It’s good to be the King!

“The Internet needs to be programmed.”

-AOL’s Tim Armstrong at today’s AOL NewFront presentation.

This year’s Newfront, when the big digital media (AOL, Hulu, Youtube/Google, Yahoo, etc) companies tout their new series and advertising opportunities, is wrapping up in NYC.

Throughout the week, we’ve seen a variety of different approaches to digital content and once again it’s been a mixed bag. Per usual, a lot of the major platforms trot out a celebrity after celebrity (with a few ‘web’lebrities sprinkled in) to show off how much they are moving quality of web content forward. And of course, every platform proudly announces how well they truly understand / reach their ‘key’ audience. At the core of each presentation are a variety of new show announcements – some of which were really interesting, bold and fresh, but mostly it’s a lot of the same old dribble. And rather than go through each outlet and critique their offerings, I want to look at two platforms on opposite ends of ‘getting it.’ First, AOL.

Let me say this: AOL will get views on their video content, but not because their new shows any good. They will get views because they have a platform for it – they can simpleyprogram their home page and video page to strategic place their ad sponsored, big name content. In that sense, I guess they are making a strategically safe, smart decision. I really can’t argue with that.  However, I would argue it’s a short term solution. Are they really driving “viewership” by creating a long term, self-sustaining community – the most valuable part of creating web content? I say no, and here’s why.

The 15 uninspired, bland formulaic batch of new shows that AOL announed – mostly notable because people like Sarah Jessica Parker Gweneth Paltrow and Nicole Ritchie are involved – are only premium in name. Celebrities on the web are only valuable if they are engaging with their audiences. They don’t truly demand eyeballs, for the most part. That’s not really the reason the shows won’t work. They could, but on the right platforms. CEO Tim Armstrong was partly right when he said that the ‘internet needs to be programmed.’ It does, but the problem for AOL is that they aren’t really part of programming it. The web is already programmed. People are programming it themselves, 1) through social media (personalized programmed) and 2) through the micro communities that they seek out proactively. For instance, if someone is passionate or interested in home design, they likely already have 2 or 3 sites they visit regularly for that content. Just because AOL does a Jonathan Adler series about design doesn’t mean that audience will seek it out. They already have a source for those passions – that show should go to where those users already are! It’s push not pull when finding web audiences.

For me, it all comes down to this: AOL shouldn’t be playing on this level. If they want to “program” things, keep doing what they’ve been doing, which is pulling in content that bubbles up to the mainstream. They shouldn’t be after niche audiences (who already have established, authentic communities developed online) that don’t need AOL to find the content the want. On the other hand, they could make truly bold programming decisions. They should be using their big dollars to create the type of high quality (note – this does not necessarily mean celebrity hosted or produced) content that is must see. That means programming as if they were are TV broadcast network – capitalize on the their bigness and broadness. This is the strategy that Netflix is taking (with success) that Hulu is trying and that, Crackle announced on Thursday.

Crackle is an earnest “major” video site. They aren’t often listed in the short list of  go-to video destinations. Still, they have been working hard to become the place for premium, male skewing content. It’s a tough market to stand out in, and I have generally negative thoughts on Crackle’s destination site approach. However, they should be applauded for making a truly bold foray this year with a variety of solid shows and unique content formats. They are going with a go big or go home attitude and released a slate of really big, expensive seemingly must-watch series / digital movies. And they are doing it smartly too – there is no doubt that the flexible format approach is opening up a pipeline of international sales opportunities that will help cover the cost of these expensive new shows.

It would be easy for Crackle to play it safe and throw a bunch of cheap- but celebrity riddled – crap series at the wall. However, they are taking some real big bets – which is what these cash-laden portals should be doing. They’ve actually been doing it for years and learning some lessons about what works and what doesn’t – remember Gemini Division and Bannen Way. This year they really stepped it up. I’m not super sure how good a Danny Glover action series will be or whether or not a sequel to Joe Dirt will matter – but it’s noteworthy, high value programming for a platform that wants to compete. They stand out for that alone.

The takeaway for me is that Crackle doesn’t really care about the short term. They want to take the risks that will help them become more and more viable in the long term. If big platforms want premium ad money (or subscription fees), they need truly premium content.  Netflix gets that and they aren’t worried about short term maximization either. This is a marathon. Kudos to Crackle for understanding that and ‘training’ the way they should be.

Finally, a quick mea culpa. I criticized Conde Nast for announcing an even-lamer-than-AOL slate of programming back in March. During the upfront they sort of doubled back and previewed a few genuinely interesting shows (still a lot of garbage mixed in) that live up the potential of their platforms. I really hope they are as good as they look- especially this cool Wired series, The Window.

Today, Amazon released a batch of 14 pilots, all of which are available for the public to view, rate, and comment on. Amazon executives will have – for the first time in the history of “television” – the distinct advantage of knowing which shows the audience actually wants to see! About friggin’ time.

This isn’t exactly microcable (I still believe finding and developing niche audiences through exclusive, limited distribution is more effective), but it’s a major step in the right direction. Television/’web series’ development should be done like this. The audience – the most important shareholder in the entire value chain -  needs to be the decider, ultimately, of what goes and stays on air. In a way they always have been; Nielsen ratings generally dictate what shows get canceled and which are renewed. Still, that’s too far down the line and too removed considering the tools media companies have at their fingertips. Amazon’s approach dramatically shifts forward the audience’s role. This is a great thing.

