Old Media Gets New Boost

It’s been said that technologies generally take longer than expected to be adopted, and that when they finally hit the mainstream, they change the world in ways few people imagined.

That adage will be particularly important in 2011, as some older technologies, such as high-definition television, continue to slowly transform the industry, and technologies such as mobile and online delivery of video move into the mainstream.

Usage of online video hit record levels in 2010, but “total online video consumption represents less than 1% of total traditional TV consumption when you are talking about professional content,” says Brian Weiser, executive VP, director of global forecasting at Magna Global, who is projecting that online video advertising will grow by 25% to $1.7 billion in 2011.

But as Wieser and others stress, 2011 is likely to see some important developments. And two technology deployments—one massive, one obscure—will be crucial.

The former is the TV Everywhere initiative by multichannel providers to allow their subscribers access to tens of thousands of programs online and, ultimately, on mobile devices. “It’s a big deal,” notes Jack Wakshlag, chief research officer for Turner Broadcasting System. “TV Everywhere [platforms] will be available in 70 million homes in 2011.”

Many programmers such as Turner are embracing TV Everywhere because of a more obscure development: After years of work, Nielsen is in the process of deploying a system to deliver combined TV and online ratings. Programmers will get preliminary reports in January, and the system will go live by mid-March, though the first official reports won’t be delivered until late April or May, notes Matt O’Grady, executive VP of product leadership at Nielsen.

Because programmers will get full credit for online viewing as long as the content is viewed within three days of its broadcast airing, and they run the same commerical load as linear TV, this will strengthen the traditional TV business and encourage broadcasters and cable networks to make more content available online. But it is also likely to put pressure on Hulu and Netflix to reexamine their business models.

Programs on Hulu’s free site contain fewer ads than broadcast, so viewing won’t be counted in Nielsen’s combined ratings, making it likely that the free part of the service will have to change its ad load.

With traditional business models spreading to online content, Netflix may be forced to add advertising, creating subscription tiers with commercials if it wants to compete for rights. “You have $100,000 per episode being offered by Netflix, while you can get a million or more per episode in syndication,” notes Brent Horowitz, VP of business development at online ad specialist FreeWheel.

Meanwhile, overall TV viewing continues to grow, thanks largely to a somewhat older technology—the high-definition 1080i images that were first tested by Japanese public broadcaster NHK in 1969.

Hi-def wasn’t developed in response to digital media—the first HD tests were analog—but it’s now having the unintended consequence of futureproofing traditional TV against other video platforms. “It’s gotten people back into the living room, watching those big-screen TVs,” says O’Grady.

An amazing amount of HD work still needs to be done, however. Only 25% to 35% of local broadcast stations have launched local HD newscasts, and only a third of broadcasters were even equipped to take HD ads as of the third quarter of 2010.

That means low-cost technologies for HD upgrades, or technologies for centralized or automated operations that can reduce costs, will once again be in vogue as broadcasters head to the National Association of Broadcasters convention in April. Here, two less widely discussed trends will be important to keep in mind: a faster move to IP infrastructure, which runs on less expensive gear; and cloud-based solutions, which require less capital and are cheaper to operate.

“The cloud is going to be the next big wave of computing in the media and entertainment world,” says Gabriele Di Piazza, managing director/ media and entertainment in Microsoft’s communications sector. Microsoft is working with such media operations as the Associated Press and Tribune on cloud-based solutions for multiplatform content delivery.

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