NAB 2000 vs. 2001: New Directions in Las Vegas

Part of the Post-Mortem series
By Sean Chercover

At last year’s NAB convention, the television people put on a brave face. But make no mistake, they were sweating. Convergence was the culprit; Streaming Media the hot topic. Web geeks were peacock-strutting around Vegas, pronouncing the death of “old media” and proclaiming themselves the new kings of news and entertainment.

So what happened? In the last year, dotcom stocks have made the Brooklyn Bridge look like a sound investment, pink-slip parties have become the official pastime of Silicon Valley, and I still don’t have broadband.

Television folks, however, have no reason to gloat. At NAB 2001 the brave face was gone, the television-broadcasting crisis was acknowledged, and this time convergence was seen as a potential savior rather than an upstart competitor.

Crisis... what crisis?

For more than a decade, broadcasters, cable operators and producers have been whistling past the graveyard, pretending not to notice that the television industry is in a state of deepening financial crisis.

But at NAB 2001, the crisis was openly addressed at a panel discussion moderated by ABC newsman, Sam Donaldson. Simply put, the proliferation of outlets for television content, combined with alternative entertainment outlets such as video rentals and the Internet, have caused increasing “fractionalization” of the available audience. The resulting decline in ratings has caused a corresponding decline in what advertisers are willing to pay for airtime. Meanwhile, production costs continue to rise.

This crisis has been brewing for years, and broadcasters are no longer willing to pay the license fees for programming that producers have traditionally enjoyed. As production budgets shrink, so does the quality of programming. Or, “content” as it is now called. Whatever.

Why the dotcom gurus thought that an advertising-based business model was viable on the Internet — which has a virtually unlimited number of outlets for content — is indeed a mystery. They only had to look at the declining fortunes of the fractionalized television universe to know better.

Perhaps we can put it down to the hubris of youth. Or perhaps the easy money offered by profligate venture capitalists seduced them. Either way, the television-advertising model didn’t work for dotcoms, and it is no longer working for television, either.

Further exacerbating the crisis for traditional television is the development of Personal Video Recorders (PVRs), which enable viewers to skip commercials entirely. PVRs have not yet reached a level of market saturation to affect advertising revenues, but it’s just a matter of time. New cable set-top-boxes will have built-in PVRs. The Microsoft Ultimate TV and AOL TV boxes have them now. Television advertising rates can only decrease.

At last year’s NAB convention, IBM’s Steve Canepa made a strong case for convergence as the savior, rather than the downfall, of “old media.” He talked forcefully about the need for producers to repurpose content for multiple distribution channels, thereby creating multiple revenue streams.

You may think you’re producing a television series, Canepa explained, but you are really creating a brand. And this brand needs to be repurposed into as many different products as possible. It goes way beyond traditional merchandising, such as lunchboxes and action figures. A television series can be morphed into a feature film, a cartoon, a home video game, an arcade game, an interactive Web game, a CD-ROM, a comic book and anything else that is commercially viable.

While it is difficult to imagine The West Wing as an arcade game, Canepa’s point is well taken. Producers are now “content creators” and they must think in terms of “brand development” rather than “television deals.”

From the broadcaster’s perspective, the key for survival is to own as many of these distribution channels as possible, while taking increasing equity positions in content creation. The AOL/TimeWarner merger is an extreme example, but the increasing vertical integration of companies such as the Tribune Company offers a realistic road map for others to follow.

Last year, many producers were resistant to this radical change in philosophy. They didn’t want to be “content creators.” They didn’t want to make interactive video games. And many, if not most, viewed the proposed unholy alliance with the Internet as the death-knell of television.

At NAB 2001, those same producers were eager to grab the lifeline represented by convergence. Why the change?

iTV... convergence without tears

After a decade of big talk, broken promises and false starts, interactive television (iTV) is finally here. Producers can relate to iTV in a way that they couldn’t to the Internet. And frankly, they now realize that they are running out of options.

While streaming media was the darling of NAB 2000, iTV was clearly the big topic this year. Microsoft TV and AOL TV are the North American pioneers in this fledgling industry, and with their deep pockets, you can bet it’s not going away this time.

Trying to pin down a definition for iTV proved more difficult than you might think. It seemed like every dotcom with streaming video on their site was trying to re-brand themselves as iTV. PVR manufacturers were calling themselves iTV. By the end of the week, iTV talk was everywhere, and you couldn’t cross the casino floor at the Venetian without tripping over a dozen self-appointed “experts” on the subject.

“You gotta be careful,” said Greg Rossetti of Extend Media, which really is in the iTV industry. “A lot of Internet guys are trying to shake off the dotcom stigma, so they go around calling themselves iTV. But it doesn’t mean they know anything about iTV.”

For clarification, I paid a visit to Skip Pizzi, technical manager of worldwide TV standards and strategy for Microsoft TV.

“It’s true, the definition of iTV is getting pretty slippery,” Pizzi said with a laugh. “PVR is not iTV, by a strict definition, but people think of it that way... but it does allow time-shifting; live pause, live rewind and fast-forward, slow motion... we call it ‘personal TV.’”

Pizzi calls PVR functionality “the point of the wedge,” which will attract most consumers to the Microsoft Ultimate TV set-top box. “And once they have it, they’ll be exposed to real iTV.”

