The genie is out of the bottle

It may seem hard to believe now, but in the no-so-distant past, when people want to watch moving pictures, they had to get in the car, or on a trolley, and go to a movie theater.

That was the only game in town…

When television was introduced commercially in the late 1940s, it took an immediate and painful bite out of the movie theater business – and then things got worse.

Today, the average person spends only one-sixth – that’s 16% – as much time in movie theaters as his pre-televlsion ancestors did.

You can still see signs of the sudden wreckage of the movie theater industry in small towns and inner cities all over America.

Here’s what interests me about this story…

I can virtually guarantee that as late as 1945 no one in their wildest imagination would ever have predicted what actually happened.

— Cable TV: The Many-Headed Hydra – Part One

The Hydra is mythological creature famous for growing new heads.  Just when the hero thinks he’s dealt with one head, twenty new ones spring up in its place.

This is exactly what’s happening to people who are heavily invested in the old media model and there are at least three hydras that merit attention.

Reading Steve Dworman’s excellent book about the infomercial business, I came across a number that shocked me into a realization of how radically television itself has changed in recent years.

He states that in 1989, the average household in the US had only eight to nine television channel choices. Can that be true? Can we have come so far, so fast?

And what impact has this had on the television industry?

A significant one.

Last week, CBS Corp announced that it’s reducing the stated value of its radio and television assets (a “write-down”) by $9.5 billion, for a total write-down of $27 billion in just two years.

One analyst, Fred Moran, commented to the New York Times:

“This officially recognizes what the market has already stated.  Traditional broadcasting assets are worth less than they were a few years ago.”

http://www.iht.com/articles/2006/02/23/business/cbs.php

— Download mania: The Many-Headed Hydra – Part Two

The same week that CBS announced its write-down, Apple announced that its iTunes Music Store had sold its one billionth download.

http://www.apple.com/itunes/1billion/

How much is media-on-demand (MOD) carving into media-when-we-say-you-can-have-it  (MWWSYCHI)?

There might be a study out there.

Has anyone seen one?

If not, the reason there isn’t may be that it’s not in the interests of old world media companies to sponsor one.  They only publish studies to convince advertisers to spend more and more often.  The data on that front can’t be good.

Companies like Apple don’t really need to know the impact they’re having on old media. In fact, crowing about it too loudly could throw cold water on alliances they’re trying to foster with the old guard.

So it’s possible, theoretically at least, that media-on-demand is causing old school TV and radio to hemorrhage customers as badly as TV did to the movie theater operators.

We just haven’t heard the news – yet.

— Social media: The Many-Headed Hydra – Part Three

Something big is definitely up at Yahoo.

One of the hottest hit makers from the broadcast world, Lloyd Braun, now head of Yahoo Media, is staring to sound like an Internet guy.

Braun is the former chairman of ABC entertainment and helped bring mega-blockbusters like “Lost” and “Desperate Housewives” onto the small screen.

Rare among people who’ve been wildly successful in one field, Braun “gets” that video on the Internet is a radically different game than the way he played it – and won – when he was at ABC.

Understandably, when Braun first came to Yahoo Media, he was prepared to apply the model he knew best – hit TV program development – to the Internet.

Here’s what he’s saying now (as quoted in the New York Times 3/2/06):

“I didn’t fully appreciate what success in this medium is really going to look like. This is not about creating one-off hits like my old business. That is not the way to create a sustainable competitive advantage.”

“Embracing things like blogs and sharing of content between individuals… is at least as important as… coming up with the next mega-online event.”

“I now get excited about user-generated content the way I used to get excited about thinking about what television shows would work.”

“Original content is the salt and pepper on the meal. It’s certainly not the engine driving this.”

“The Internet is such a niche content environment that the broadcast model does not really work.”

—  “The broadcast model does not really work…”

Less than twenty years ago, broadcast was the only game in town.

Sixty years ago, movie theaters were the only game in town.

Television did not kill the movie industry. It just diluted its power.

The Internet is not likely to eradicate television – cable or broadcast – either, but just like TV did to the movie theater business, it’s going to chomp away at its influence, probably significantly.

Here’s the path we’ve been on as screen watching creatures:

From a limited number of moving picture options outside the home available according to a set schedule (movie theaters)…

To a limited number of moving pictures inside the home according to a set schedule (television)…

To a virtually limitless selection of choices, when, where and how we want it (Internet video)…

The genie is out of the bottle.

– Ken McCarthy

P.S. For over 25 years I’ve been sharing the simple but powerful things that matter in business with my clients.

If you’d like direction for your business that will work today, tomorrow and twenty years from now, visit us at the System Club.