Television Disrupted: The Transition from Network to Networked TV

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Overview

With a vital update to his seminal book, Shelly Palmer takes a look at the old, explains the new and guides readers through the continually evolving and competitive landscape of media. Not just for television executives, the book is a must-read for anyone in the Telco, Cable, Internet or Satellite business who is striving to grapple with change, innovate, profit and avoid getting left behind.
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Product Details

  • ISBN-13: 9780240808642
  • Publisher: Taylor & Francis
  • Publication date: 4/11/2006
  • Edition description: 1ST
  • Pages: 248
  • Product dimensions: 6.68 (w) x 8.88 (h) x 0.58 (d)

Meet the Author

Shelly Palmer is the Managing Director, Advanced Media Ventures Group, LLC. He is an award-winning inventor, technologist, composer and television producer and the host of Media 3.0 with Shelly Palmer. He invented enhanced television (Who Wants to Be as Millionaire, Monday Night Football), the most popular form of interactive television in the United States. Mr. Palmer is President of the National Academy of Arts & Sciences, NY, which bestows the coveted Emmy® Awards. He is the Vice-Chairman of the National Academy of Media Arts & Sciences and he oversees the Advanced Media Technology Emmy® Awards, which honor outstanding achievements in the science and technology of advanced media. He is the author of one of the most popular television business news blogs, www.media30.com, a weekly columnist for the Jack Myers Report, The Huffington Post and a technology commentator for CNN.com.
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Read an Excerpt

Television Disrupted

The Transition from Network to Networked TV
By Shelly Palmer

ELSEVIER

Copyright © 2006 Shelly Palmer
All right reserved.

ISBN: 978-0-08-048132-6


Chapter One

The Businesses of Television

Wonkavision ... my very latest and greatest invention. Now, I suppose you all know how ordinary television works. You photograph something and then the photograph is split up into millions of tiny pieces, and they go whizzing through the air down to your TV set where they're all put together again in the right order. — Willy Wonka, Charlie and the Chocolate Factory, Roald Dahl, 1964

From a technology perspective, Willy Wonka had it just about right. But very few people think of television as a technology, and there is no reason for them to. Television (from the Greek word, tele, and the Latin word, visio,) literally means far-sight or far-vision. Modern American network television lives up to that name. For more than 50 years, it has been the best, most efficient way to communicate with the largest possible audience. This probably won't change anytime soon. What is changing is our definition of a large audience and the value we are placing on it.

Ratings and demos, the lingua franca of the television business, are giving way to new types of ROI calculations. Production and distribution are quickly becoming democratized. And, every day seems to herald a new, world-changing technology and the portent of a new paradigm to accompany it.

Before we can jump into discussions about all of the things that are changing (hourly at this point) in the television business, we have to cover some basics and learn some vocabulary. If you know how television stations, television networks, cable networks and satellite networks came to be, and you have a pretty good idea who all of the players are, you can skip to Chapter 2. Otherwise, let's look at a brief overview of mass media in the United States.

There Are Two Kinds of Television ...

There are several different consumer value propositions embodied in the modern media world. For television, they break down into two basic categories — "free," which is known as "advertiser supported," and "subscription," which means you pay for the media you use. Of course, nothing in the media business is ever that simple, so let's review the subtle (and not so subtle) variations of these two themes.

Free Analog Television

Free over-the-air television is supposed to be free. But, like so many things in life, it's not really free. You need to own a television monitor, a television tuner (you can purchase a television receiver which combines both elements — we commonly refer to television receivers as TVs,) and a television antenna. If you live within the coverage area of a local television station, you can use your television tuner to tune into that specific channel and watch whatever content is being broadcast free of charge. Oh, and you need electricity too. So, free over-the-air television is mostly free, except for the cost of the equipment, any maintenance fees and electricity.

As far as analog television technology goes, not much has changed since December 23, 1953. That's the day the Federal Communications Commission (FCC) authorized the use of the NTSC (National Television Systems Committee) standard of 525 lines of resolution per second for color broadcasts in the United States. In order to provide this mostly free service to viewers, a local broadcaster must obtain an FCC license to broadcast on a particular channel (frequency) from a specific geographic location.