As a content creator and a believer in (intelligently implemented) video distribution disruption, this is a great sign of things to come. Combine it with the changing release strategies (ex. House of Cards), flexible ‘platform agnostic’ content formats,  increasingly fractal audiences, and the breakdown of non-consumer friendly bundling (ex. HBO’s inevitable direct to audience approach), and it’s clear that the conventions of big media are finally being crushed. The results, for better or worse, will be a more empowered audience, a much more fickle market for shows, but also a more democratic approach to entertainment.

Conde Nast Entertainment announced today that they are launching a new digital video network (probably a good idea) starting with programming from their GQ and Glamour brands (also sounds like a solid move – if not 2 years too late). Big advertisers have stepped up to the plate (P&G, Microsoft) to sponsor the programming out of the gate. This all sounds great – and I love that more media companies are making serious plays into digital….oh, wait. I just read the slate of shows they are starting with. I take that all back. This is a wasted opportunity for both the brand sponsors and Conde Nast. Allow me to explain…

An elevator makeover show? A talk show hosted by a guy training for a marathon? This is exactly the low value video content that already exists (in spades) and is done pretty well by other, established digital players. Conde Nast, with its reputation as a premium purveyor of lifestyle content, should be coming to the plate with original and creatively ambitious programming. What they announced today sounds like a poo poo platter of safe and sorry. I really do hope they have success, but I don’t think their brand name alone will allow for them to make a real impact with viewers. Still, I’m guessing ‘success’  from the advertisers perspective is guaranteed. Being a big media conglomerate, they can probably guarantee views and impressions to a certain extent (through bought and owned media)…even if real viewership on these shows is underwhelming. Hopefully the media buyers at MediaVest will be on top of this.  Either way, it’s a shame to see that Conde Nast is pulling away digital ad dollars to fund lackluster, below-their-capabilities style shows when those advertisers could be spending money against more interesting digital content. At the very least, Conde Nast should have come out with one or two more adventurous bets. Big players need to make big moves to stay relevant in digital. Conde Nast may figure that out the hard way.

Back in December of 2011, we wrote about a new (smarter, better, etc) content development strategy called micro-cable. The general idea is that cable networks (or network TV for that matter) can use niche digital distribution and community development to better create, test, and then launch new series.  It’s 15 months later, and the micro-cable strategy is still only being tested in a limited fashion.

However, we are finally starting to see some real positive change as more and more publishers and creators find real budgets on the web. The NYTimes’ Brian Stetler wrote a great article yesterday about this shift, which is only the beginning. What’s interesting to this blogger is that the recent round of investments isn’t done in an effort to eventually create TV programming. It’s done to create viable, profitable web programming. This is the next step in micro-cable – and it likely means that cable and broadcast networks are already falling behind the eight ball.

There’s been a lot written about Netflix’s first foray into original programming. My favorite so far is Rebecca Greenfield’s Post for the Atlantic Wire which attempts to delve deep into the economics of the $100 million dollar original series. Most interestingly, she cites sources that claim Netflix will likely run cash flow negative for the foreseeable future. I’m not so sure about that, but it’s interesting to think about nonetheless. Just as interesting to me is what Netflix does (if anything) to monetize their content off their platform. Syndication, second-window and international distribution are HUGELY important in the cable and network TV models. I’m not sure that Netflix can (or wants) take advantage of those lucrative revenue sources. I ultimately think this will be a big challenge for Netflix when competing with the HBOs of the world (it’s tough when a competitor is also a supplier). Still, Netflix is making the right move with their first of soon to be many original series.

I’ve been impressed by the quality of House of Cards (I’m 6 eps in already) and I can’t wait for more.  The best part, IMHO, is the all-at-once distribution model.  Andrew Wallenstein at Variety recently panned the model as bad for business. He believes that binge viewing will result in a whole lot of flaky, quick to leave subscribers. The crux of his argument: viewers will ultimately spend less time with Netflix because they are binge viewing a show for a few days versus over the course of months.

He couldn’t be more wrong. First, I think that House of Cards will just be one more reason for many people to opt into Netflix, which already had a compelling collection of content to begin with. Second, I’m willing to bet that Netflix looked really closely at their subscriber turnover (people who sign up and then drop the service quickly) before embarking on their “groundbreaking” release strategy. I’m sure they know, as I’m assuming, that most people will sign up and stay signed up. Netflix is 1) cheap, 2) easy to quit if you want (making it the massively favorable alternative to expensive, unfriendly contractually restrictive cable), and 3) offers way more than just House of Cards. I think people will sign up for the show, and stay for the rest. Or at least enough people will.

I’m extremely excited to see Netflix (and Amazon) blowing up the model and testing out this radical approach. It’s not perfect, but it’s exactly what our industry needed to more forward sustainably.

It’s really a big gimmick, but I still think it’s a step in the right direction. On Monday night, CBS viewers can tweet end who they think committed a murder on an episode of Hawaii Five-0. While I think this is the most rudimentary application of viewer interaction, it does show that networks are willing to experiment with interesting, new, and interactive storytelling. Here’s hoping they do more soon.

www.deadline.com/2013/01/episode-of-cbs-hawaii-five-0-lets-viewers-choose-ending-in-real-time/

The guys at Tech Dirt have smartly analyzed HBO’s decision to not offer a direct to consumer model. And of course, they nail their analysis. I won’t try to summarize the entire article here (it’s short – just read it), but it offers a real world example of how a TV industry incumbent is putting short term profits over long term viability. Tech Dirt correctly cites The Innovator’s Dilemma in explaining how HBO is putting themselves in a precarious situation by not cannibalizing their current revenue sources for new ones that are only starting to appear. It’s a tough decision, but the TV players that do it will the be the ones that succeed in the long run. Innovate or die.