Raise the Hammer
Today's network television business model is doomed. Hamilton has a chance to grow an economic cluster around a new business model for TV production and distribution.
By Ryan McGreal
Published May 27, 2009
Adrian Duyzer just wrote about his experience at a focus group session organized by the city to explore possibilities of the arts as a creative catalyst.
This initiative comes from the Hamilton Creative Catalyst [PDf link] project, which authorizes city staff to:
investigate collaborative opportunities with the Imperial Cotton Centre for the Arts for the purpose of identifying Cultural Industry based projects within Arts and Culture development projects in Hamilton.
The document notes the city's recognition of the role of creative industries as identified in the City's 2005 Economic Development Strategy and identifies "'Film and Culture' industries as a unique emerging cluster in the city."
The creation of this cluster was an important first step in recognizing the economic impact that creative industries play in the Hamilton economy.
While the definition of a "creative industry" is quite broad, as Adrian notes, the city's focus on economic development around film and television is surprisingly narrow, and excludes a large part of the nascent creative economy in Hamilton.
If they're betting the Creative Catalyst farm on this, it's not going to be much help to everyone else. I really hope the city listens to the creative professionals at the focus group and either broadens its focus or takes the approach of incubating more than one creative cluster.
As for film and television itself, I share Adrian's concerns about the long-term viability of today's business model for TV programming. It rarely pays to chase past performers, and it seems a bit late to the game for Hamilton to decide now that we want to ramp up our role in an industry whose own executives insist will go bankrupt if the government doesn't help them.
The current business model of network television is that you have a seller (the network), a buyer (the advertisers) and a product being sold (the viewers).
However, consumer technology has advanced to the point at which huge swaths of viewers no longer need to look at advertisements, so they don't. That means advertisers no longer getting the eyeballs they've been paying for.
We're in a position today in which ad revenues for TV networks have collapsed. Part of it is the economic crisis, but that's only exacerbating a trend that was already well underway. If anything, the recession forced advertisers to acknowledge that the money they're spending on TV spots is wasted - money they can no longer afford to throw away since their own revenues are also way down.
The result is that network TV corporations are all teetering on the edge of bankruptcy and begging to the federal government and the CRTC for some relief.
The feds have agreed to pony up some bridge financing - but no one is really sure what the financing is a bridge to. Meanwhile, the CRTC, like the current TV production industry, is fairly clueless when it comes to new media technologies, so they'll likely be of little help.
The fact is that Someone is going to figure out how to make money under the new system. If Hamilton is smart and forward-thinking, we'll figure out how to make sure that the new business model for TV is built here, where we're not already bound by the institutional legacy of the failing status quo model.
It's likely that the future of video programming as such will be a) niche oriented and b) digitally transmitted. In addition to the baseline activities of writing a script, putting together a production team, casting actors, filming, editing, and so on, this will require a new business model (i.e. new revenue streams) and a new distribution system.
We should be thinking about how we can get in the ground floor of this transformation. If we can cultivate a post-broadcast network industry in Hamilton, the rest of the industry will follow the money here and the current centre of Canadian broadcasting (i.e. Toronto) will be left wondering where all the business went.
The advantages to this is that it gets us the critical, all-important multiplier effect that is missing from today's film industry in Hamilton, which still largely amounts to a lower cost on-location set piece for Toronto-based outfits.
By Scootmeister (registered) | Posted May 27, 2009 at 22:17:00
Excellent article Ryan! Anything to stimulate the economy and generate some much needed revenue into our fair city is okay in my books! This looks like quite a viable option. Now if only we could do something about our rising cable rates!
By UrbanRenaissance (registered) | Posted May 28, 2009 at 07:58:03
If the Cable/Satellite companies were smart they'd go to an all "On-Demand" style system where users pay per show (or maybe a monthly fee for X number of shows a month) and only see a couple of ads before and after the broadcast, similar to what Hulu does online.
The cable/satellite companies would make their money by selling the ads before and after shows and also selling the viewership stats to advertisers and content providers.
Consumers would benefit by only having to pay for what they watch, they could watch it whenever they wanted, and coupled with a DVR it could be paused and rewound.
Advertisers would see a huge benefit to this system as well, rather than getting estimated viewership data from the antiquated Nielson System they'd have access to the total number of times the show was viewed a much more accurate indication of a show's popularity.
TV Stations could transition from broadcasters to content providers, freeing up capital to make quality programming. If a show faired poorly then the whole station wouldn't suffer, just that show. This would allow them to take more chances on non mainstream shows.
Maybe someday we'll have people running and regulating our technology who actually understand it and understand how we want to interact with it.
By Mr. Focus (anonymous) | Posted May 29, 2009 at 18:05:40
Good article, but the analysis doesn't go far enough, I think. Advertising will still have to play a large part in the economic mix that will support new media, I suspect.
Network TV is all about expensive "production values" and a star system attracting huge audiences so that cost-per-viewer was kept low for advertisers. That's industrial era thinking, and worked just like other forms of industrial production. Mass consumption was delivered through mass media to support mass production which delivered mass employment and around we go again. Our notions of democracy and manufacturing mass concensus supported this system, which greatly advanced the material wealth of western industrialized nations.
Then technology blew the doors off, primarily through computerizing the front end of this production system. In the printing industry, one of the earlier computerized industries, it became faster and cheaper to produce relatively short runs of even fairly elaborate brochures, accompanied by a letter that addressed you with your own name instead of "Occupant". Even before that, during the 50s and 60s three kids with electric guitars in a garage started learning how to make as much noise as an entire symphony orchestra. The result is an explosion of media, each more open to participation as front-end, or "tooling" costs are driven down.
But advertisers were still looking for those big audiences. They had to, because they were still promoting mass produced goods. What's happening now too, as audiences are split, is that markets too are split. Political concensus is also splitting. People want different kinds of choices than merely "left" or "right".
Industries that succeed are those that learn how to produce for smaller and smaller niches. Advertisers need to learn how to then reach those diverging markets through media that are used by smaller numbers of people with similar interests. Sometimes these communities are still spread over very large geographic areas. The Network system of producing one show in LA or New York and relying on paying a star millions of dollars to draw a big audience is in trouble.
But sometimes a community is still geography based. It's just that for networks, local production has always been an inefficient expense. It is even more so now and that expense is no longer being covered by advertisers who are drifting toward newer media. Unfortunately, they are often still trying to develop big audiences through stitching together multi-media methods, and often don't pay for content. I think that is still to come as advertisers learn the benefits of directly addressing smaller, more identifiable audiences. But it's still shaking out.
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