This is an expanded version of the story that appeared in the March, 2016 emmy magazine.
Inhale the future; exhale the past.
So say the successful — and those striving for the top, But when it comes to television, the future has many in the industry holding their breath.
Between dizzying advances in technology, shape-shifting business models and more programming than even the world's worst insomniac could hope to watch, a little anxiety is understandable.
So, yes, there's uncertainty, but there's also plenty to celebrate: Better shows than ever? Check. More — and more convenient — ways to watch them? Check. Despite the disruption (and some would say, because of it), this is a time of enormous opportunity for consumers, creators and companies alike.
But don't take it from us, Listen to the executives, producers and futurists — all on the front lines of TV's transformation — who shared their thoughts with emmy editor-in-chief Juan Morales on cord cutting, audience measurement, "peak TV" and much more,
There's no denying that the business has taken some lumps, but the upshot, in the words of one analyst, is clear: "Television is still here, and it's stronger than ever.”
Now, go ahead, take that deep breath,
Chairman, NBC Entertainment
What would you regard as areas of greatest opportunity and greatest concern with regard to the future of television?
Well, the concern is always following the audience to other methods of viewing, and measuring and getting compensated for that, since that’s the business that we’re in.
There have never been more ways for people to watch television, on different devices and different platforms, and we know people are watching television and broadcast television more than they ever have been, but in different ways and in ways that are harder to measure and monetize.
So for us, it’s really about trying to figure out how many people are really watching a program. And the beauty of more devices is more opportunity for people. But also, how do we get compensated for that?
That’s one dilemma. The other dilemma is what everyone talks about these days, which is just the volume of programming that’s available for everybody. Every genre, on so many different networks, and the fragmentation of that audience and trying to get noticed in a marketplace that is just filled with volume — and a lot of it’s great. That’s the good news.
But it just tends to continue to fragment the audience, and we’re in the aggregating-eyeballs business, which isn’t true of many other businesses. So that’s a continuing challenge for us.
The opportunities are the flip side of the argument — you can reach people easier than ever before. If they can find a show, and they want to watch it, the experience is so convenient. I mean other platforms and other devices and that’s a good thing, because hopefully that just leads to more overall viewership.
We have to find ways to bring them back to the, as I said the measured experiences, monetized experiences, but I think it’s a real opportunity that we can just reach so many people on so many different platforms nowadays.
You touched on some things I was going to ask you regarding some recent news items. The first one is Fox’s live production of Grease, which got great ratings. You started the live-musical trend with Sound of Music. What was the inspiration behind that, and how does it feel to see it become a trend?
I’m thrilled about it. I wanted to do something like that to see if there was to make some kind of event out of a movie like that. We’re in the event business whenever we can be, and we know what happens when we have the Olympics and the Super Bowl, there are a lot of big live events still in the TV business, and I wanted to figure out how we could create more.
We have awards shows and half-a-dozen things, but when we did Sound of Music we had no idea what it would yield, and lo and behold, there were almost 19 million viewers of that original telecast, which I don’t think will ever be surpassed. I think we started something that’s great. Imitation is the sincerest form of flattery, and it’s wonderful if other people want get in the game.
And it’s not just musicals. We’re going to do a live A Few Good Men, which is a drama as opposed to a musical, and there are other networks talking about doing both musicals and dramas live.
It’s all about building events for an audience that I think is saturated and a little bit overwhelmed with the hundreds and hundreds of choices they have. How do you make a choice go to the top of their list? And a live musical seems to be, if you do them right, one of those things.
The other major live event is sports, and the NFL recently announced that NBC and CBS will share the rights to broadcast Thursday Night Football. What does that mean for you as a company, and as you said, as the ability to attract large audiences for live viewing becomes more important, will sports only become more valuable?
Well, sports is the best sort of live viewing experience. It is the one form of programming that people will watch live. I mean, who wants to watch a big sporting event three or four days later? There’s hardly any delayed viewing of live sports. It’s almost as if to say live sports is redundant, because they really are live.
Sunday Night Football is not only a huge event for us every week in the fall, it’s the number-one show on broadcast television and delivers a huge audience religiously. We love being the home of Sunday Night Football, we love being the home of the Olympics and all the stuff that we do in the sports world.
But there’s almost nothing better than the NFL games. So to have them on Thursdays as well is just a fantastic development for us, and it gives us tens of millions of people to promote to for our other scripted programming.
So the Sunday games are just great for us, and we hope Thursday games are one of the tent poles of programming that, that we do, it already is. We love having those live sporting events and couldn’t be happier that the NFL chose us again to kind expand their franchise.
A moment ago you mentioned the dilemma of audience measurement. In another recent news item, Rentrak and comScore announced that they are merging in an effort to challenge Nielsen. How do you feel about measurement going forward and the prospects for standardization so that people like yourself can capture and get compensated as you described?
It’s vital for us in the broadcast world, though it’s not as vital for everyone else. I ran Showtime for a number of years, and we didn’t care about ratings or how many people watched our shows. We loved to brag when we had good numbers, but it really is a vital part of our business plan [at NBC].
So measurement and accuracy and how many people are really watching and what kinds of people, what demographics — all that stuff is vital to us and to our advertising clients. So more and better measurement systems are great. It’s really not about challenging [or] competing with Nielsen, it’s just who can be the most accurate. It’s a huge job.
It’s almost impossible to pull off a national sample in this country of the size of you need, and how accurately can you do it. Can you measure all the devices that are at the moment not measured, and are really where people are going, and are vital to our business?
So anyone who wants to get in the game and come up with their system is great for us. There are streaming platforms, and we’d like to know how many people are watching shows there, because that’s certainly a new avenue of programming. And we have a studio business also, it’s separate from the network, and we produce shows for Netflix and Hulu and Amazon and whatnot.
So it’s important on all levels for us to know what those metrics are, and we applaud anybody who wants to get into this measuring system business and what new technology can they use? And, just, how do we get a real accurate measurement? At the moment, we’re all dependent on one system, and that’s always tricky. You have to assume that’s accurate, and the best system, and maybe it’s not.
Netflix and Amazon don’t release viewership numbers. You might have better luck with Hulu because your company is one of its partners. Your colleague Alan Wurzel got some attention at the Television Critics Association meeting in January using technology from the technology firm Symphony to predict, or perhaps to reveal viewership data for, some Netflix programs. Why did you do that, and what are your thoughts in the aftermath of having done it, as far as the coverage it received?
Well, journalists are only going to want to write the incendiary part of the story, not the plain, informative or mundane part of the story. But the presentation, which we do every time there’s a TCA, is really kind of educational, and to try to pull the curtain back on some of these systems.
I think Alan spoke for about an hour, and I think 10 minutes or less of that had a mention of Netflix. Of course, what came out of that was: “NBC nipping at Netflix heels, exposing, blah, blah, blah.” And it was really only to demonstrate a comparative level of what we think is the viewership of some Netflix shows versus broadcast television shows.
Because we get measured and they don’t, and yet we want to put them in context alongside us, just to sort of see how we’re doing. And the perception out there is — and some things that Netflix has said, without any numbers to back it up — is that those shows are out-rating broadcast television, and broadcast television shows are diminished compared to some of those hits.
