The television will not be revolutionised: Is Michael Wolff right that the glory days of the TV industry still lie in the future?

tim burrowes landscapeMedia execs will be talking about one book this year, says Mumbrella’s Tim Burrowes. Television Is The New Television offers, for the first time, a credible challenge to the orthodoxy that digital disruption will inevitably lead to new media winners.

Over the last decade or so, I’ve often been afflicted by this constant high-pitched background noise.

Like anyone who write about media, I’ve been experiencing the communications world’s version of tinnitus: whistling past the graveyard.

Over the years, the whistling has got louder, as every medium challenged by the rise of digital has attempted to make the case that everything is going to be okay.

In Australia, this included Newspaper Works memorable efforts of 2010 to make the case that consumers loved newspapers better than Nike, McDonald’s, Holden, Target and Microsoft.

This was of course just before the advertising and circulation downturn forced thousands of redundancies across the major newspaper publishers.

And the world of magazines went through a similar period of denial, even as title after title was being closed or having its frequency reduced.

It was about as convincing as when The Day Today told us that everything was fine.

The whistling was loud.

No louder, perhaps, than at a media conference I attended not long after I’d arrived in the country.

Harold Mitchell, then Australia’s biggest media buyer as owner of Mitchell & Partners, prognosticated on stage.

He opined that the big existing players – the Nines and the Sevens and their like – would be the winners and the survivors of the coming upheaval, thanks in part to their alliances with the likes of Microsoft and Yahoo.

I thought he was talking nonsense and wrote an opinion piece for B&T, (of which I was the editor at the time), to that effect. (Sadly, in one of B&T’s various online relaunches, the opinion piece seems to have been lost from the archive, so I can’t link to it.)

To me, Harold sounded like a dinosaur hoping to ignore the approaching meteor before it ended the world.


Mitchell: Is he owed an apology?

At the time, I preferred Bill Gates’ 1996 quote: “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten.”

Nearly a decade on, I’m starting to wonder if the meteor has missed, and whether I owe Harold an apology for saying that he talked nonsense. (I really wish I could find that old column – I did rather put the boot in.)

The trigger for the thought is the new book from Michael Wolff – Television Is the New Television – The Unexpected Triumph of Old Media In The Digital Age.

Television is the new television Michael WolffAnd if there’s one book on which everybody in media is going to be expected to have a point of view over the next 12 months, this is it.

Much like every strategist kept a prominent copy of Malcolm Gladwell’s The Tipping Point on their office shelf (and then Freakonomics, and then The Signal And The Noise), every media executive is going to be expected to be up to speed on Television Is The New Television. You can bet your life the networks will be talking abut it at their 2016 upfronts , which begin this week.

Luckily, at 200 pages, it’s not a long book. But it covers a helluva lot of ground.

Wolff has done what in hindsight is annoyingly obvious – pulled together the major media trends of the last decade – and asked why what was apparently inevitable has not occurred.

Which takes me back the the whistling past the graveyard. Just like TV didn’t kill radio, what if digital doesn’t kill TV?

This is the central question in Wolff’s book – the orthodoxy is that having laid low newspapers and magazines, the television industry is next. But what if it isn’t? What if, rather than Bill Gates’ ten years to revolution running a bit late, this wholesale revolution is not going to happen to the television industry at all?

I’m not fully convinced of the argument by the way, although it is an enticing one.

Wolff makes an excellent case that the rise of a profitable new media is not the inevitability that venture capitalists would like to think. But I’m not as persuaded that television, and particularly Australian television, doesn’t still face some misery.

But he raises a lot of questions, you’re going to need to have a point of view on. These are the questions I’m left with after reading the book.

1. – Will there even be new media victors?

The digital cheerleaders of the old media – the likes of The New York Times and The Guardian – can’t yet offer much evidence of a profitable new media future.

As Wolff puts it, “the closer the new media future gets, the further away victory appears”.

And it’s fair to say that those who’ve made big bets on the inevitable rise of digital have lost as often as they’ve won. Look at News Corp’s acquisition of MySpace or locally Yahoo!7’s top-of-the-market $30m acquisition of group buying site Spreets. Indeed, at Mumbrella we burned through a couple of hundred grand in our big bet on a weekly tablet publication and failed to find an audience or workable business model.

The thing that has undone most digital business models, argues Wolff, is that scale doesn’t so much create winners, as an oversupply of advertising impressions, which constantly drives down price, making the audience ever less valuable.

2. – What if the Buzzfeed “experiment” is bullshit?

