IF YOU CAN'T BEAT 'EM...
(Update: Interesting AdAge article following up on yesterday's Disney announcement)
You gotta love Jeff Jarvis' headline: "Exploding TV: Ka-bloom!"
Dramatic, and makes the point. Of course, he's talking about the Wall Street Journal article this morning going over Disney's big announcement, with the less dramatic, but also very descriptive title "Disney will offer many TV shows free on the web".
Full stop.
And Fred Wilson is right...it is big stuff.
Some excerpts from the Journal article are in order:
"Walt Disney Co. plans to make much of its newest and most popular programming on ABC and other channels available free anytime on the Web, in a move that could speed the transformation of television viewing habits and help revive the struggling TV advertising business.
On April 30, ABC will unveil a revamped Web site that will include a "theater" where people with broadband connections can watch free episodes of "Desperate Housewives," "Lost" and other hit shows on their computers. Episodes will be available the morning after they air and will be archived so people can eventually view a whole season..."
"Episodes of the ABC shows -- which can be paused, rewound and fast-forwarded -- will contain commercial breaks that viewers can't skip, making Disney hopeful it has figured out a way to turn the delivery of programs over the Web into a profit-generating business. Ten advertisers, including Ford Motor Co., Procter & Gamble, Universal Pictures and Unilever, already have signed up..."
Why is it different from what's happened so far? The announcement, according to the Journal,
"...marks a watershed: the first time a TV company is offering major prime-time shows free online without restriction. Until now, networks have brokered limited piecemeal deals in a bid to keep business partners happy and their traditional business models intact. CBS Corp. has come the closest to what Disney is planning, offering rentals of "Survivor" episodes on CBS.com for 99 cents."
So, what's the REALLY big deal here?
"Nearly anyone with a computer and a broadband connection will be able to watch Disney's TV offerings online. Still, Disney is putting such a huge volume of programming online that some analysts say it could spur sales of media-rich computers, as well as devices that transmit Internet content to be watched on most types of TV sets."
It's not just the "media-rich" computers, but also other, more portable video-viewing devices like the iPod, and the upcoming ultra-mobile, or UMPC format of tablet PCs from Microsoft that I've talked about before, along with other categories of consumer electronics.
Separately, it's not clear yet from the article, whether Disney will attempt to put any geographical and/or country locks on the content over the Internet. In other words, will viewers from anywhere in the world be able to access the Disney/ABC content, or whether it will only be available to US audiences at first.
A concern for Disney/ABC is the relationship with it's affiliates and production talent, as the article explains:
"Offering so much content online will probably ruffle some feathers. ABC affiliates, long accustomed to exclusive broadcast rights to new shows, are already griping that they don't profit from the network's deal with Apple. It could also fuel a fight with Hollywood unions, which are starting to talk strike over how artists are compensated as the networks' business models evolve."
Also commendable is that Disney seems to be trying to innovate on the ads, which as mentioned before, will be un-skippable for now:
"The ads won't look like typical TV commercials. For starters, instead of five commercial breaks during an hourlong episode, there will be three breaks lasting a minimum of one minute each -- all of them from the same advertiser. Mike Shaw, ABC's president of sales, says viewers will have a choice of what type of ad to watch -- for instance, a traditional video commercial or an interactive "game" commercial."
So, what's my major quibble with Disney's move today? That if you want any of this content, the only place you can get it will be at Disney/ABC's web-sites.
For now, it looks like Disney/ABC will keep all it's marbles and not share with the new kids on the media block, including Google Video:
"Key to Disney's online TV strategy is to keep tight control of programs, which rules out partnerships with companies such as Google Inc. that are moving into video on demand."
This of course will likely change, as the GYMAAAE companies and others try and come up with win-win strategies for content companies like Disney/ABC companies to work with them and expand the economic pie.
Umair of Bubblegeneration makes this point well in his post with the following comment:
"The point: unbundling media is only half the game: the value creation half. And it's exactly and totally the wrong half from a strategic point of view.
Rebundling is where value capture will happen - at communities, reconstructors, markets, networks - that direct people's attention to individualized 'casts. This is where branding will be reborn - and where advertising is already being disrupted, ripped apart, and reborn (viz, Google, PPC, pay per call, etc)
It won't happen overnight. But in the next few years, rebundling will be the future of connected consumption. Most often, it's why consumers connect in the first place: why do you think people <3 MySpace, Last.fm, etc?
By focusing on unbundling without rebundling Disney is getting edge strategy exactly wrong. They are handing market power to folks like YouTube and MySpace - literally just forking over market power..."
"But, like other media players, Disney fundamentally misunderstands this."
I'm more optimistic and hopeful than Umair that Disney understands this, but they've just chosen not to implement the "rebundling" strategy just yet. More of a "crawl before you can walk thing".
Not to make excuses for Disney, but they do have to manage all the negative repercussions for a whole array of existing business partners, and not spook existing shareholders by disrupting their current business models too fast.
For although this Internet Disruption thing may all turn out more positively for Disney in the long-run, the public markets especially prefer certainty over uncertainty.
And the form, economics, and indeed the very participants of these new "rebundling" strategies are still far from certain.
I do, however share Umair's general contention that in the long-term, the NEED TO TAKE the path to these "rebundling" strategies is most certain.
And of course, the incumbent TV distribution networks will also not be happy with this announcement. Again, from the Journal article:
"The "cable bypass," as CBS Chief Executive Leslie Moonves calls it, could have dire implications for cable and satellite purveyors because it has the potential to cut off the revenue they receive for delivering programming. Making shows available online also could undercut the on-demand services cable operators are rolling out."
That this is happening, and "cable bypass" is one of the disruptive outcomes of this is not a surprise. Many observers including myself have long talked about this.
What has not been clear is the pace at which this will happen, and which incumbent content companies will take the lead in making it happen.
That Disney is taking the first steps also should probably not be a surprise, especially given the "tech DNA" that is now being inserted into the company at the highest levels, with Steve Jobs going on the company's board soon and becoming it's biggest, individual shareholder, after the deal closes later this month, or early next.
And of course, today's announcement is more important as it's implications ripple through the operating and business model dynamics of Disney's competitors and peers.
All we have to do as consumers, is to stay tuned.
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