They have some great hits, certainly creatively. We don’t really know if they’re hits numerically, and we’re curious about where their shows fall versus where our shows fall. So it was really only about exposing some of these numbers that Symphony, which is a separate company, has developed a measurement system that we think is pretty accurate and interesting to look at in terms of new technology and putting those numbers up alongside our numbers.
That transparency, we think, is great for the business, and certainly the more information we all have, the more we can sort of put everything in context. That was really the purpose of it, and of course it turned into us kind of blowing a hole in the side of Netflix.
I also love [that] Ted Sarandos at the TCA said, “I don’t know why NBC is spending time talking about our ratings; it’s because they didn’t want to talk about their ratings." But the truth of that matter is — and nobody, of course, wrote this, they just wrote the quippy quote — I spent 20 minutes earlier that day talking about our ratings, because they’re so extraordinary.
We’re number one by a mile, third year in a row, won the fall, won the sweeps. And of course what came out of that was the inference that we’re not talking about our ratings because somehow they’re bad and we want to deflect that by talking about Netflix. But I get it, it is what it is. Transparency, we think, is really the way to go, and that’s what we hope happens over the next couple of years.
Louis C.K. recently released a show called Horace and Pete, with him and Steve Buscemi, directly through his website, and he’s charging people to watch it. He’s done that before with live comedy performances, but this is a scripted series. What did you think of the approach of going straight to a fan base?
There’s nothing I can complain about, because the internet has given us the opportunity to do so many things that were never possible before. And far be it for us to complain about any use of the medium that we love and use every single day of our lives. If somebody comes up with a great way to deliver a program directly to an audience, more power to them.
I don’t think that will ever supplant the kind of infrastructure and the sort of platform that an NBC has, or a USA network has. But again, I can’t really get upset about it. Good for him.
I hear Instagram is doing a scripted series that they’ve announced. I guess it’s all based on photographs, and there’s a narrative thing; it’s a minute long or something, and they’re going to put one out periodically. Now, it’s bite-sized, as you would expect it to be on Instagram, but I guess where there’s a medium, there’s going to be some kind of programming, and everybody is looking for how to make their service relevant.
The good thing is, it all comes back to how do you want to tell stories? They want to figure out how to bring storytelling in its myriad of forms. Whether it’s a six-second Vine or Instagram storytelling or direct to consumer; it’s all storytelling and I just think it speaks to the great hunger in our world for people to continue to consume storytelling in all its forms and various lengths.
We do one kind of storytelling, which is big, scripted hour and half-hour stories, and that’s great, and there are many other forms of that. And I think the more the merrier.
Most of the conversations about the business of television are quantitative, but there’s also a qualitative component. There has been a lot of talk about diversity and the conversations that have arisen because of the Oscar nominations. How important is it to create programming created by, and cast with, people from underrepresented groups, both for you as a company, and for the industry overall?
I think it’s vital. The Oscars have gotten a lot of negative press, unfortunately, because awards shows are unique in how people bubble up to the surface.
Every awards show I look at, and usually they’re awards shows we’re competing in, I’m constantly wondering, how did something that we did that was as great as Parenthood for all those years, never get nominated? It’s not sour grapes, it’s volume and people being exposed to things and how do you see everything and what’s the voting body and how devoted are people to actually seeing everything?
I think there are always huge discrepancies in any sort of awards show system. That said, I think television is closer to reflecting society than anything. Movies tend to be bigger and grander, and there are superheroes and all kinds of extraordinary large-scale things.
We’re mostly representing real life, whether it’s reality television, or even dramas and comedies, and I think it’s vital that we represent the world that we live in, and its diverse, not only in sort of ethnicities, but in gender, sexual orientation all of those things have got to be represented. And I think television has been doing an exemplary job of it.
I’m really proud of our record here, and I think we’re one of the most diverse networks. I think 41 percent casts are diverse, which is probably more than the proportions of the population — that’s all diversities. I know we just put like a half a dozen female directors on pilots, which I think is kind of unprecedented and very much a great step in the right direction.
I just think it’s the world we live in, and if we don’t do it, it’s not only bad for our souls, I think it’s bad for business. Because these diverse audiences and cultures drive our business and want to watch characters that they can relate to and that look like them, and it’s incumbent on us to do that.
I’m really thrilled that our executive staff is extremely diverse. My head of drama is African-American, my head of current programming is African-American, my head of casting is Asian-American, the head of the studio is Indian. I mean, we have it in every rank and file.
And I think that’s what makes it just organic when somebody comes in with an idea we think it’s not a bunch of white people sitting around putting on shows with white ensembles; the people in the room are going, “Yeah, that’s a diverse show, that’s a world and a sort of character that I can relate to. And I think it’s really incumbent on everybody to bring more diversity into the, the ranks of the people who are making the decisions.
And that’s, again, very organic here, and I think at other networks, and I’m really proud of that. So I think television is where you can look for real progress. We’ll never do enough, and of course we have a lot more to accomplish, but I’m really proud of the record that the television business as a whole has right now and certainly that this network has.
President, Solutions Research Group Consultants
I first spoke with you in 2009, for a story about the explosion of online video. What are some of the major differences in the media landscape in the seven years since then?
I think the big difference is that the whole mobile piece was kind of embryonic at that time. You started seeing it, but you didn’t think that it would be dominant, so a lot of the conversation was around online streaming. There was still streaming, but I think it was still in the context of a download from iTunes.
If you wanted a movie, the model was: you bought the VHS, and then you bought the DVD, and now you would buy the download. There wasn’t the idea that [all content] was out there, and you could access it with one passkey. And Netflix was not nearly as dominant culturally.
They were still a DVD-by-mail service.
Yeah, I remember when they were piloting streaming, and I remember reading something like half the people on their DVD subscription list were actually streaming the movies. That sort of gave rise to, Well, why don’t we take the service more seriously? Today there are 43 million Netflix subscribers in the U.S., and Amazon Prime and Hulu are clearly a force as well.
What are some other trends?
About 10 years ago, 65 percent of U.S. households had three or more TVs. Now that number is down to 54.
It used to be you had three, four, five televisions in a household, and usually one of them would be in the kids’ room. There’s no TV in kids’ rooms anymore. Why would there be? They either have an iPad or a smartphone or something that’s mobile, so it doesn’t have to be in a room. Secondly, as old TVs die, or get too old, they’re not being replaced at the same rate.
Because they’re getting replaced by a tablet or something mobile instead.
Exactly. So now, when we do studies, one of the points we would use would be the number of screens in use. Screens that are internet connected exceed the number of TV sets. Because if you look at the typical household, there are smartphones, tablets, laptops, even desktops, where you can stream video. And there are more of those now than there are TV’s that are connected to the internet.
The other component of this is how easy and seamless it is to watch video today. It used to be much more difficult.
I’ve been thinking about this a fair bit. Look at Jimmy Fallon. His YouTube channel has millions of subscribers. The funny thing is, on the one hand, he’s very powerful precisely because of TV. On the other hand, I never really have to watch [his] show because I know that if something culturally significant happens, or something really funny, or something really captivating, I can always stream it on my phone the next day.
It’s the elevation of program identification or content identification and the potential dilution of the source brand, because the network, in this case NBC, might not resonate as much with viewers. They just want to see Jimmy Fallon.
