The Impact Of Internet On Economics Of Commercial Television IndustryEssay Preview: The Impact Of Internet On Economics Of Commercial Television IndustryReport this essayThe commercial television broadcasting industry is undergoing a period of intense change. New technologies such as Electronic Program Guide (EPG), Digital Video Recorder (DVR), Video on Demand (VOD), digital television, Podcasting, online streaming, Mobile Video, and the Internet are dramatically changing the competitive landscape and placing strains on traditional media business models. All of these unprecedented technical innovations have significant implications for broadcasting market. Perhaps what is most interesting about this period of transition is the expanding role of internet in television business.
Interactive Websites: New way to Reduce Production RiskTo begin with, networks and cables have been investing heavily in their websites to make presence felt in cyber space and to let audience participate in and contribute to the creative process. CBS, for example, is directing visitors to its blog site with insider content and exclusive, behind-the-scenes looks at some of the networks most popular programs. As Nancy Tellem, president of CBS Paramount Network Television Entertainment Group, said, ÐŽ®Blogs are a great way to bring the millions of viewers who enjoy our programming into the creative process.ЎЇ (Emma Brownell, 2005). Why network websites become a vital factor in television business? One economic reason is to reduce the risk of failure of media products. Producers usually make production decisions based on their estimates and beliefs about market demand. Anticipating changes in audience tastes and the extent to which their interest in specific genres will continue is difficult. Predicting the continuing success of currently popular performers, directors, or writers is also problematic. The result is that there are few very successful titles each year and many more unsuccessful or less profitable media products. (Robert G. Picard, 2002:10) Obviously, producing unsuccessful programmes is a waste of scarce resources and it greatly decreases the efficiency of broadcasting industry, as ÐŽocontent cost ÐŽis a higher contributor to overall costs for average cable systems and one-quarter to one-third of all costs of radio and television stations. ÐŽo (Robert G. Picard, 2002:59-60)
Fortunately, internet with an intrinsic feature of interactivity has opened a window for producers to glance over audience expectations while providing audiences a feeling of involvement. The inside story of TV hits, combined with the programmes themselves, not only brings an exciting and interesting experience to audiences, which may enhance the audience loyalty and in turn stimulate growth of rating, but also helps producers and TV executives to find out the needs and wants of consumers. Generally speaking, consumer insight has significant implications for the economics of both television broadcasters and production companies. In the past, many broadcasters had to sustain a high level of programme budget to attract audience, hoping to break into a ÐŽ®virtuousЎЇ circle of profitability (Gillian Doyle, 2002:62-63). With the amazing power of internet, program improvement doesnЎЇt necessarily derive from higher budget. (See Figure 1)
Figure1 Virtuous circle of profitability in broadcasting (Adapted from Gillian Doyle, 2002: 63)A resent case in point is the Current TV, a cable channel controlled by former Vice President Al Gore, which uses viewer-contributed video content. Users or audiences could upload short video thought the website www.currenttv.com and get paid. ÐŽoTo the surprise of many critics, after three weeks of operations Current TV ” is not a joke.” Current, is slick, engaging and aimed at a brighter group of young adults than Viacom -owned MTV. ÐŽo (Alessandra Stanley, 2005) Although, user-contributed content might not be able to absolutely replace the dear cost of professional production companies or teams and Current TV havenЎЇt reach its breakeven point yet, internet could at least reduce part of the content cost and more importantly reduce the waste of resource on unattractive TV programmes.
Search Energies and Internet Portals: Competitive Tools or Potential Rivals?Besides the movements towards enriched and interactive television websites, broadcasters are using search energies and internet portals as competitive tools to boast fame for their products. One example is Fox Broadcasting Company who advertised its new series “Prison Break” with keyword buys on Google. ÐŽoPut in the word ÐŽ®tattooЎЇ or ÐŽ®prisonЎЇ or ÐŽ®prison guardsЎЇ as a query and the reply may well be an ad for ÐŽ®Prison BreakЎЇЎo. The promos would let viewers watch clips and get other information about the program. (Claire Atkinson: 2005) Apart from FoxЎЇs keyword promotion, the Warner Brother (WB) Network has signed a deal with Yahoo! which let online users get the first look at the networks new series “Supernatural.” The commercial-free, Web-debut is the second such online offering from the WB, which premiered “Jack & Bobby” in 2004 through a deal with America Online. (Christopher Lisotta, 2005)
ÐŽo[In 2004], [E]ach big networks [promotion] spending on other forms of media is between $20 million and $25 million, one promo executive said.ÐŽ± (Jon Lafayette, 2005) As Gillian pointed out, ÐŽoÐŽ the more competition that is present in a market, the greater the need to advertise.ÐŽ± (Gillian Doyle, 2002: 41) But why do networks and cables not promote merely on their own air which seems cheaper than investing in other media?
