between the bulwark and the apocalypse—putting aside the fate of the music industry—there ought yet to be a lot of room to maneuver.

  And if there is a fundamental television talent, beyond popular narrative technique,
it is maneuvering for advantage.

  The digital side tends to see it, or at least cast it, not only as a music-like overthrow, but as a music-like certainty.

  But unbundling of music—wherein a great many consumers became accustomed to single-song choice in a very short period of time and, as though overnight, a single-song system was effectively put in place—caught everybody unaware. The television bundle, on the other hand, is a tendentiously debated affair.

  In addition to the digital position, there is the political one, driven by complaints about rising cable bills, which has raised the interest in unbundling. Everybody hating their cable operator makes them a safe target for mau-mauing by politicians—you don’t lose many votes when you do it. This leads to things like John McCain’s introduction of legislation in 2013 to force unbundling, as well as the FCC’s recent me-too interest in the topic.

  In a straight-up world, the prospect of more oversight and more regulation might otherwise be worrisome to an industry. But the unbundling debate tends to reduce to a cable-digital divide.

  There’s cable on one side, with its opaque packages and high fees; digital, on the other, with its promise of vast à la carte menus, but inevitably under the thumb and designs of secretive and hegemonic platforms. And, as a vastly interested third party, the producers of content, who benefit from bundling, depend on it even, but who benefit, in some cases with greater advantages, from many unbundling scenarios.

  In some sense, everybody is looking for leverage in their negotiations with cable (and satellite) providers: the digital players for greater speed at lower cost into the home; producers for great fees from content distributors (e.g., cable and satellite, but ultimately any distributors, including digital platforms). Political leverage can offer a real negotiating threat. On the other hand, it is in a sense home turf for the cable industry and particularly Comcast. A legislative and regulatory battle results, one might say with vast assurance, not in unbundling but in a renegotiation of the bundle—with, in the end, the advantages won or lost being unclear for years to come. (Already, FCC chairman Tom Wheeler is proposing that various OTT services be classified as multichannel video programming distributors—“MVPD”—meaning instead of being the new freewheeling à la carte providers, they’ll be subject to regulation too—meaning not only pushback from cable, but pushback from digital platforms.)

  What’s more, if the à la carte argument seems to have captured the high-road logic—why pay for what you don’t consume—the virtuous bundling argument is, more and more, being cogently spun. There are the extreme arguments that suggest nothing less than an entire breakdown of the video entertainment system, with one analyst, Laura Martin, at Needham & Company, doing an apocalyptic math that put something like $100 billion at risk—an I-dare-you-to-meddle form of argument to regulators. And then, for regulators, there is the perhaps more worrisome argument that changes in the television ecology might well make prices for the consumer go up rather than down, that not only will choice decline, but the aggregate cost for the consumer to assemble the content he or she wants will be more than the current package now. “For households filled with people of differing tastes or fans of many channels, this future could make the average cable TV bill—which hovers at around $90—seem like a bargain,” noted The Wall Street Journal.

  This is valid on some more and more obvious levels. The video world is unbundling and we can see some of the effects: at this point, more choice, but more fees. OTT offerings are in effect channels we’re adding to the cable bundle—the suggestion is that they are premium channels like HBO, but that is really not quite true. Netflix isn’t HBO right now, it’s AMC or TNT: a basic cable channel with a couple of headline prime-time shows backed by a library of rerun movies and TV series. The question is, how many of those separate (but really the same) services will you be willing to pay for? All of them mixing and remixing bits and pieces of the same library content.

  The underlying argument here is that the system is too complex, interdependent, and fraught for any sane person to want to mess with—the center holds because, if not strong, it is the devil you know.

  What’s more, the threats of unpredictable ecosystem disruption are also directed by cable companies against programmers—that is, cable systems themselves threaten to unbundle as leverage against programmers seeking higher fees.

  On the other hand, if it does shake out this way—vastly more segmented outlets—the potential opportunity here for the programmers is to create even more syndication outlets for their libraries, beyond what they have with the existing universe of traditional channels. Syndication, of course, became a much more lucrative business for owners of content libraries when the video world expanded from a handful of channels in broadcast to the one-hundred-plus-channel world of cable. Syndication in an unbundled OTT world might likely add greater levels to the three-dimensional chess game of pricing strategies and exclusivity windows for library content, as well as original programming.

