Assuming the original programming created by the networks becomes avaliable only to content providers, what exactly does that mean for monetization? How does advertising work? How does a network or a content producer evaluate ratings when time slots become irrelevant?
I pondered some of these things four years ago when Conan O'Brien and Jay Leno became the subject of a highly publicised kerfuffle regarding their employment contracts, ratings, and schedule shifting of The Tonight Show.
Here's the juicy bits of that article which I beleive are still relevant today:
Ratings will no longer be about timeslots, but about the number of downloads and targeted audiences, and the metrics that content providers will be able to gather and data mine will be tremendous. Suddenly, NBC will realize that 70 percent of what gets shown on Saturday Night Live sucks ass, and they'll be able to do sophisticated trends analysis to tell them to ditch the consistently stupid skits and the people that produce them or star in them, because they'll know exactly when people tune in and tune out to very granular levels of detail.
Produced television content will have to survive based on raw viewership and downloads, not by what time slot they occupy. The success of television programming in 2016 will be measured not unlike the way we measure the success of New Media today. Old Media Television will have to adapt to an instantaneous gratification model, or die.
Of course back in 2010, Cloud Computing as well as Big Data were not industry buzzwords as they are now. But I understood even four years ago that such technologies would be critical to move television into the 21st century.
Will the TV broadcast industry cease to exist and go "Over the Top", as Les Moonves predicts?
Rapid provisioning (and de-provisioning) of servers and storage to provide geo-redundant capacity for the content streaming is one part of the equation, certainly. No television network will want to pay for spare datacenter capacity and the CAPEX and OPEX that goes along with it when they can just buy it on demand as a cheap utility from their choice of Cloud providers.
Sophisticated analysis and Big Data decision making tools will guide the networks in how to target advertising to who is viewing that streamed content, providing more of a precision guided muniton to the eyeballs than the shotgun blast that they have today.
For the advertisers, that's way better than the tools they have now. Today all they have is time slots, ratings and audience popularity based on Neilsen and perhaps DVR data, as well as local demographics.
All of that is legacy technology and vestigial old school business when Over-the-Air is gone. Depending on the viewer, who will be profiled based on their social network footprint and historical viewing data supplied by all of their content providers (presumably through business partnerships) they will receive customized TV ads dynamically inserted into their streams. And they will be told what other programs to watch.
Nothing will be DVRed, as content will be dropped onto the CDNs for the content provider as soon as it is ready and the endpoints will only need enough local storage for an encrypted stream cache, eliminating a great deal of content piracy. And it will be difficult to bypass embedded advertisements in some cases depending on how the content was licensed.
If the activities of the NSA snooping on your emails and phone call history creep you out, just think about what the networks are going to do with the information that details what you like and do not like to watch, what parts of it you liked or disliked, all of your favorite things on Facebook, what you've been saying on Twitter, what websites you look at, what products you've been buying, what books you read and what games and music you play on your devices.
One thing is for certain. Aereo will be a mere footnote in a decade hence, a long-forgotten startup that made a poor bet that the industry it used for the basis of its offerings would not adapt to the changing lifestyle and technology preferences of its content consumers.
Will the TV broadcast industry cease to exist and go "Over the Top", as Les Moonves predicts? Talk Back and Let Me Know.