Post No. 5
Posted By: Terry Oprea
Posted: 1/16/2008
In my previous blog I mentioned that Big Media in metropolitan regions tend to spend a lot of cash actually creating product. And advertisers even locally spend a significant amount of cash on spots and print ads. Which is the sixth reason Big Regional Media are freaking out:
6. The cost of production in print and broadcast media far outstrips the cost of production on the web
…which raises another big question: If digital content consumers demand lots and lots of it in short doses, how can Big Media create that kind of content volume – especially in rich video and audio media – at a dramatically lower price? To do so would require a sea-change in the way that video and audio content is produced.
The sad news is that most of the mainstream video producing organizations, Ad Agencies and TV stations have not adapted well to cost reduction necessities. Though newspapers have ironically been quicker on the uptake, they admit their video products still have a long way to go in many cases.
The smart organizations have gotten rid of the $50,000 to $250,000 field videocam packages and replaced them with smaller digital video cameras that cost as little as a few thousand dollars. These same smart organizations no longer staff video shoots with 4 or 5 or 6 people. They use one person, maybe two. Further, rapidly going away are the giant, impressive editing suites that cost several hundred thousand dollars – in favor of laptop or small desktop editing configurations that deliver the same basic result for pennies on the dollar.
So do consumers know the difference? They actually prefer lower production value in local media – while being suspicious of high-end video productions in a local environment. Why? Because they smell marketing when they see slick stuff.
Cost of video production has been overpriced and inflated for years – driven by Ad Agencies. Some of the post-production facilities that cater to the big Advertising gurus charge astounding per-hour fees, while getting the agency producers to give them the business through certain “environmental incentives”. For example:
- Catering free, sumptuous meals at all times of the day.
- Providing unlimited free beer, wine, et al during the work day in their facilities
- One facility built a full service mahogany bar and lounge in their offices, with unlimited hard liquor and snacks – no extra charge, of course.
If prolific video content is going to be evident, the cost to produce it has to be low. Giving away free booze just inflates costs further.
But why do I keep harping about video and audio content on the web? Is it really that important?
It’s far more important than Big Regional Media truly understands. For example, the number of seconds of video downloaded or streamed from the internet in the first 6 months of 2007 was 175% greater than the previous six months. And I’m willing to bet that when the data comes in for the last 6 months of 2007, the number will increase by another 250% to 300% over the first 6 months of 2007.
This wildly growing appetite for online video is fueled by several factors:
- Computer technology becoming a commodity. All computers and laptops – even the cheapest ones – now have video cards and huge amounts of RAM with a range of video software, media players, Flash, and what have you, to accommodate video and audio online.
- Bandwidth continues to grow exponentially year to year, allowing easy, seamless video playback, download, and streaming.
- Video compression technology continues to become more sophisticated and efficient, allowing more video content with larger pictures on your desktop or laptop.
Soooo….its not just about the Internet – but also about video and audio on the Internet. If you’re weak in that area, you’ll struggle to grow loyal, unique visitors.
There’s one final reason (#7) Regional Media are Freaking Out – and ironically, its something reserved for local TV stations – something that they have no control over:
#7. Local broadcast TV stations have been forced by law to invest in digital transmission technology that some argue will be outmoded before it even has time to take root.
All local TV stations have been required to convert their transmitters to digital technology. By the beginning of 2009 all television transmission must be solely digital. That mandatory conversion has cost local broadcasters hundreds of millions of dollars in operating and capital expenses in order to make that conversion.
Going to mandatory digital transmission originally seemed like a good thing to do at the time it was put into law years ago. It was supposed to enable TV stations to split into multiple sub-channels. It could enable them to serve specific smaller user groups in their respective regions with unique programming, rather than the “one size fits all” approach to each station’s programming schedule as they currently exist.
The problem is that fewer and fewer viewers get their TV from broadcast signals. Mostly it’s picked up off of cable. It’s true that cable operations are more or less required to carry local TV stations’ primary signals – but it remains to be seen what the arrangement will be when TV stations start trying to produce digital programming that goes beyond their normal signal.
Some futurists argue that the Internet’s appetite for video is growing at such a breakneck speed that it will eventually eclipse traditional broadcast programming. If that’s true, both local broadcasters and daily newspapers will be well-positioned with their Internet properties – but only if they solve all 7 of the challenges I’ve described over the past 5 days.
The Victors in all the Freakout chaos will go to those who look at content, production economics, and human behavior as one picture – one that is constantly changing. That means Big Regional Media need to be in a continual state of reinvention and experimentation in order to attract people, loyalty, advertisers, and ultimately, profitability and success.
And that, of course, means continual risk-taking with eyes wide open.