NAB 2003 Report: Free TV Contemplates ‘Pause’ and Paid Revenue

(by Peter Krasilovsky, Borrell Associates): Free TV has been a holdout to the paid content wars that have subsumed the Web, cable TV, wireless data and games. But many of the 89,000 broadcasters attending last week’s NAB confab in Las Vegas made it clear they are now looking to win a piece of the paid revenue pie.

Prodded by the FCC to digitize their signals and catch up with cable and satellite networks, broadcast stations have been forced to look beyond the free ride they have been receiving on cable TV systems. Instead, they are contemplating co-habitation in an era of personal video recorders such as TIVO, video-on-demand and addressable set top boxes–all of which have ‘pause’ attributes that compromise broadcasters’ current reliance on mass media advertising.

Today, 13 percent of homes have pause/rewind/fast forward capabilities, notes David Tice of Knowledge Networks/SRI, Cranford, NJ.”That’s up from 4% in 2001. And they are willing to pay $1.36 per month for such capabilities, just a little less than they would pay for interactive program guides ($1.64) and pay-per-view ($1.46).”

Tom Morgan, President of DiMAS, a San Mateo, Calif. based researcher, notes that “features such as fast forward, pause and overlay generates new functionality and consumer control. It also impacts the 30 second ad.” Morgan suggests that all the new technology is converging together to transform the broadcasters’ traditional “channel” concept into a “zone” concept. “You start with pause and take it from there. We’ve never seen it before in broadcasting. But the Web sees it all the time.”

Morgan predicts that “back end” revenue streams may come for broadcasters from different types of advertising that take advantage of embedded technology, as well as paid programming. There may be broadcaster-generated affinity or “passion” blocks on video on demand, for instance, he noted…

Meanwhile, the impact of video over the Web has begun to register, possibly squeezing broadcasters in yet another way. Broadband users, for instance, are now watching roughly seven video streams per month, according to Paul Palumbo, president of Accusteam imedia of Seaside, Calif. Palumbo sees a 50% growth rate for video streams, possibly coming at the expense of free TV. He also notes, however, that the growth rate has been somewhat stifled by premium providers such as Real’s SuperPass , AOL broadband and Yahoo Platinum putting content behind firewalls.

The (streaming) market is typically dominated by large media brands like AOL, Yahoo, MSNBC and ESPN, pointing to the next generation’s broadcast rivals. “But good programming ideas can capture audience share quickly,” he adds, citing BMW Films, and others.

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