Right. The cultural mode that’s emerging is, we connect to people and we connect to maybe organizations and causes. But what’s a network? A network aggregates a lot of talent which is relevant to people. It could be a talk show host, it could be a news anchor, a weather person, a sports announcer — it doesn’t really matter.
These are our cultural touch points, and the social piece is changing the balance of power to where you can now, if you want, connect directly to the artist, the athlete, and so on. You don’t have to go through the mother brand. It’s always a kind of complex relationship.
Look at Comedy Central. When you lose top talent [like Jon Stewart and Stephen Colbert], will you be able to engage socially as well as you did? There’s that brand equity that individuals stars carry that has become much more portable in this new environment. So Jimmy Fallon is assured of a future, because if things don’t work out, or if he wants to do something else, he’s got millions of fans coming along with him. At that A-star level, social is incredibly powerful.
There’s been tremendous disruption in the television industry in recent years, which is concerning to big, legacy brands like networks. On the other hand, it has created opportunities for people at more niche organizations. And with so many companies producing original programming, there are lots of new places for TV professionals to find work. But disruption causes tension.
Yes. As an analyst, I’m clear on consumer trends, but when I look at the economic impact, it gets a bit fuzzy.
For example, I think it’s easy to show mathematically that there’s more video entertainment being consumed. Let’s put aside all the cat videos and focus only on professional or quasi-professional content. Across the board, there is more of it being consumed. So you have to believe that there are more people who could make a living off it.
But I think the disrupting content is being produced at a much lower rate in terms of the dollar amount. I’m not talking about dramatic stuff that Netflix is doing.
For example, other day I went on YouTube and I found this woodworking channel, and it had half a million subscribers. I looked at some of the videos, and they’re good quality, but nowhere near the production value you’d find in a tier-one cable channel. But I have to believe the guy who’s creating the content is monetizing it.
Is he making nearly has much as you would’ve made, say, 10 or 15 years ago, being commissioned to do those shows for a cable channel? Probably not. It’s not the same thing as analog dollars to digital dimes, but I think there are a lot more dollars going to more people. So, that’s one end of it.
The second part of it is when it comes to opportunity for original productions. If you’re a content creator, there are probably a lot more chances for your content to be consumed, for somebody to take a chance with your content. Netflix, Amazon and Hulu are providing those opportunities as well, and creating a real point of competition.
So there is the glass half full, definitely, from that standpoint. But if you’ve been in the business for 25 years, and been doing it you know a certain way, the rules are changing, and I think that shift is quite painful, because there’s a lot of uncertainty.
With the vast increase in programming, and so many different ways for people to consume content, can companies that rely on advertising measured it accurately enough to generate the revenue they need, or is there a bubble that’s going to burst?
The big issue is that measurement is in real flux. I’m being polite. It’s a mess right now. That’s a real issue for the traditional part of the industry.
You have ratings that basically reflect maybe, in some cases, half, or maybe 60 percent, of what happens over the course of a month. But a month later, things have moved on.
And similarly, digital has an issue too, because you don’t have a unified, simple reporting system or credible kind of currency that everybody can buy into. So that makes it hard for brands when they’re looking at their ad spends. There’s no apples to apples, so they have to sort of eyeball things, which can be difficult.
It’s okay if you’re a small spender, but if you’re a major company — you’re Ford or Procter & Gamble, you’ve got billions at stake. So it’s not going to be a pretty evolution, I think, if you look at Nielsen and where that is. I mean, you have a sample-based system, you have boxes in people’s homes. But if you look at streams or YouTube, it’s kind of an instant measure. It may not be as sophisticated, and there are issues with it, but it’s also reasonably simple.
The one thing I’ve noticed is that in the conversation around streaming, and companies like Netflix, Amazon and Hulu, we always kind of overlook what’s going on with YouTube, where you have a very vibrant ecosystem. You see it in certain verticals.
For example, if you’re Maybelline, chances are your brand directors are paying as much attention, if not more, to YouTube personalities and their channels and their subscriber counts and their viewing of the videos that they’re partly sponsoring or fully sponsoring, as they are to the performance of certain television shows you might be buying.
There’s a lot of viable, triple-A content that’s directly consumable, friction-free, and gets to people [because] they subscribe to the channel. Something like 30 percent of online Americans subscribe to a YouTube channel. That’s something like 70 million people. And the minute their favorite gamer or makeup artist or photographer or woodworker puts something up, they get pinged, and they can go and watch, and all of a sudden it may go from zero to 500,000 views in no time.
Michelle Phan is the big one in the makeup space.
Yeah. In fact, I was making a presentation to a TV concern three years ago, and we used her as an example. She was relatively new, and had maybe a million subscribers at the time.
We had just finished a big project for Procter and Gamble, and the brand managers were really interested in understanding fashion-forward young women. And what came back from the research was how influential those trendsetters were on YouTube. So you can imagine the way the conversation goes now at an organization that’s probably one of the top five in the world in terms of market cap. And they have this incredible vested interest in younger women.
And the research comes back and people say, “A lot of my discoveries are via YouTube online.” The first time I watched one of her videos on YouTube, I thought, Of course, this makes so much sense. Why wait for one little thirty-second product spot on a channel that people may or may not be watching, and may or may not be measured accurately, when you could just buy into the top 10 or 20 influencers on YouTube?
That’s not cutting out a corporation, because certainly Maybelline is a corporation, but they’re they can go directly to the customer instead of buying time on a TV show.
That’s right, and it’s the same thing with social media, too. Whether it’s via Twitter or Facebook or Instagram, you can reach communities of interest, you can reach fans of The Walking Dead without advertising on The Walking Dead. All you have to do is buy the key words.
For example, and I’m exaggerating to illustrate the point, you no longer need that particular middle person, or that’s not the only place you have to invest the money. You can reach that target group in alternative ways.
But there’s still $70 billion in TV advertising in the U.S. market, and all these other alternatives are still relatively new, and they’re gunning for that same total.
For example, I’m sure you’ve been following that Vice is launching a linear network. I think their top line last year was $4 billion. So I thought about that for a second. I think ESPN is like $12 billion on its own. So there’s still a lot of big money in the TV space, and I think they’re also looking at digital brands to see how they can get a piece of that action. It’s both an opportunity and a threat, depending on where you are on the continuum.
Do you follow cord-cutting trends as well?
Yes, it’s part of the package. I think the best way I can think about it conceptually is, if you’re driving and you’re on a road trip and you go by an older motel with a sign from the 1970s or whatever, you’ll be able to recognize it from the fonts that they use for the name, but also, it might say something like Cable TV.
Whereas, a newly built hotel will almost always say Free WiFi! It’s almost like every generation, every 20 years or so, has something it grew up with. So if you were born in the 1930 or ’40s, it might have been radio; if it was the ’50s into ’90s, it might be TV. And if you were born any time from the early ’90s to now, it will be internet.
You can even break that down to less mobile and more mobile components. I have a teenager, and there wasn’t an iPhone when he was born, but my younger was born later, and she doesn’t know a time when there wasn’t an iPhone.
Those early connections create kind of culture relevance as well. We’ve done a few different studies in this space and learned some things. First, the number of U.S. households has been growing at a clip of about two to three million households per year, but if you look at the past five to seven years, the number of households with paid TV has not really increased. It’s maybe 98, 99, 100 million, somewhere in there.
