The New Video IPOD -- Networks Bypassing Affiliates?

(From ShopTalk/Broadcast Web Ideas -- By Stephen Warley)

It's true. There is a long-term trend toward bypassing television affiliates by the networks. Who can blame them?
The cost of network programming is outrageous, so why wouldn't THE BIG FOUR look for ways to keep more of the pie as it continues to fragment?

The latest potential opportunity to bypass the affiliates is the introduction of APPLES's new IPOD that plays videos. The even bigger news is that DISNEY's BOB IGER concluded a deal with APPLES's STEVE JOBS to deliver ABC hit programs like DESPERATE HOUSEWIVES and LOST via the new IPOD the day after they air for $1.99 per episode, commercial free.

As you can imagine, ABC affiliates are crying foul for not being consulted in advance about the decision to offer the network's most popular shows to IPOD users. The affiliates are complaining that it will hurt ratings, particularly for reruns, as well as on the syndication side of the business.

Other detractors of the new IPOD question the willingness of consumers to watch a television program on such a tiny screen (approximately 2.5 inches in width).

As with every new technology, there are those who are ready to rip it apart because it either threatens their existing business model or because they have a limited vision as to how consumers will adopt the new technology for their own uses in the real world.

Here are a few things to think about:

1. It's a different type of viewing experience.
Never underestimate the desire of Americans to watch even more TV. I have a colleague who has already bought the new iPod and is very excited about it. He is looking forward to watching news clips and other video to pass the time as he waits in endless lines at the airport (he frequently travels). The screen is bigger than the postage-stamp-size screen of a cell phone, so APPLE may have found a happy medium. He still wants to watch his favorite programs in the comfort of his living room, but also wants the opportunity to watch video to pass the time when he's on the go.

2. It's not just a viewing device, but a storage device.
Another use for the new iPod, if not more important than viewing video, is storing video. Up to 150 hours! I'm excited by the idea of loading up a bunch of programs on a video iPod and brining it over to a friend's house to watch TV. All you need to do is connect your iPod to the TV using a composite cable. I have a friend who loves the show NIP TUCK, but doesn't want to pay for basic cable just to watch it, so she comes to my house every Tuesday night. With the video iPod, she can watch it wherever she wants and whenever she wants. Of course, this is a potential threat to cable television.

3. Need for affiliates to break addiction to network programming.
I know the 50-year old business model of network affiliates depends on network programming (it's the foundation in fact), however it's time to start seeing the writing on the wall. Between emerging technologies to make television easier to search, DVR's, VOD and mobile video devices, there are increasing opportunities for the networks to go directly to their viewers without the carriage of affiliates.

Television is fragmenting and individual programs are losing their ability to aggregate mass audiences in a way they use to, so the mass-market, affiliate-network model is slowly becoming obsolete. Even advertisers understand this. Why does FORD sponsor entire programs? Why does TARGET sponsor entire nights on IFC? Because they want exclusivity and they are targeting very specific demographics.

Local affiliates need to start producing more of their own local programming to better serve their local advertisers. That is their future. The advent of DV cameras, laptop-editing systems, and web technologies to enable local communities to produce their own content has dramatically reduced the cost structure of producing programming. I should also note, I'm not recommending churning out more slick "news" programming, but rather branching out into other genres like entertainment, travel, business or health.

Remember, consumers are demanding more ways to consume even more variations of video content. Pour your energies into figuring out how to build businesses in the age of mass personalization, rather than wasting your time defending the besieged business models of the mass market.