  There is, too, in any discussion of the merits and inevitability of OTT choice versus the cable bundle the still incontestable virtues of the traditional infrastructure. At least in the near term, it remains a more reliable delivery mechanism for video—no network slowdowns that lead to stalled streams and spinning balls in the middle of your screen. In fact, in an unbundled world it’s possible to imagine the “old” tech (current TV) actually being marketed more as a “premium” service to consumers—in the way, in fact, that cable was originally marketed, as technology that gave you, finally, a reliably clear picture.

  Ironic that while there’s this discussion about programming being unbundled, the pathways through which consumers access this stuff are available at a heavy discount only if bought in a bundle of phone/Internet/TV from the telcos and cable operators. Theoretically these are all available to you unbundled, but at a much higher price if you tried to buy them separately—or exactly what the doomsayers are predicting will happen in an unbundled TV world. But it’s also an indication that the moment unbundling becomes official, we’ll get offers on rebundled packages of programming that will be significantly cheaper than buying à la carte.

  Unbundling is more accurately rebundling—sometimes in a more efficient way but, of course, efficient bundles tend sooner or later to become inefficient.

  FiOS, Verizon’s broadband service, is now bundling Netflix, along with HBO, Showtime, basic cable, and broadcast, into its Internet access package for $60 a month, whereas, on its own, Netflix costs $9 a month.

  It is easy to imagine in the OTT world of rebundling a far larger variety of bundle options than we currently get from our cable/sat providers—things like a twenty-five-channels-for-$25 option, where you get one or two premium channels that you really want bundled with the twenty-three collections of dreck. This is essentially what the programmers do already in their negotiations with the operators, forcing them to take their secondary channels, which they charge pennies per sub for, if they want to buy AMC or ESPN. It would just be applied more transparently to the consumer.

  But it is still bundling.

  23

  SINE QUA NON

  If digital wants to steal TV’s business, especially its big brand advertising, why are there no sports?

  Why not, in television style, bid for exclusive rights to stream a sporting event and thereby draw exactly those high-margin brand advertisers who so far have largely disdained digital media and kept it in the shadow of television?

  In fact, in the summer of 2013, shortly before the NFL’s billion-dollar Sunday Ticket deal with DirecTV was due to expire, Google and YouTube executives met with the NFL, as, many assumed, a prelude to bidding on the package. But the new price went to $1.4 billion, and Google retreated without making a formal offer.

  It may just be that digital media moguls and entrepreneurs continue to hope digital media will somehow find another avenue before making the ultimate programming b
et. Or it may just reflect an aspect of the small-time in digital media moguls and entrepreneurs. Digital media is mere retail banking, and sports is a high-risk and arcane financial instrument, requiring television’s cleverer and more cutthroat schemers.

  At any rate, there is no television without sports. As certainly, there is no sports, at least no mega–sports media complex, without television. This is a partnership on the level of gas and cars.

  Similarly, there may be no way to compete with television without sports.

  Sports is the purest media construct—the original and ultimate reality television. It’s news with a real-time cliff-hanger outcome. We know something is going to happen, we know when, and we know who is involved, but we don’t know what—and there is a built-in, obsessive audience that passionately wants to know.

  It’s all in the marketing handbook—or the marketing handbook was written on the basis of the easy byplay between brands and sports:

  The sports industry’s ability to generate popular live events has been invaluable to brand advertisers for decades, not only for their built-in commercial breaks, but for their seemingly endless inventory of in-event sponsor mentions, which began in more commercially innocent times but which persist to this day: while boomer Yankee fans fondly remember Mel Allen’s incorporation of “Ballantine Blasts” and “White Owl Wallops” into his calls of Mickey Mantle home runs on radio and television in the fifties and early sixties, their children and grandchildren have grown accustomed to seeing NFL field goals and extra points brought to them by the Good Hands of Allstate.

  That importance to brands has only advanced as consumers have gained an ever-increasing ability to time-shift and fast-forward through commercial breaks in other forms of programming. Even with efforts to insert unskippable ads into shows, the overall trend appears to be working inexorably against advertisers. Sports, however, exists only in real time—the ads are part of life, and, by this time, part of the sports experience and general bonhomie.

 

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