I'm Matt Holzman with The Business Brief, a guide to what's happening in and around the business.
At the end of April, Disney, which owns ABC, announced that it would become a partner in the television web site Hulu. So now, Hulu has three of the four major networks on board, and they have those great commercials with Alec Baldwin. But does Hulu have a future?
If you haven't visited recently, Hulu makes it possible to sit on couch with your laptop and watch tons of stuff from the broadcast networks, cable networks like MTV and producers like Sony Pictures TV. It's generally user friendly and works pretty darn well. And for now, all the content is free. CBS, for it's part, has its own streaming service at TV.com.
Although NBC honcho Jeff Zucker recently announced that Hulu would be breaking even “soon,” that's really not saying much, considering that right now it seems like they don't pay anything for any of their content. But even if they manage to keep the venture from being a major money drain, the site will continue to trade network TV dollars for Internet dimes for the foreseeable future. It's actually Internet pennies, but dimes is more alliterative with dollars.
But you gotta' give ‘em credit. The networks are stepping valiantly out of their comfort zone and into an unknown future to avoid the mistakes of the past. No one – and I mean no one – has a bead on the Internet end game. Technology, the business environment and consumer behavior are changing so fast that even Merlin's crystal ball would be cloudy on this one. And so the networks have made this decision to go on-line even though they cant give show producers and advertisers any assurance that they know how they'll turn the whole deal into a moneymaker. They can't even promise that their web site won't steal viewers from their own advertisers on TV.
Which reminds me of when KCRW made its first foray onto the web. In the early ‘90's, I heard that our GM and management consultant were planning to spend money on a website, whatever that was. And I screamed but what was the business model? How are we going to make our money back? I have a degree in computer science, and our GM didn't even really use a computer at the time. But I was dead wrong. Though KCRW still have a business model on-line in the traditional sense, the web has expanded the awareness of the station dramatically, which in turn has brought the station more listeners, which in turn has brought in more subscriber revenue.
Now, I'm not saying that the TV people should hold a pledge drive. What I am saying that there is a business model out there even if the networks and advertisers don't know what it is. But to survive to see that day, the networks are going to have to be as bold in all parts of its business as they've been by stepping blindly into the on-line abyss. And they may have to change their thinking about their business altogether.
That may mean that they have to let go of the idea that a TV show has a set length. Or somehow meld TV shows with video games in some way. Maybe there will be game shows where the viewers are the contestants. I don't know the specifics, but I do know that TV people have to give up on the traditional idea of programming and scheduling and try something new. Another expensive one hour police procedural is just not going to cut it.
Perhaps most painfully, they may have to give up their main claim to fame: that they're still the single greatest aggregator of eyeballs for advertisers.
They really don't have much choice. Network TV audiences are dwindling at the hands of the web, video games, DVD's and cable balkanization. DVR's make skipping the ads easy. Add the downturn in the economy and the resulting decline in ad revenue and you have a perfect TV storm.
Actually, I guess they could do nothing, like the record business, which just stuck its head in the sand when things got bad and prayed that everything would work out. But that plan didn't turn out so well, did it.
I'd love to know what you think. You can comment on today's commentary or subscribe to the podcast at KCRW.com/TheBusinessBrief. For KCRW, I'm Matt Holzman.