Broadcast Networks

Since the broadcast coverage area of a local television station is physically limited by the power of its transmitter and the location of its antenna, as shown in Figure 1.1, the only way to cover the entire country with broadcast television is to create a "network" of local television stations. This has been accomplished by several organizations with familiar names, like NBC, ABC, CBS and FOX.

In today's mass-mediated world, the television networks own some of their own stations, cleverly referred to as "O&Os" (owned and operated). Stations that carry the network feed but are owned by other companies are known simply as affiliates. As you may have guessed, every station owned by a network station group does not necessarily carry that particular network. For example: the NBC Universal (which owns both the NBC and Telemundo Networks) does own a bunch of NBC and Telemundo O&O's, but they also own independent KWHY in Los Angeles. And, as you may also have guessed, there are station groups (such as Hearst Argyle and Advance Newhouse) that are completely independent but own stations affiliated with several different networks.

Designated Market Areas (DMAs) are used by Nielsen Media Research to identify TV stations whose broadcast signals reach a specific area and attract the most viewers. A DMA consists of all counties whose largest viewing share is given to stations of that same market area. The entire continental United States, Hawaii and parts of Alaska are covered by 210 non-overlapping DMAs, as shown in Figure 1.2. Table 1.1 shows the top 10 DMAs in the nation. (Visit www.televisiondisrupted.com for complete listing.)

If you think about it, the infrastructure of a modern television network is extremely large. Each station has offices, studios, engineers, a transmitter and an antenna to carry just one channel. Multiply that capital expense by the roughly 200 affiliates each network has, adjust for market size, then multiply by the number of different networks available in each DMA and you start to understand why television has become a multibillion dollar industry.

Since television stations currently offer only one analog commercial channel (they will all have multiple digital channels after the mandatory conversion to digital), the multi-channel universe familiar to many consumers is brought to you by your local cable operator, cable over-builder, direct-broadcast satellite service (DBS), or telephone company (telco). The FCC refers to these content suppliers as "multi-channel video programming distributors," or MVPDs. For our purposes, we describe anyone who runs a proprietary network for the purposes of delivering some form of video to consumers as a "system operator."

Cable networks (HBO, ESPN, A&E, CNN, etc.) can feed system operators directly. However, in order to be available through a system operator, a broadcast television network (NBC, ABC, CBS, FOX, etc.) must retransmit their signals from their local affiliates to the system operators.

Free Analog Television Models

There are two basic types of free over-the-air television: commercial and educational. Of the almost 1,800 television stations in the United States, roughly 1,400 are commercial and about 400 are educational (FCC, June 2005 Broadcast Station Totals).

Back 50 years ago, when the modern business model of commercial television began, the owners of commercial television stations (and networks) made a pact with the American people: You get to watch this interesting content for almost free if you agree to watch some commercial advertisements. Also, we'd like it if you went out and supported the advertisers because they pay us a bunch of money to broadcast the spots and we need them to come back and do it often. This may be a grossly oversimplified view of commercial television, but it is ultimately accurate. Today, of the 110 million television households, approximately 15 million still use antennas to receive free over-the-air television.

Free Digital Television

Just to complicate this issue a bit more, the FCC has mandated that all broadcast television signals in the United States be converted from analog to digital by early 2009 (but the date will probably change). Television stations have been allocated a range of frequencies in the spectrum to be used for DTT (Digital Terrestrial Television) broadcast. They have the option to use this digital bandwidth for HDTV (High Definition Television) or SDTV (Standard Definition Television) or anything else they choose, as long as they fulfill their obligations to the FCC for local broadcasting and live up to the requirements of their broadcast licenses.