“Viewers will become comfortable with interactivity one step at a time,” added Pizzi, “so something like EPGs [electronic program guides] and pay per view, video on demand... those things are not really iTV, because the only interactivity is whether to show something or not... but they get people used to interacting.”

Pizzi says the first level of true interactivity is “enhanced television,” which includes a back channel and enables viewers to play along with a game show, take a live poll, purchase things, or even change camera angles, all with a push of the remote button. “Then there’s the last level, which includes browsing the Web and doing email on your television,” he concluded.

Where’s the killer app?

PVR functionality will get viewers in the front door of iTV, but where’s the “killer app” that will keep them? The television is not a good place to view text-heavy Web sites or to read email, and it won’t be, at least until we all have HDTV in our living rooms.

Having control over camera angles is a mildly interesting novelty... for a few minutes. But watching this demonstrated on the NAB showroom floor, I couldn’t help but ask, “Why would I want to do that?” Isn’t that what they hire a director for? To think that the ability to change camera angles is going to save the television industry is, well... nuts.

The general consensus at NAB 2001 was that T-commerce is the initial “killer app” of iTV, at least for the broadcasting community. More important than the ability to buy over the television (which can now be done with a phone call to any shopping network or infomercial call center) is the ability of advertisers to collect information about the viewer and then “hyper-target” future interactive advertising.

This unprecedented targeting ability, coupled with the ability to accurately measure viewer response, will make up for dwindling ratings, according to iTV’s proponents. Maybe. But as impressed as I am with iTV’s potential, I suspect that the killer app is yet to be discovered.

Bringing it all together

For me, Ashley Highfield, president of the New Media division of the BBC, stole the show at NAB 2001. His demonstration showed the potential of true convergence. The BBC has developed a broadband portal, which will integrate with their iTV offering to create something totally new.

Highfield explained that, while the BBC enjoyed huge success with their computer-animated documentary series, Walking With Dinosaurs, the cost of production made the series unprofitable. “What we’ve found at the BBC is that you can no longer just commission a series,” he said. “You have to commission a project that includes all media.”

The BBC is putting into action exactly what Steve Canepa was describing to a reluctant audience, last year. The new season of Walking With Dinosaurs will consist of a documentary series, a “the making of... ” documentary special, a “the science behind... ” documentary special, a Web site, an interactive game, and even a game show. It will premiere by the end of this year.

The “content” will be repurposed for no less than six different sub-projects, thereby spreading out the cost of production and enabling multiple revenue streams. Highfield adds that they are looking at other merchandising opportunities, as well.

The iTV component will allow viewers to set their PVRs to record the shows, play the interactive game on their televisions, watch other people’s games and vote on the best gamers, who will then compete on the game show. Viewers will also be able to send a quick email to friends, reminding them to watch or encouraging them to take part in the game.

Finally, after all the talk and all the hype, we get a glimpse of television’s future. Clearly, the BBC understands convergence and is putting it into practice.

Workflow implications

The ability to add interactive functions and to efficiently repurpose content for multiple distribution channels is a direct result of the digitization of media. In digital form, media becomes infinitely malleable. Metadata can now be attached to any piece of media, and that is going to forever change the way we work.

Online collaboration is quickly becoming an everyday reality, through the implementation of virtual production environments. Digidesign® Pro Tools® users can now collaborate in real-time, regardless of distance. Avid editors can use the AvidProNet™ Review & Approval™ service to streamline the post-production process. Project management functions, such as scheduling and billing, will soon migrate to the Web.

These developments will lower production costs and increase efficiency, freeing our time to concentrate on the core of what we do... making entertaining and informative television shows.

The road to hell...

Or maybe not.

Industry leaders now describe television shows as “content” and producers as “content providers.” They talk about iTV giving viewers “the power to shape content.” But television shows are not just content. They are newscasts and dramas and comedies and, sometimes, even art.

I don’t want the ending of a story to be chosen by an interactive poll of the audience. I want a talented and intelligent writer to decide how the story ends, not some pimply-faced teenager. I don’t want to choose the camera angle... I want a talented and experienced director to use his talent and experience to tell the story. And I resent advertisers trying to look inside my head and build a database of my likes and dislikes.

Maybe I’m just getting old. But I don’t think that’s it. Behind all the pretty talk of “democratization” is a base and relentless drive to reach through my television and directly into my pocket, and separate me from my money.

In this brave new world, the quality and meaning of the “content” that keeps me staring at the television is irrelevant, just so long as I keep staring. And the products that are being advertised are irrelevant, just so long as I keep buying.

I’m not against profits. I think profits are great. But I’m old enough to remember when producers didn’t make “content”; they made television shows. Companies made products and then used advertising to sell them. Now they make advertising. The products themselves are a secondary consideration.

It’s a slippery slope, kids. Maybe next year, if we’re lucky, the talk at NAB 2002 will encompass how to use these new tools to create quality television shows... and not just “content.”

Sean Chercover sean@chercover.com is a freelance writer and video editor. He plans to create multiple revenue streams by repurposing this content for multiple distribution channels.

The company, product or services names referenced above may be trademarks or service marks of their respective owners.

 [top of page]