Big television is undergoing big changes - not so much in content but in how we watch it, when we watch it, and who delivers the goods. In recent weeks, ABC has partnered with iTunes, CBS with Comcast, and NBC with Direct TV. The deals will allow people to view old shows whenever they want. Bob talks to Broadcasting & Cable columnist John Higgins about the ramifications of video-on-demand.
BOB GARFIELD:: Big television is undergoing big changes, not so much in content but in how we watch it, when we watch it, and on what device we watch it. Also, how we pay for it. First there's the ABC iTunes deal whereby ABC's prime time shows will be offered online through Apple's iTunes. Then there's the CBS deal with Comcast and the NBC deal with DirecTV. Under those agreements, the cable companies will be able to offer episodes of the networks' hit shows via video-on-demand, or VOD, for 99 cents. That's a big deal for TV watchers and an even bigger deal for producers and advertisers. John Higgins writes for Broadcasting and Cable magazine. He joins me to discuss the ramifications. But first, so we know of what we speak, John, what is VOD?
JOHN HIGGINS: Video-on-demand is basically allowing you to call up a sitcom or a movie or a news clip from your cable system as easily as you do a webpage on your computer.
BOB GARFIELD:: So if I decide that I want to see an episode of "Seinfeld" or maybe even last week's "Desperate Housewives," I press a button, on it comes and I get billed by my cable company for the service.
JOHN HIGGINS: Well, maybe you do, maybe you don't. A lot of stuff on video-on-demand is just free. On the deals announced recently, where it would be, you know, 99 cents to watch last week's "CSI," about half of that would go to the network and half of that would go to the cable system.
BOB GARFIELD:: This week, a lot of commentators, including your own boss, Max Robins, wrote that this is a really historic day in television. How big is this development?
JOHN HIGGINS: This was very, very dramatic in my life, and I don't believe the hype in most cases, and I believe this hype. The cable operators have been dying for higher quality product. The networks and the operators finally came to terms. What happened is we found out what the price was going to be, and that's been something that's been kind of like this big staring contest for two years. The cable guys didn't want to pay and the networks were saying they wanted, you know, five dollars an episode. So this could really break the ice and start a flow of high-quality product to video-on-demand.
BOB GARFIELD:: So on the face of it, you would think that everybody in the TV business would be slappin' high fives this week that this new window for revenue has materialized and technology has finally made it possible. But there's another side to this story, isn't there, John? Because to the extent that people download video-on-demand, they're not watching it on broadcast in its original form, which means the audiences are smaller than they ever were before, which, unless I'm absolutely crazy, undermines and threatens the entire model that gives us broadcast TV. Which side do you take on this question?
JOHN HIGGINS: I'm a little bit in the middle on this. This is not dramatically going to change cable financially. I mean, it's like, you know, a few extra billion dollars with the cable operator a year, but it's not going to be, you know, 40 billion dollars. On the ad side, there will still be some mass shows on the broadcast networks that everybody will be watching at the same time and talking about at the water cooler the next day. But there will be some disruption. If there's fewer people watching the big shows at the same time, that's bad for advertisers. Advertisers like mass. They like reach. That's the big advantage TV has over any other medium, even the Internet. You can't reach 20, 25 million people at the same time in any other medium. The flip side of that is, you know, VOD becomes its own ad vehicle, a new ad vehicle, in some ways a better one, because the cable operator's going to know a lot about you when you call up a movie. So your middle-aged guy living in the suburbs, they'll send you a different kind of car ad than they will send somebody who's, you know, a 22-year-old woman. And the cable operator will ultimately, not today, but ultimately be able to target that ad to you, and that may be more effective. And the advertiser will be willing to pay a lot more money for that, and they'll split that money with the networks.
BOB GARFIELD:: Okay. I have to know, what are you going to download first? What's your first video-on-demand demand?
JOHN HIGGINS: For 99 cents an episode? I'll TiVo it. But if I missed it, it would be "24." "24" is the show that, you know, I have to watch it and I have to watch it that day.
BOB GARFIELD:: John, thanks very much. [CHUCKLES]
JOHN HIGGINS: Thanks for having me.
BOB GARFIELD:: John Higgins is Business Editor of Broadcasting and Cable magazine. [MUSIC UP AND UNDER]
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