Broadcasters are about to experience the equivalent of the Big Bang, warns Akamai Technologies CEO Paul Sagan, a broadcast and cable veteran whose company facilitates more than one-fifth of the world's Web traffic.The ability to match high-def TV picture quality with Internet interactivity is creating a sea change for online video that will begin rippling through the television industry in 2010. Only TV station owners that leap to the new arena, playing the strength of their hyper-local connections, will survive.
"The dominos are going to fall. The television industry is going to feel the impact of the Internet that music and print have suffered through," Sagan told MediaPost. "It will change everything about television production, distribution, advertising -- where revenues come from and how wealth is created."
Traditional content producers and distributors that are among Akamai's deep client base are in peril; their audiences are rapidly migrating to the Internet. Too many broadcasters are obsessing about cannibalizing their content instead of using the efficiency and convenience of interactivity to expand their local power base.
While increasing numbers of TV stations are going online with real-time and on-demand local news, sports and other live events, they do not have the interactive online advertising in place to fully monetize their content. Some major broadcasters are aggregating their digital spectrum for long-term lease to outside businesses. Or they are creating a virtual DVR-styled content service in order to prevent the Feds from reclaiming it for the national broadband initiative. Many TV broadcasters are paralyzed by debt or a rigid mindset, unable to convert online.
I would expand on this - they not only do not have the advertising set up but they lack a coherent plan. This is not simply a move from air to web. It is a mindset revolution.
Their programming has to have a strong social attraction - content on it's own will not be enough. This is why KETC is experimenting with Gearing Up - where they work with the many communities of kids who participate in the First Robotics world. And why KETC has pioneered true social engagement where it has helped facilitate the establishment of local networks of support to help people get through the economic crisis. Why KETC is training kids to use video to tell local stories.
What no one has dealt with yet are the organizational and cost issues of the revolution.
Many claim rightly that there is not the revenue in the new yet to cover the costs of the old.
This is the Newspaper Issue - so long as all the legacy work and costs are in place the costs are too high. No new process starts with the revenues to pay for the old.
So what to do?
I am starting to think that station managers need to split their organizations into two parts. Today the new hides in bits and pieces throughout the old. Make a new organization that is all about the new and put the best person in charge. Work out what it has to achieve and how to measure.
At the same time make a coherent organization out of the old. Do your costs cutting here. Make this organization as efficient as possible. In a way Greenfield it - do not accept any assumptions about "we always have done it this way".
Now you have a portfolio of the new and the old. Both will have to perform. Resources in the end will have to move over time to the new.
If you do not do this, then the inertia of the old and the power of the old will drain from the new.
It's the GM SUV and Truck issue. "We make most of our money from SUV's and Trucks" So this is where the attention and the power resides. The future gets to die.