That could be falsely encouraging, because you think the numbers are stable, but the truth is, you’re still adding households, but a lot of them are not paying for television.
That’s right. And I’ve always been fascinated by the counts that Nielsen seems to lowball a little bit versus the U.S. Census Bureau when there are annual surveys of occupied households.
Last year I remember digging into it a little bit. But putting aside the exact, precise numbers, that’s exactly what’s happened. Recently there were articles about the decline in ESPN’s subscription numbers over the past two years. They went from something like 98 million to 92 million.
Yes, which translates to something like $650 million less in subscriber fees, according to reports.
It’s like when a lake is frozen: before the ice breaks, you can’t see all the stuff underneath. Once it breaks, you see everything, but it’s too late.
When the numbers go from 98 million to 92 million, there’s stuff going underneath. What that tells me is that part of it is cord cutting, and part of it is people opting for packages without sports. Although not that many carriers offer that option exactly.
It’s really becoming an issue of affordability. People always say, “Well, when you say affordability, what’s the context?” The context is, each household, including yours, is spending a lot more on communication services and entertainment services than 10 years ago. There are more options. You have your TV service, you have your internet, maybe you dropped your home phone but you might have three mobile phones at home.
Then there are subscription services, apps that your kids download, and if you add it all up, it’s a substantial amount of spending. So you might look for ways to save.
When you’re cutting things, or when you’re trimming things, you look at value for the money each service provides, and make your decisions accordingly. And the second part of it is the millennials. Somebody born in the early ’90s may have graduated from college, but they didn’t have paid TV at college. Now, when they form a household, what do they do? If they’re big sports fans, of course they’ll have TV, but you don’t have to have 500 channels. They could buy a smaller subscription.
A skinny bundle.
A skinny bundle, exactly. Or do they skip it altogether? That’s the dynamic that’s playing out, as well as the dynamic of cord shaving.
Of course, a lot of the operators and MSOs are beginning to say, “Well, I’d rather keep you as a customer than lose you as a customer, so I will cannibalize my own product before somebody else does it for me. So I will offer you a smaller package for less.” So that’s contributing as well.
We’re seeing this happen in slow motion, so it’s kind of difficult to see. I always look at the reporting quarters, and I say, “Well, that’s nice, but one quarter up, one quarter down doesn’t make a trend.” You have to look at it over a long period of time — five years, seven years — and the bottom line is, for the past five to seven years, the number of paid TV households in the U.S. has not grown. But households overall have grown substantially.
Another thing that’s happening is the proliferation of standalone pay services, whether its HBO Go or CBS All Access, which is going to have new Star Trek episodes next year, or the new NBC comedy service called Seeso. Each of them costs a monthly fee. So if someone lets their cable or satellite service go, and buys a lot of separate services, their bill might not result in as much savings as they think it does. It could even turn out to be more.
Well, if you go back to when music was moving from analog and even packaged CDs to digital, there was a period of confusion. First of all, iTunes didn’t have all the labels and artists, and then, if you bought something from iTunes, you couldn’t necessarily play it on other devices. So there was kind of a period of confusion, and I think that’s pretty customary in these kinds of transitions.
But you can almost see, on the music side, that this is being sorted out, and is maybe seven or 10 years ahead of streaming services. Now there’s price points and a kind of dominant design emerging. So even if you can say, “Oh, I’m going to go to Apple Music; no, I’m going to do Spotify; no, I’m going to Google Music Play,” there are price points, there’s some orderliness to the market.
Whereas, I think what we’re seeing here is sort of, if you look at the legacy content creators or networks, kind of one foot on the brake, one foot on the gas: “Let’s put it over the top, but not so quick that is cannibalizes our main product.”
What I’ve found from doing consumer research for a couple of decades now is that, with consumers, there are early adopters and some movement, but most consumers will wait until the market sorts itself. Or the market will sort itself by taking cues from the consumer. There is a kind of a-ha moment, a clarifying moment, and everybody goes forward.
So I suspect that with television, in the next two years we’ll still have this experimentation and different models — some ad supported, some with multiple subscription models. But imagine the horror story of having to have five or six subscriptions to different over-the-top services, each with different credit card information and passwords. That’s not an easy world either.
So I think we’re going to see that sort of sort itself out, but how is the world going to look five years out? All I know is that there will be a lot more streaming, a lot more on demand, probably hybrid ad-supported and subscription, but it will probably be more orderly for the end user, too.
Would you say that the changes in the television space are progressing faster, slower or at about the pace one might expect, as far as movements driven by technology?
With these things, I always think of the visual of a snowball — it starts slow, and gradually begins to accelerate, and then at some point, the old thing is gone and the new thing is here, and you sort of say, “My grandma used to do this.” I don’t know how that happens, but it does! (Laughs)
How secure or vulnerable are networks with conventional advertising models?
There has been a slow erosion in the past seven, eight years. It’s very hard to see quarter to quarter, but there has been erosion. If you look at the top 10 or 20 shows in the ratings seven or eight years ago versus today, you’d going to see a big difference. The average audiences are much smaller today.
But I think you have a good five years. After that, all bets are off, really. What I’ve observed professionally with situations of erosion is, it’s a slow process. You know it’s happening, you’re talking about it, but it’s really not falling off a cliff.
I think there are some corroborating factors, too. One of the things that’s propping up a lot of TV, period, is sports. Primarily in the American context, the NFL is a huge contributor. If you unpack that piece from your primetime ratings and everything else, you see kind of a more frightening picture, if you will. But that’s fine, that’s part of it.
But the numbers for broadcast rights — if the NBA signs a gazillion dollar contract, or whatever, they know it’s the last one ever. (Laughs) There won’t be another one like it, so to speak, because there’s a certain point where your shareholders have to say, “Well, I don’t know if we can spend this money for that, relative to the risk that we’re facing.”
But I’m not saying networks are going to die, or anything like that. At the same time, we’ve seen the rise in prominence of an HBO and an AMC, for example, to give you two strong examples that are, in effect, the new network TV in some ways. They have very different models and assumptions than the sort of appeal-to-everybody kind of thing. So there’s definitely a lot of power and life in the whole model, but it’s being chipped away daily.
There has been a lot of discussion over the past several months about whether there might be too much television, and the market may not be able to sustain it all.
When I hear those comments I think, Find somebody under 25 whoever says, “Oh, I can’t believe it, I can’t find what I’m looking for!” Only from the perspective of a programmer might that be the case. It’s only a problem if there’s a failure of the content to find you.
And the thing is, in an integrated, mobile, social world, the content that you like — on the younger end of the demographics, anyway — will either find you, or you will have no problem finding it. It’ll either find you through your social graph, or it’s searchable. There’s an intelligent engine behind it, like Netflix has done so incredibly.
I was at a conference not long ago, and I was saying, “Netflix probably has only 0.5 percent of all the content I would love, but it may have 50 percent of my attention and appreciation, because either A, I could find it; B, I could consume it anytime I want; or C, it will somehow come to me, recommended. So what they’re doing is a lot with very little content through use of intelligent algorithms.
I was speaking to a group of American and Canadian broadcasters, and I said, “Right now, as I sit here, there are thousands of hours of great shows being broadcast. But as far as I’m concerned they don’t exist, because I can’t reach out and grab them, they don’t know where to find me, I don’t know where to find them.”