Wolff argues that many “hack publishing” sites that live and die by bringing in large traffic through clever understanding of virality are pretending to indulge in “a great experiment in an evolving market”. Instead, they are getting credit for what in any other medium would be low value, “a classic schlock model”.

BuzzfeedHe points towards Buzzfeed, but equally, he might be talking about Mashable, Upworthy, Mamamia or many others.

Buzzfeed, for instance, is indulging in “fake it til you make it” with a bit of high quality journalism to act as a loss leader around the dross, he argues. The parallel Wolff draws to the value of ads on sharing-driven sites is with the sort of low value home shopping inventory you find on daytime television.

3. – Be careful what you wish for

Where I completely agree with Wolff, is his assessment that the mass audience may one day be sad about where that revolution they are enthusiastically participating in, ends up.

When the drive to single song sales rather than albums hobbles the music industry; and the public don’t want to subscribe to a whole online publication – but might be willing to make a micropayment for a single article – the “be careful what you wish for” observation from Wolff makes sense.

But as Clay Shirky put it: “’You’re gonna miss us when we’re gone!’ has never been much of a business model.”

Digital may have the power to destroy old models, but it doesn’t guarantee success for the disruptors.

It makes me think of the glee that some  fans have exhibited at the ease with which they can pirate TV shows. They love not having to pay what they see as the exorbitant prcies of susbcribing to a whole channel or pay TV package. But are probably less clear that this is how high end TV productions are funded.

And the thought occurs that when News Corp’s PR department’s Monday newsletter quoted the company’s editorial boss Campbell Reid in May, he may have had a point:

“The world is not changing, it has already changed,” Mr Reid said. “The question is not, when is the internet going to kill news­papers, but why has it failed to do so.

“My contention is if the digital revolution was going to kill ­papers, it would have already done so.”

4. – Bundling is (and always has been) the key.

And this is where Wolff turns his attention back towards television. Just as newspapers bundle news, features, job ads, arts coverage and so on, and the music industry bundles albums, the traditional subscription TV model has been around bundling too.

You might only want Chelsea versus Southampton in the EPL, but you’re also going to need to pay for Real Housewives of Melbourne. Or that was the model, anyway.

But the likes of Netflix (plus in Australia, Stan and Presto and so on) is simply creating a new type of bundle that fits in with the viewing habits of the digital generation.

Wolff argues that Netflix is great at marketing, but most of what it has to offer is pretty bland, recycled television.

And the bundle is indeed a continuing part of the model.

Look at News Corp’s offering, which is currently being promoted by one of the best newspaper marketing campaigns in recent years fronted by Dame Edna. Subscribe to the newspaper, get the website and apps of course, but also get access to Fox Sports. And soon enough, to streaming service Presto, I’m sure.

And of course, Fairfax Media is similarly bundling a mandatory digital subscription with every newspaper sub, along with six months free access to streaming service Stan.

5. – TV’s future lies in owning the content, not managing the advertising

And this is where much of the comfort that TV executives will take from this book in Australia may be questionable.

A large proportion of Wolff’s argument for optimism about TV is around the content.

Yes, Netflix may be changing habits. But it has to buy the shows from somewhere. And apart from a few loss leaders like House Of Cards, that’s from the (US) networks.

As Wolff points out, until Netflix came along, the main way for the US TV networks to make money from their product was through ad-support. Thanks to Netflix, even crappy old TV shows became paid for products.

What Wolff doesn’t point out, is that for the US networks, another revenue stream has always been selling content on the Australian TV networks, and elsewhere around the English speaking world. Famously, the US ABC studio deal saved Seven when Desperate Housewives and Lost were big hits.

More recently though, the price has become too steep to the Aussie networks. In its annual report published last week, Nine CEO David Gyngell cites the ending of Nine’s US output deals with some blunt words about the ongoing attraction to Australian audiences of US content. It would seem the US content no longer works for Aussie audiences.

gnygell us output nec

But the problem for the Australian networks of course is that they may not own enough content that has a sell-on value.

Sport – which combines the benefits of a fixed appointment to view with unpredictable drama – is licensed from the codes. Even where Australian media companies own a slice, it’s rarely valuable outside of Australia.

Reality as a genre may still rate for the networks, but mostly, they don’t own the successful formats.

The likes of The Voice, The Bachelor or the X Factor are all local productions of international formats. And for every successful local format like The Block, there are two local reality disasters like The Renovators or Everybody Dance Now.

Local drama is even less reliable. House Husbands, 800 Words or Offspring may go well locally, but it’s expensive to make and with the exception of Neighbours and Home & Away, almost no Aussie-made dramas reach a big international audience.

