Business models for network TV are in the midst of fundamental change right now. The networks themselves are forcing some of the changes, and some changes will be forced on them.
Recent actions by Fox are emblematic of the changes being forced by the networks, who hope to create a second revenue stream. The first revenue stream has been the traditional advertising revenue stream. The second, which has been enjoyed by “cable” programmers (e.g. HBO, Discovery, ESPN, etc) for years, but has not been part of revenue stream for “network television,” would be to charge a monthly fee per pay TV subscriber per month. In recent months, Fox shut down their feed to DISH Network and to Cablevision, and there have been other shutdowns for this reason as well. In the end, Fox apparently will receive some kind of compensation because those subscribers again receive Fox, but the terms with DISH and with Cablevision were not made public.
I’ve been watching Google’s online forum for Google TV, and last week I began to post there. I continued to think about one of my posts, which then became this post on my own blog on December 17th. In response, one of the Google forum members asked: do local affiliates participate in online programming in any way? I didn’t think so, but I may simply be unaware. So I started asking around and in fact, the answer is currently “No.”
Technically, it wouldn’t be difficult to do. If an online viewer’s location can be pinpointed down to IP address by the access provider, the information could conceivably be conveyed to the TV network and then matched to the local market’s network affiliate, and even be used to enable online local ad-insertion. Location-based services are already enabled in mobile applications, and by IPTV operators (e.g. AT&T U-verse), but it apparently isn’t yet part of online TV.
It’s ironic, because the TV networks aren’t passing any of today’s online TV ad revenue back to their local network affiliates, enabling online viewers to watch the local affiliates’ programming, or enabling local ad placements – even though IP technology and location-based services make this possible technically.
And the story continues to unfold: according to a story in today’s New York Times (December 20 2010), Google has asked its partners to pull their Google TV products from CES (the International Consumer Electronics Show) in early January. Ostensibly, it’s to “refine” the software. Still I wonder – has the fact that the major TV networks are blocking their programming from Google TV caused Google to blink?
Earlier I mentioned that some changes will be forced on the TV networks. One of those is the emergence of Apps – which are likely to become the equivalent of TV channels, and may be the catalyst that finally forces the pay TV programmers to offer a-la-carte programming. Some will be paid, some free, some standalone and some available only via aggregators such as Hulu, Netflix, Boxee, and yes, Google TV.