The point I’m making is, in this new world, more is better, because more content can find its way to its audience. So it’s not so much the end of scarcity — and yes, there’s a lot out there — but there’s also both social graphs and intelligent algorithms combined, which are extremely powerful in being able to serve up both populist, mainstream stuff and very niche content at the same time.
Implicit in the statement about too much TV or, peak TV, seems to be that the resources to produce television of the caliber that is going to be on an FX or a similar network is substantial, so if they don’t have the ability to get it in front of enough people to persuade advertisers to buy time, they won’t be able to make programming that the people desire.
But that’s a qualitative statement: “I only would like to produce this level of programming.” I was having a discussion with someone else about “quality” television, in quotes. And I said, “Well, I see amazing stuff on YouTube that’s not dramatic, I agree on that point, but it’s still pretty compelling content."
So I think we’re challenged in understanding what that means. The other thing is, and I think maybe Netflix has the right idea here, there’s seven billion people on Earth, and the U.S. market is three hundred million and, of course, fundamentally the biggest exporter of content in the world.
But there is other scale to be had. And there are other resources to be unlocked, there’s other money to be found. It may not be in the domestic market, but it might be globally. And I think nobody else except Netflix is doing that at the moment.
That could be why Netflix did a show like Marco Polo, which may not have seemed like a natural fit for the U.S., but it has a lot of international appeal.
Correct. And I think they have an upper hand in the context of just incredible rich data. They might do a movie like The Ridiculous Six, and we may say, Well, it’s Adam Sandler, that’s goofy stuff. But I would not be surprised if it were their top title across the world for some time.
Maybe, but we’ll never know, because they don’t reveal statistics.
That’s right, we’ll never know. They don’t really care. (Laughs)
That’s what makes broadcast and cable executives so upset, because their information is public and Netflix is like the cone of silence.
The thing is, there’s a failure rate that has to be factored into all the dollars-and-cents decisions. I think this is the big, almost unfair thing. It’s not a level playing field anymore. I’m a big believer in data, and the kind of data Netflix has is not asking somebody if they would like [something]. They have extremely rich, granular data based on usage.
So every time they go into a market and launch the service, it’s better than the most expensive market research you could buy. FX has produced some really meaningful and exciting programming in the past several years, and in our research, their brands have come up quite a bit.
So they’re resonating, but they still have to take an extreme amount of risk, and they’re only depending on their creative instincts, and that’s primarily in the U.S. marketplace. Netflix is probably able to do both, so the way they would look at it would be entirely different.
This year the Television Academy is celebrating its 70th anniversary, which is the peg for looking into the future of the business. Are there a handful of key topics that should be front-of-mind in the next several years?
I think we will see pain and anguish if you’re in the business now, and the rules are changing, and there’s a great deal of uncertainty in terms of funding and success criteria and distribution.
I also think, at the younger end, there is a kind of under-the-radar group of creators who, once they start hitting their stride, we will be amazed, and it’ll be fantastic.
For instance, observing the way kids talk when they post stuff on Instagram, they know exactly why people liked the post and why they didn’t. They’re so sensitive to, and kind of integrated with, the feedback they get for everything they do socially. And what I’m finding is that this seeps into the creative process.
If you look at some YouTube creators and the way they say “Please post here and send me your feedback,” and this and that. It’s not just somebody at the end of a radio show or a TV show saying, “If you have any comments, let us know.” That’s really how they move things. Audience feedback is very integrated into their way of thinking.
So now I’m trying to think of that generation as showrunners and as moviemakers. I do feel like we haven’t quite seen that yet, because they’re still young — they’re still in their you know teens and early 20s. But looking 10, 15 years into the future, as that generation comes of age and brings its creative learnings, if you will, forward, I think we’re going to see a very exiting dynamic. So whether it’s on Netflix or YouTube — probably the platform will be somewhat irrelevant — it will be out there.
Maybe it’s starting, because there are Vine personalities right now, in the six-second format, getting TV deals.
Exactly. And the storytelling is different, and the way they relate to it different. I’m sure it was probably to some extent similar in the past.
Every generation has a different flavor than previous generations, but this is the first generation of mobile creators. I know a bunch of kids in their teens, and the stuff that they’re able to create on their own, the storytelling, is very … you know, we think of literacy in terms of reading, but I think there’s also a kind of visual literacy that they have that’s just very different. It’s richer in some ways, and less linear.
So that’s hopeful, but I don’t know what the dollars and cents around it would be.
Vice-President for Original Content, Netflix
We’re familiar with the terms cord cutters, cord nevers and, more recently, cord cobblers — people who are assembling a variety of options from different services. There is also the prediction that disruptions in the television industry will result in consolidation among cable networks and other changes. From your perspective, how do you see the business in five or 10 years down the road?
Well, I don’t believe a Malthusian catastrophe is inevitable. The existing networks will necessarily evolve their models, and they will adapt, just as they’ve done throughout television history, I think. And the advent of cable did not kill broadcast, and the advent of on demand doesn’t need to kill the larger businesses.
There are smart folks managing those businesses, and I think they’ll navigate this kind of transition. On demand is going to continue to grow, and many of the strong television brands will increasingly serve viewers this way.
What do you see as areas of greatest opportunity and areas of greatest concern? You may not be able to speak from the perspective of those other kinds of companies, but certainly Netflix is a focal point in this entire conversation.
Well, I think the opportunity in front of us all is huge. The existing networks have an opportunity to extend their businesses and brands online and on demand, and we have the opportunity to serve storytellers and then create breadth and diversity is storytelling for a global audience. Overall viewership is growing and continues to do so. It’s not a zero-sum game.
In terms of greatest concern? Certainly it’s a concern that a severe downturn or collapse in the industry would be bad for us. The majority of our spending is on content that we license from the other networks. It’s also a concern that because of competing agendas and entrenched interests, this development of the TV-app environment and measurement tools and systems is just moving too slowly.
In an interview in December of 2015, Leslie Moonves said the contention that broadcast networks are diminishing is a misconception because the highest-rated network shows still can bring in 20 million viewers a week, whether it’s The Big Bang Theory or NCIS. The difference is that people are accessing them in different ways. He has been proactive about setting up alternative ways to access content, including the subscription services CBS All Access and CBSN for news. That seems to be the direction things are going in an effort to capture as many viewers as possible.
I think Les is absolutely right. Our long-term view is that many networks will increasingly migrate their offerings to on-demand applications, so that’s really consistent with what we think.
There has been a large increase in viewing on mobile devices. Does the manner in which people watch your shows appear in any of your data, or does that make any difference to you?
The majority of viewing of Netflix is still done television sets. We did see that there is viewing on all kinds of different platforms, and we’re indifferent as to which consumers choose. The core to our strategy from very early on is that our programming would be available on all types of devices.
Live event programming with the ability to aggregate large audiences at once has become increasingly important to a lot of traditional television networks. But I don’t get the sense that live events are a focus for Netflix.
No, live programming is not a focus for us.
Everyone I’ve been speaking with for this feature has mentioned the challenge of accurate audience measurement. Do you feel there will be some standardization eventually, or is it going to continue to be a dilemma?