It’s been encouraging to see Foxtel’s well made Prisoner reboot, Wentworth, find an overseas audience. Hopefully the same will got for A Place To Call Home, rescued by Foxtel from Seven.

And more to the point, because of that route to an international audience, the risk is worth it. Hence today’s announcement that Nine and Fairfax’s joint venture streaming service Stan has commissioned a series of backpacker slasher drama Wolf Creek.

Mind you, Australian scriptwriters will need to overcome their addiction to exposition-through-dialogue if they want to have a hope of being saleable.

It was also intriguing to see Sunday’s news that Nine is back in the comedy business, commissioning Here Come The Habibs, a Muslims-next-door sitcom.

On the face of it, it sounds like it could be horribly racist, a Love Thy Neighbour for the 21st Century, or another Citizen Khan. But the fact it is from the Jungleboys, the people behind the smart (and popular) The Moodys, gives a bit of reassurance.

Regardless, investing in comedy seems like a good risk to take. It’s also a genre that has hope of finding an audience beyond Australia.

6. – Owning the means of production will matter even more

The key to the television future isn’t just about the content, it’s also having a stake in the whole production process.

And we have to give credit here to Murdoch, who saw the value of integrating every stage of the TV production chain before almost anyone else.

And by Murdoch, I mean Elisabeth Murdoch. She founded production house Shine 15 years ago. It grew to become one of the world’s most successful program makers. Growing by acquisition and mergers right from the start, Shine was early into the strategy of  involving production companies in every stage of the process from script to screen.

Wolff points out in the book that some of what turned out to be the best media acquisitions happened by accident. Disney became a dominant media company thanks to getting ESPN thrown in when it bought ABC.

When News Corp bought Shine for nearly a billion bucks in 2011, critics labelled it as Rupert Murdoch overpaying to bring his daughter back into the business. Since it merged with Endemol, the deal now looks like an absolute bargain, giving the company (now 21st Century Fox) control over what is now arguably the most important part of the TV ecosystem.

7. – YouTube had its moment – and missed it.

Copyright was the crucial battleground for YouTube, argues Wolff. Not wanting to risk the sort of do-or-die confrontation that killed Napster (and took the music industry down with it), YouTube backed down and effectively became yet another content licencee. Now it’s just brand funded television, like the old days.

For all the talk of a serious live sports strategy, it feels like YouTube has dithered. It still seems to have ambitions to launch a subscription offering, but certainly won’t have first mover advantage.

And for whatever reason, it looks like the gap in price between pre-roll ads on YouTube and broadcast television is no longer narrowing.

8. – The rise of the native advertising sceptics

I wish Wolf had spent a little more time analysing the role of native advertising in the new landscape,whether in text or video.

For clarity, by native, I mean content that does not feature the brand, but has been funded by the brand to deliver relevant, entertaining content that will interest its target audience. I do not mean the sort of advertorial content that some are currently presenting as native advertising.

Wolff writes off native as content converged with advertising, which is probably too simplistic, when it’s done well. But the place of native on the hype curve is going to need watching

8. – The broadband landscape is different in Australia – so the outcome will be too

Much of Wolff’s case around the concept of bundling being the uniting factor is that in the US, most people get their cable TV and broadband down a pipe from a single local area monopoly supplier.

And while Foxtel is finally getting serious about its triple play, that’s not the case here.

Foxtel’s pay product penetration in Australia is much lower than cable in the US. And sport is more protected for free-to-air.

There is competition in broadband in Australia – and the National Broadband Network will be heavily regulated. In retrospect, the one thing Stephen Conroy may have achieved as Communications Minister was setting government policy on a path forcing Telstra (half owner of Foxtel) to separate from the NBN.

As my colleague Alex Hayes wrote last week around the launch of Telstra TV, the telco may prove to be Foxtel’s biggest threat.

9. – TV still works

At least for now, most Australian homes still get their free TV over the airwaves. And television remains the most efficient mass medium.

Being a marketer these days is complicated and confusing.  But one of the few remaining certainties is that if you have a product you need to put in front of the Australian population, then you can still do it with prime time free-to-air television.

Of course, habits will change, more cords will be cut. But Wolff was right: we thought it was going to have happened by now.

Much of what we thought we knew about the future of the media has proved to be wrong. Which makes the future even more complicated and confusing for those in media and marketing.

I’m still not betting on TV passing through mostly unscathed, but I’m no longer betting against it. The whistling past the graveyard has a while to go yet.



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