NBC Universal and other media companies are making some progress generating digital revenue.
"We're up to ‘digital dimes,' " said NBC Universal president and CEO Jeff Zucker, who had once lamented that media companies were myopically replacing "analog dollars with digital pennies."
Now, he said, his company and others in the industry are establishing ways to monetize their digital revenues.
"We've got to change our cost structure. We have to get to ‘digital quarters,' "Zucker said at The Wall Street Journal's D7 conference. He also acknowledged that the old sources of dollars will diminish, raising concerns that increased digital revenues may not offset declining traditional income sources.
In his wide-ranging comments, Zucker also said that the broadcast and cable networks will adopt new commercial approaches.
"We'll have better targeted ads, enhanced advertising that will be good for the advertisers. It will help everyone," he said.
Zucker also insisted that online video is not threatening conventional TV programs, but he said that, "Protection of intellectual property is one of the most important things" on his agenda.
Zucker said that Hulu, the online video service in which NBC-U is a founding partner, is "ahead of plan."
"We expect it to be profitable for us very soon," he said, but declined to be more specific. "It has succeeded in every r espect (but) we have to figure out the monetization."
As part of the effort to find new revenue models, Zucker said that Hulu might set up an advertising agency to create and place new kinds of commercials onto the site.
He also announced the formation of Hulu Labs, a new site within Hulu, which will ask consumers to help refine future directions of the online video service. Zucker also repeated his protectionist stance that will prevent Boxee software from being used to bring online video services, such as Hulu, to the TV monitor. Such an arrangement would allow the online feeds to compete on the same home screen with NBC, Fox, Disney and the other 150 content suppliers delivering content through Hulu.
Zucker also dealt with the shifting broadcast TV model, observing again that NBC now is "at core a cable company." He said that 60% of the company's profits come from its cable networks, "all of which had a record year."
"Our core competency is cable, and we'd look to expand if assets are available," Zucker said, noting that NBCU would consider buying if it cannot create new channels. He said growth could be "organic or non-organic. We wouldn't leave anything out."
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Contributor Gary Arlen is known for his insights into the convergence of media, telecom, content and technology. Gary was founder/editor/publisher of Interactivity Report, TeleServices Report and other influential newsletters; he was the longtime “curmudgeon” columnist for Multichannel News as well as a regular contributor to AdMap, Washington Technology and Telecommunications Reports. He writes regularly about trends and media/marketing for the Consumer Technology Association's i3 magazine plus several blogs. Gary has taught media-focused courses on the adjunct faculties at George Mason University and American University and has guest-lectured at MIT, Harvard, UCLA, University of Southern California and Northwestern University and at countless media, marketing and technology industry events. As President of Arlen Communications LLC, he has provided analyses about the development of applications and services for entertainment, marketing and e-commerce.