I would certainly hope that there’s some kind of standardization, my outsider’s perspective is that it’s been incredibly difficult for networks and MVPD’s [Multichannel video programming distributor] and rating agencies and advertisers, all of these different constituencies, to agree on what standards ought to be. So that, I think, ultimately is a negative for the entire industry.
Netflix doesn’t report viewership statistics. What would you say to your broadcast and cable competitors who have expressed frustration about that?
I understand some frustration that we don’t release ratings, but they’re not relevant to our business, and why would we sign up to a system that not only is not relevant to our business, but is a source great frustration for those companies that have to use that system?
I spoke with a futurist who said assessing programming in terms of broadcast or cable or over-the-top is what he calls 20th century thinking, and it’s necessary to think in 21st terms. The expansion of new platforms is influencing programming in an interesting way. He cited the Netflix series Jessica Jones as an example, because it’s within the Marvel universe, but it’s a different kind of a show. It’s not a $200 million feature film blockbuster, it’s more on the fringe of the Marvel universe, set in a darker environment. By that yardstick, it wouldn’t work as a summer blockbuster, nor would it necessarily work as a cable or a broadcast show with regard to potential viewers. But Netflix has obviously figured out how to thin-slice within the Marvel universe in a way that makes sense for them. It’s an interesting example of content being influenced by the platform.
I definitely would support the view that different platforms allow for different kinds of storytelling and different stories to be told. The fact that we are a highly personalized on-demand service allows us to find the audience most likely to respond a given story, and therefore it allows us to take a lot more risks.
Netflix recently announced a comedy series with Colleen Ballinger Evans, star of the popular YouTube show Miranda Sings. You seem to be just gathering from all corners of the content space — from a YouTube personality to Kevin Spacey. It’s an interesting array of options.
Yeah, we seek a really broad set of original programming. 18-to-49-year-olds in the United States are not the only viewers we care about. There’s another 55 percent of the U.S. population we want to serve, and another 7 billion people outside of the U.S. that we seek to entertain and provide compelling programming.
Netflix is planning to produce 600 hours of original programming in 2016, and early this year you expanded into 130 more countries, bringing the total to about 190. That seemed to be an accelerated timeline that caught some analysts by surprise.
Well, we have said publicly before we launched in the additional 130 countries that we planned to be as global as we could possibly be by 2017, so we accelerated that timeline by as much as a year.
I recently read a story in The New York Times that speculated that it wouldn’t be unthinkable that Netflix could expand even deeper into conventional industry structures like building your own studio, for instance. You’d have a place to do your original production. Where do you see the company going, because it seems to continue to surprise people?
Well, we’ve already started producing some projects in-house. We don’t have a Netflix studio, per se, but virtually, we are producing some series in-house, and film projects, but we’ll also continue to license from a lot of the folks who are producing great television in the studios around town.
There has been a lot of discussion in media circles about so-called “peak TV,” the notion there’s too much programming today. What are your thoughts on the topic?
The phenomenon is strictly true in the sense that more series are being made than ever before. Our view is that that’s a great thing. I’m not sure that we are even at a limit, as the word peak implies. This trend may continue for years; we’re not entirely sure.
We know we will continue to grow our offerings. But the fact that more series are being made, with greater diversity, is a great thing for consumers and for storytellers. It’s a great thing for the industry overall.
What would you say are the areas of greatest opportunity and greatest concern with regard to the future of the television business?
I think the greatest opportunity is probably portability and access to viewers, basically 24 hours a day, 365 days a year. And technology that enhances the ease by which people access television, I think that’s a great opportunity.
As for concerns, this is just my own personal feeling, I’m not sure it’s a business concern, but I think it’s important that people keep the fact that it’s entertainment in perspective. Television is either a medium of transferring information or platforming entertainment, and I sometimes worry that it’s all taken a little bit too seriously.
We’ve been hearing for quite a long time about cord cutters, cord nevers, and more recently, so-called cord cobblers — people who tailor their own viewing preferences through an assortment of things that they buy or subscribe to. Looking ahead, how do you prepare to reach those people who aren’t getting TV in the conventional manner?
I think premium [cable] has an interesting opportunity. First of all, in the traditional MVPD [multichannel video programming distributor] world we are linear, we’re on demand and we have our authenticated apps. So we have multiple technologies, multiple features that I think empower and advantage the viewer — the subscriber, in our case — to get real value and real use out of their Starz and Encore subscription.
But also, because we are not ad supported, and it’s a subscription service, the technologies that are emerging and the models that people are experimenting with and exploring could allow us the opportunity to get more direct to the consumer through various other distribution partners that would allow us to access consumers who are unable to buy through to the premium channels in the current MVPD universe.
So the feeling being — and I think it’s a good one — there are a lot of people out there that might want to watch what is on Starz but can’t afford to buy through the traditional television structure. That’s something we’ve been looking at.
HBO has experimented in that way, Showtime has, we announced our Amazon deal, and I think there will be more interesting things to consider in the immediate, not too distant, and God knows for how long future.
John Landgraf of FX got a lot of attention this past year expressing concern about the sheer volume of original programming, the 412 shows — and that doesn’t even include reality — that aired in 2015. How do you feel about the subject?
Well, it’d certainly be easier for me if everybody else stopped making shows. That would be nice; I’d appreciate it if we could get people to do that. Look, this is just the way of the world. Like I said, there’s a lot happening in the space now. It probably doesn’t look this way even two years from now.
I think things will in some respects change slowly, and in other respects I think they’ll change more quickly, but we like our subscription model, we like the premium product that we put out. We think that we’ve got, as I just talked about, not only a good position where we are, but good opportunities.
So it’s a business. I don’t look at it as we’ve got to conquer the world, I don’t look at it as we’ve got to beat everybody else. I look at it as we’ve got to continue to grow our business and build our brand and become more important to a larger group of people, and I think that’s very doable for us, given the plan we have and the assets that we have and the business model that we have.
Netflix does not release viewership numbers. Some premium services, like HBO and Showtime, at different times have released numbers, as with Game of Thrones or Billions. As head of a premium service with no obligation to do so, what are your thoughts about sharing audience statistics?
I always thought that this was a double-edged sword, unless you’re selling ad time, and I think [Netflix chief content officer] Ted Sarandos makes a good point. Unless you’re selling ad time, it’s a number that’s really only relevant to the company itself in how they make business decisions.
Especially with the features we have, as I mentioned, the linear channels, the plex channels the on demand channels, just the DVR function that people have in their homes alone, the authenticated platforms that we have; there are so many different ways that people access these that it’s not relevant to look at any particular timeslot, or even any particular number of days, especially for a premium service, when you’re thinking about what’s the value.
Because we have shows on that are targeting specific audiences that we think are important constituencies for premium and offer opportunities, especially should we decide to go through other distribution methods that allow us to build our business, to get more people out there to buy Starz.
So it has less to do with how many people are watching our shows than it has to do with how many people are subscribing to our service. And you can certainly say that there’s a correlation of some kind between people who are using the service and enjoying it and people re-upping.
You could probably make an argument that they’re telling their friends, and maybe there will be new subscribers coming that way. But certainly to look at ratings in the traditional sense is becoming, I think, less and less relevant as the television — or home entertainment, I’ll say — landscape evolves.