Unfortunately, consumers who use an antenna to receive digital broadcast transmissions are going to have a different experience than they had with analog broadcast television. Analog television is broadcast using an FM signal and, although the best picture is achieved with a clear line of sight between transmitter and antenna, acceptable signals can be achieved even in sub-optimal situations. Sadly for antenna users, digital television signals are more complex than the analog television signals that they are replacing. Multipath issues prevent optimal broadcast digital terrestrial television coverage in cities like New York where tall buildings block each other and receivers are in close proximity to the transmitting antenna.

Lastly, digital television is not backwards-compatible with analog television. This means that after the switch, everyone will have to have a digital television tuner, digital television set or a digital-to-analog converter (DA) attached to an antenna to use their current technology analog television sets to receive free over-the-air television signals. Broadcasters estimate that there are 73 million television sets (that's sets, not households) in American homes not hooked up to cable or satellite services and that rely on over-the-air broadcasts. After the switch, these television sets are going to become landfill unless they have a DA. There is going to be a business here for somebody – and a cost to consumers one way or the other.

Hybrid Subscription

Don't people with cable get free over-the-air television? Yes, they do. Only, it's not free. System operator subscribers pay a fee each month for the pleasure of having better signal quality (over cable, fiber or satellite) — which translates into a better picture and, nowadays, more channels. But, consumers also see advertising. How did this hybrid model become the most popular form of subscription-based entertainment in America? After all, you were only supposed to have to watch advertisements if the content was provided free ... weren't you?

Cable Television

A little history: In the early days of cable, there were no premium channels or important cable-only content. Cable's consumer value proposition was simply the promise of a better picture. Unless you are older than 40 or happen to use an antenna to receive your television signals, it is probably hard for you to imagine what the world was like in the days when everyone had antennas. Back then, if you lived close to the television transmitter you could use an indoor antenna, lovingly referred to as rabbit ears. But, if you lived in the suburbs or more rural areas, you had to have one of the big rooftop models like the Dual Dipole with screen reflector, the Amphenol Stacked Array, the Ten Element Yagi or my favorite, the Finco Bedspring.

All of these antennas had one thing in common ... they provided sub-optimal picture quality. This created a rare situation for engineers; an actual problem that needed a solution! The solution was cable, and people couldn't wait.

Back in the 70s, if you lived in an average television household, the TV was on over six hours each day. Even by today's standard (American households watched over eight hours of television per day in 2005, according to Nielsen Media Research) that's quite a bit of TV. So just about everyone wanted a better picture. Towns were willing to grant monopolies and other financial incentives to entrepreneurs who would take the risk to wire a neighborhood, and wire they did.

Today there are an estimated 73 million cable television households, which account for about 66 percent of the total estimated 110 million television households (see Table 1.2). You can find more complete listing of industry statistics at www.televisiondisrupted.com for the most up-to-date information.

Part of the consumer value proposition of cable television was a higher signal quality (yielding a better picture) than you could achieve with an antenna. So, it stands to reason that the first, most important content you could find on cable was the retransmission of local television signals.

Must-Carry Rules

In 1972, when cable was still very young, "must-carry rules" were designed to ensure that local broadcasters would not lose market share to fledging cable networks that were competing with them for the limited number of available cable channels. Over the past few decades, must-carry has been ruled unconstitutional and has been revised several times.

(Continues...)



Excerpted from Television Disrupted by Shelly Palmer Copyright © 2006 by Shelly Palmer. Excerpted by permission of ELSEVIER. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.

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Table of Contents

1: The Businesses of Television
2: Disrupting Television Using Existing Network Technologies
3: Internet
4: Existing Wireless Networks
5: Emerging Networks
6: Content, Storytellers, Gatekeepers and Related Skills
7: Networked Value Propositions
8: Media Consumption
9: Digital Rights Management and Copyright Laws
10: The Evolution of Advertising and Audience Measurement
11: Emerging Advertising Technologies
12: Television Disrupted

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  • Anonymous

    Posted May 2, 2009

    An Awesome Primer for 21st Century Media

    Palmer did a great job of synthesizing a complex topic into a comprehensive primer on the state of today's media - both new and old. I would recommend this book to anyone working in a field impacted by the shifting sands of content-based media.

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