With television facing increasing competition from the internet and other interactive entertainment, digital media is becoming an increasingly important component of the Banff TV Festival. The “Digital Heavy Hitters” panel gathered some of cable’s biggest power players together to discuss how they’re both responding to the digital challenge and embracing it to extend their brands.
David Purdy, VP of Television Products for Rogers, started off by saying what keeps him up at night is how to maintain a subscription service in a “republic of users” climate. He said Rogers is changing the $70 a month for cable model to a “anywhere, anytime” access model across various platforms. Karen Gilford, who runs Fancast.com for Comcast, said television has gotten ahead of consumer demand, and unlike music, you can’t create high quality TV in your garage. But she worries that the cost side for television hasn’t budged, so there has to be a course correction in the TV business model. She pointed to Jay Leno moving to an earlier time as indicative, as it eliminates the cost of five other shows that no longer have to be produced. Gary Carter of Fremantle (who delivered a keynote at nextMedia) said what keeps him up is the question of what it means to be a creator of entertainment in the 21st century, whcih is by no means an easy question to answer. Carter said they’re exploring how the companies brands (Idol, the “Talent” franchise, and many soap operas) can be spread into the new digital medium. As well, Fremantle’s FXM experimental division creates non-television properties and then works them back into TV.
Ron Berryman, the VP of Fox Interactive Media’s Digital Publishing Group, said the company is pulling their film and tv components back and seeing how they can distribute their properties in different ways. Berryman namechecked Hulu, but said that other properties could work on subscription models, such as Family Guy, which has a ravenous fan base. Interestingly, Fox is trying to use as much metadata as possible in order to track and analyze what happens to their content in the wild.
Gilford said that Fancast gets content from many different providers, and that means they have to integrate many different digital media players, involving many technical difficulties on the backend which have to by invisible to the end user. Comcast is also working on on-demand online, so that Comcast subscribers can get access to all their cable content from anywhere. Fancast is also intended to build community, she said, and not simply be “host and post.” She noted that once content moves online, decision making also moves online. The next wave, she said, is the consumer using the internet to sift through all the TV content they have access to.
Purdy said the main trends Rogers is responding to is HD, whether its on cable or online, as well as distribution. Bittorrent is big in Canada because there aren’t legitimate ways to find video online in Canada, and that has to change, he said. Rogers is also responding to the long tail phenomenon. You can’t have a closed system that doesn’t let the customer roam freely and grab content from anywhere, he said.
But how to pay for all this change? Purdy said they always try to add more value, then ask users to recognize that with a price increase down the road. But they aren’t sure they’ll be able to do so down the road, so they’re concentrating on the advertising revenue, including dynamic ad insertion.
Carter said he’s very unconvinced that there’s enough advertising money in the ecosystem to sustain everything, and termed the landscape “pretty chilly.” The recession is the precursor to some pretty significant change, and that levels won’t go back to where they were and even if they do won’t grow like they did. Subscription will have to be the future, he said, which means the consumer has to have a greatly simplified experience that delivers everything, instead of the fragmented “walled garden” model. Further, the sense of what the industry believes is quality will change, because the consumer has a different idea of what defines quality, and at any rate expensive programming like fictional entertainment will have to get cheaper.
Gilford also pointed out that the total advertising revenue on the internet, while growing, isn’t anywhere near what TV advertising has been at in the past, so as of right now the numbers just don’t add up.