Not to mention that audience measurement is tough these days. It’s not your concern as a premium service, but for broadcast and cable networks, quantifying or missing possible viewers is a problem. Do you foresee standardization, or is it going to be an ongoing dilemma?
I don’t know. Look, I think that the ad-supported model certainly is one that, as there’s more and more choices, and those numbers become more fragmented, you would think that there are probably some folks that aren’t going to be able to stay in the game. But like I said, I think the subscription model advantages us, gives us some challenges certainly, but advantages us in ways that I think makes us more durable.
A lot of conversations on the business side are quantitative — revenues, subscriptions, audience measurement and so on. But I think there’s an important qualitative component regarding the future of TV as well. TV seems to be doing better at representing diversity, certainly with regard to casting. You’ve spoken about creating programming for underserved audiences, and you’ve had great success with Power and Survivors Remorse with predominantly African-American casts and creators. You have also announced projects with predominantly Hispanic cast and creators. As a company, but also for the industry, how important is that?
I think if you’re trying to just do business, if you’re trying to attract people to subscribe to your service, you should have a service that reflects what America looks like. And if you don’t have diverse programming and you’re trying the appeal to a diverse audience, I would say you’re (laughs) literally not going to succeed at the level that you could.
I’ve been a big believer in that my whole career, whether I was at HBO Independent Productions, and I did Roc and Martin for Fox, whether we did The Wire or The Corner, or some of the great things we did at HBO. Whether it was Chris Rock any of the comedians that I got a chance to work with over the years.
To me, it’s so clear that it’s a business obligation. Forget about any sort of social obligation — which I also think it is. But I think it’s just a business obligation to the companies that you work for, especially the business that we’re in.
Aside from diversity, television has increasingly become a destination for creators with distinctive visions. Starz’s The Girlfriend Experience is interesting because Steven Soderbergh is an executive producer, but also, Amy Seimetz and Lodge Kerrigan, who are also producers and are directing episodes, are unlikely television people if you look at their resumes. It seems that, in some respects, television has filled the gap that was once occupied by independent film.
I agree, and I think the invitation to premiere The Girlfriend Experience at Sundance this year is a direct result of the independent film approach that Steven advocated since the beginning. It was his vision, he chose Lodge and Amy, and then [series star] Riley [Keough] gives us an astonishing performance. But the whole piece feels like an extended independent film. I’m so excited about it, and really, really pleased.
If you look ahead five years or so, how do you think the industry might look compared to today? Will it be similar? Will there be fewer companies because of a shaking-out of corporations?
Look, even if there are fewer companies, that doesn’t mean those companies will have channels or platforms or whatever. Part of combining some of these companies — or the theory behind combining some of these companies — is that you have the same lines of business, just for economies of scale, and also firepower to create new businesses.
I don’t mean to sound trite, but my best guess of five years from now is that some things will be a little different, and some things will be a lot different.
Brian David Johnson
Futurist-in-residence, Arizona State University, and Futurist and Fellow at the research firm Frost & Sullivan
In 2005 you published the book Screen Future, which looked ahead to what television might be like in 2015. Having reached that point, what are your thoughts on the television landscape today?
It’s still all about screens, right? And you’re starting to see camps. You’ve got folks like Dish, who bought Sling, who have the Hopper 3 coming out, and you have its opposite, TiVo, being the sort of aggregator of all things broadcast, streaming, personal, and putting a premium — literally a premium price — on the consumer experience.
Dish and Comcast or Xfinity are maybe more about content, features, speeds and that type of stuff. To me, it’s starting to look a lot like the world of Windows versus Mac. I believe it was last year, [Apple CEO] Tim Cook said in Bloomberg, “We don’t make products for everybody, we make products for people who want the Apple experience.”
That’s exactly what they do, and they put a premium on it. People will pay for it. Again, not better or worse, but you look at the world of Android, you look at the world of PC and then there’s much more about speeds and feeds and different areas not about a single, unified experience.
Again, not saying one is better than the other. Really you need both, because choice always wins. Some people want the experience. So I don’t think it’s bad that you can begin to see the media landscape starting to move comfortably into a landscape where it’s much more like consumer electronics and high-tech, where before, the media landscape didn’t really know how it fit, both from an experience standpoint and from a business-model standpoint.
You’re really starting to see the business models shake out, and the thing that I love is that we’re living in the golden age of TV. There is so much high-quality television on, you can’t even keep up. Thank goodness we’ve got DVRs and over-the-top and the ability to binge watch.
I mean, it’s insane how much high-quality stuff is out there. It still costs a lot of money to produce. What’s funny is, it turns out consumer-generated content, You Tube, didn’t eat the world. It’s great that it’s out there, it’s good, but what do people really want to watch? High-quality scripted television.
It could come from Netflix, it could come from Hulu, it could come from HBO — it doesn’t matter. People are always going to want content, they’re going to want that experience. And so now you’re starting to see Netflix and Hulu try to figure out how to pay for all this stuff. Netflix raised its rates last year, right? Because it turns out Orange is the New Black and House of Cards aren’t cheap. And you don’t want it to be cheap, and that’s a great thing.
So, first you had the technology coming in, which everybody was freaking out about. Then people started coming up with compelling experiences about why you wanted to go to Netflix or why you wanted to go to HBO. Now they’re starting to figure out the business models. You’ve got subscription, you’ve got pay-as-you-go, you’ve got some binge watching, but that’ll continue to shake out. For me, that’s the big story.
If you really want the media landscape, number one, we’re in the golden age of TV. Then, you’re going to continue to see the business models reacting to that, especially when it comes to scripted. Then, as a colleague of mine by the name of Jared Palmer says, if you want to know about the other side of the coin when it comes to media, and especially television, and especially television in the United States, you only have to know three letters: N, F and L.
The other side of scripted TV is appointment TV, live TV. And the biggest thing on live TV is the NFL. I’m a huge baseball fan, and a big NBA fan, but even a really bad NFL game gets more numbers than anything else.
As we get into 2019, and you have Monday Night Football and Sunday football, those rights are going to be really interesting. What’s the NFL going to do? Are they going to take MLB’s platform? MLB has got an extraordinary platform for taking back their own rights and distributing it.
The NFL certainly is powerful enough to be able to take over their own rights and monetize their own rights. Or are they going to go with an Apple or another over-the-top provider. Or do they do a hybrid approach, like NASCAR did between Fox and TNT?
So I think live TV is going to be really interesting. I think scripted TV has started to shake out, but when it comes to NFL and all the other [sports], I think we’re going to be in for a really interesting ride for the next four or five years.
We’re in the golden age of TV — you can’t say that enough. I love TV, but TV got beat up for a long time. I’m a TV guy, always have been, I love TV. And for a long time it got beat up, and even when House of Cards came on Netflix, people were talking about the death of TV.
And it turned out it was the signal of the rebirth of TV. So, I don’t think you can say that enough, because it’s really important, and it speaks to the talent and the quality of the TV producing side. Your constituents and your members really speak to the fact that it’s the talent of the production industry and the creative industry that has really brought about the golden age of TV. I could wax poetic about that for a long time.
TV is really important to people. Where they get their TV and how they get their TV has been changing and will continue to change.
