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Analog Dollars, Digital Pennies

It's hard to think of a form of media that isn't being fundamentally altered by the transition from analog to digital and the associated distribution changes (physical to bits, fixed schedule/place to anywhere/anytime).

TV advertising hung on for a long time but faces enormous pressure as:

  • People spend less time watching TV
  • DVR penetration continues to grow (fast forward me passed the commercials)
  • TV content is available online (time and place shifting)

Today's NY Times has an interesting article covering the increasing consumption of TV content via the computer – "Serving Up Television Without the TV Set". There are a couple of quotes in the article that really strike home the disconnect that faces the TV industry:

In an address in January to television executives in Las Vegas, Jeff Zucker, the chief executive of NBC Universal, noted that NBC.com had measured more than half a billion video streams in just over a year.

"Our challenge with all these ventures is to effectively monetize them so that we do not end up trading analog dollars for digital pennies," Mr. Zucker said, calling it the No. 1 challenge for the industry.

Compare this against:

One piece of good news for the networks and advertisers is that viewers are more likely to remember ads on the Internet versions of TV shows, partly because the commercials are less numerous and more demographically aimed online, according to many studies."

The advertisers already realize that those "analog dollars" are really worth pennies and the TV industry is trying to hold on to its old business model as it struggles to find ways of converting "digital pennies" into dollars.

Efforts like Hulu may help but we see yet another example of a threatened industry struggling to prop up its old business model – much as King Canute tried to stem the rising tide.

Will the established players in the TV industry be successful in weathering this change? Parallels in other industries suggest not – the winners tend to be new entrants who wholly embrace the new realities – it's too soon to tell who those winners will be but it's fascinating watching yet-another-industry transition resulting from the impact of the PC, mobile and the Internet.

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STU PHILLIPS
MENLO PARK, CALIFORNIA

Intense Brit, lived in Silicon Valley since 1984. Avid pilot, like digital photography, ham radio and a bunch of other stuff. Official Geek.

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