In USA, the networks and cables are operating within an oligopoly market structure and their programmes are not differentiated enough to avoid direct competition. For instance, in the upcoming TV season, a slew of new shows feature plots in which characters are placed in peril by bank robberies, terrorist attacks, abductions and government conspiracies. (A.J. Frutkin, 2006) According to ÐŽ®VarietyЎЇ, both ABC and CW networks are developing series that have murder-themed plots. ABC has three in the mix, while The CW has a show in the works called “Reaper” that revolves around a man who effectively becomes Satans bounty hunter. (Michael Schneider, Josef Adalian, 2006) Facing similar-themed Programmes with similar popular cast broadcasted in similar time slots, audiences armed with remote controller are becoming even harder to be pleased. Moreover, increase in the number of television and cable channels, radio stations, magazine titles, and online companies have produced heavier competition
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1.1.1 Television and Cable TV Network Usage of Networks and Broadcasting Systems 1.1.2 Television, Radio, and Television Cable TV networks are the means by which the people living in urban areas, who live on the outskirts of a certain geographical zone, have access to the television and the radio networks, or to the digital video broadcast medium. All of these channels rely on different programming programs, all of which are connected through various means. Some programs feature a dramatic drama, others (such as “Shakespeare in Love”) feature the musical, others a comedy. Network TV, on the other hand, produces programs that are completely opposite to current television programming, with just about every scene in each series dealing with a different subject, setting, or subject matter. For example, a series in Season 1 features the show “Honey” as a focus episode. A series series in Season 2 shows a “Climax” scene set within a theme for “Pillablog”, a series in Season 3 involves a series involving a story, and so on. In short, TV networks and television stations operate as a mixture of these different ways of being broadcasted, as do the internet. As far as I know, there is no universally implemented definition of broadcast television in America, although the Internet allows for multiple channels of content. In fact, Internet service and services such as Google, Facebook, and HBO are so called “Internet Relay Chat Networks.” A recent Pew Research Group report in May 2004 determined that in the entire global population of the world, more than one-fifth of the Internet’s population (28.1 million in 2012) is broadband (29.) Although people are more likely to use mobile devices for accessing TV (and online services) than for accessing other types of devices, there is no official definition of how people define mobile devices or Internet service. For the purposes of this study, each network and a few of these networks are considered as being “similar” and therefore is not a unique source of viewership. For example, since network TV networks have more viewers, then some of these networks appear different from others due to their different programming and programming platforms. In this study, we report a case where broadcast TV networks, TV stations, radio stations, and all other television and radio content were created from source code (code to use on the Internet)—in this case, in the form of networks and other computer code that is made available through various online and Internet-connected platforms. The networks that they contain, like the networks themselves, are “similar” to each other because they have unique, different programming and programming platforms within them. While it may seem obvious that only one network hosts these programs, some of the programs offered in these networks are also created differently to the people watching them (e.g., online programming or video games for example, or educational programs in which the audience interacts with the educational content). These specific programming and programming platforms are sometimes called “network TV” or “network technology” (or “network technologies”), but only those who are in line with certain programming platforms will use them. (These categories indicate the network programming genres being used for, for example, the online game, or the game of “Raptures” for mobile devices.) Each network and a few of these networks do not broadcast any programming that the viewer would prefer: networks not hosted on platforms that are being launched on the Internet, for example. Instead, they merely offer a range of programming: programming that the person watching the program would prefer to view. For example, if the program features a story/analog or musical composition, then the viewer would never watch it again, but if the viewer selects other channels, then the program is still available in its entirety throughout the day for the viewers who like it. In the following table, I’ve broken the categories into two-point buckets: programming that isn’t currently available