Cars are really interesting in many different ways, but for the media landscape, we’ve seen that autos have become an interesting consumption spot for television. I think they will continue to be an interesting rear-seat consumption spot for television as we become more connected.
For the media industry, we need to think about cars as computers or computational power or just screens that carry us around. We’re used to carrying around screens in our pockets and computers in our pockets; cars really are just computers that carry us around. They help us park sometimes, and they have navigation systems, and ultimately, as we get out to 2020 and 2025, they’ll be driving us around.
And I think when they start to drive us around, the media will become even more important. I think that’s a medium- to long-term thing for your readers to keep an eye on. The more autonomy you get in the car, the more media becomes important, and actually becomes a new area for people to come into.
Then, add to that, smart homes.
We’ve been talking about smart homes for a while. I think smart homes fit very nice and neatly into the media landscape. I think the thing that we can never forget about smart homes is we don’t want them to be too smart. People always talk about smart homes as being really efficient and getting lots of stuff done.
I think that the high-tech world and a lot of people forget that one of the things that we like to do in our homes is be inefficient. That we like to not get things done. We like to sit down and do nothing. We like to sit down and watch TV, we like to sit down around our family and watch TV.
And so I think we can never lose our understanding of what people are actually doing in their homes as these homes get smarter and that they may, the smart homes of the future may allow you to become more inefficient when you get to your home.
And finally, I think of 3D printing. 3D printing, I think, is becoming a really important area. Certainly 3D Systems and the deal they did with Disney and Mattel around the production of physical things. I think there’s an exact correlation and I’m not the first one to have said this, but there’s an exact correlation between what happened in the music industry and what will start to happen in the industry of physical things, of sort of merchandise licensing.
I do believe that media companies need to get out in front of that, much like they’ve started to, but to understand that in a world where anything could be printed, you should create a future where you want things to be printed. Not where you’re trying to control it, not when you’re trying to rein it in.
But you’re looking at products and services, you’re looking at innovative new companies that can take the properties that have come from this beloved new age of television and then allowing people who simply love it and simply want to have physical access to things, whether they be dolls or whether they be action figures or being able to print an ashtray from Mad Men.
I think we’ve seen that there are really interesting niche markets around physically being able to do that. I think that 3D printing actually isn’t a problem. I think it can solve a lot of problems, to connect the consumer with the television product in new and interesting ways. But I think there’s a lot of innovation that needs to happen around that, and it’s not being done yet, but it really could be.
John Landgraf of FX received a lot of attention surrounding the topic of so-called “Peak TV,” the enormous volume of programming being produced today, and concerns that it might be too much.
I think he’s right in the point that we’ve reached a place where we have more high-quality television than ever before. Now is that a peak? It could be. Because what he’s speaking to is the business model that supports it, and that’s kind of what I was talking before, where we have the technology now to get TV wherever, whenever — what I talked about in Screen Future, we’ve reached that future.
We now have the compelling content across all of those things. And the reason why it’s compelling content is we’re creating shows that couldn’t be created back in the 20th century. I’ll give you an example in a moment.
We’re creating lots of different shows, and shows that maybe couldn’t exist on broadcast, that couldn’t exist on cable, but maybe can exist in a world of binge watching and over the top.
I think to this point, do we have a business model that makes that sustainable? I think the answer to that is we don’t know yet. And that is where I’m keeping my eye: Can we find ways to monetize these? Because we know that the public has an appetite for it, but we still haven’t settled on the business models for those.
I think that’s what he’s saying. It may not be a peak, but it could be a peak if we’re looking at traditional financing models. I think what over the top, what on demand, what binge watching allow us to do is create different opportunities for financing. And I think that is an area for me, as I look to 2016 and 2017, which is very interesting.
Now, the example, for me, is Jessica Jones. I do think it’s a great, high-quality, really well done show, but I don’t pick it because it’s better than any others. It’s an interesting installment in the Marvel universe. It’s not a huge budget, and certainly it looks darker. It is more on the fringe, literally.
Even the characters are on the fringe. It’s not a summer blockbuster, but it’s a way of exploring the Marvel universe and showing us aspects of the Marvel universe that we certainly wouldn’t be able to see in a summer blockbuster. Nor would we probably even seen on broadcast or on cable.
But what Netflix is doing is starting to explore some of these side characters. I know that Netflix has talked about John Cage, who’s the bartender in Jessica Jones, maybe even having his own show.
So I think that this new models are allowing us to explore content in really different ways where it doesn’t have to be a big blockbuster. It doesn’t have to be so massive, and possibly even Netflix and Hulu and some of these other areas can start looking at how you’re going to finance these shows so that they don’t have to be so big. They can be on the fringe and be a little bit more low-budget or indie.
Still be huge, but reining in the size of the show to be commensurate with the size of the audience, because the audience wants that type of show because it’s on the fringe.
You’re talking about a kind of thin slicing within the Marvel universe.
Yeah, and the audience would accept that it doesn’t need to be a blockbuster. They don’t need to spend $200 million on making Jessica Jones, and they wouldn’t want it. Because it is on the darker fringes of the Marvel universe, it makes sense that it’s a smaller, not so special effects-driven series, that it’s more of a smaller drama. And those two literally can live in the same universe. Not only our universe that we live in, but also the Marvel Universe.
There is conflicting information about cord shaving and cord cutting, but as subscriptions to conventional cable or satellite or companies decline, what would be the impact on those larger businesses as customers try to kind of customize their viewing?
As you said, you can pick your stat. I think cord cutting or shaving — or more customized media viewing — it is happening. It’s not happening at a massive rate, it’s not happening at an avalanche.
I think we’re beginning to see consumer behavior evolve. And part of that evolution is people wanting to have access to content and changing their habits to get it. So again, you want to watch House of Cards or Orange Is the New Black or Jessica Jones, so you get Netflix.
So you watch Netflix on your TiVo or you watch on your Apple TV or you watch on your devices. So now you do some shaving, but it’s because you wanted the content. So people want access to the content; I think that’s one side of the coin. And I think we found out that consumers are very comfortable keeping the live broadcast because they want the NFL.
But at the same time, they also want to watch some of these other shows, and they’ll get access to it however they can get access to it. And they’re starting to figure out what their budget is as well around that.
So I do you think you see a movement. The other side of that, certainly, is millennials, and Gen Z as well. Gen Z is completely comfortable with getting their content over the top, getting it online. And the thing you have to remember about millennials is they’re a much larger demographic certainly than Generation X or as Gen Z. There’s now, I think, more millennials than there are baby boomers.
So you have a large public, which is great, but now you have to remember this is a public that has lived through a recession. A lot of them are called the lost generation of investors. They don’t have a lot of money, so they’re a little bit more frugal.
Additionally, you have Gen Z, which is a little more frugal. Gen Z has never known a time when we weren’t in a recession, never known a time when we weren’t at war. And so they’re a little bit more conservative with their wallet, and they’re completely comfortable with getting their content whenever they get their content.
And I think this is not the death knell of live TV, but we have to remember that this is a group that thinks about live TV in a really different way. And again, this goes back to the business models, and I think this is where all eyes should be right now. You’ve got people who are going to want choice, and you’ve heard me say it before: always bet on choice, because choice always wins.
And the more choice you can give people, the better. So I don’t think you’re going to have a massive end of live TV and people leaving.
Again, a good bellwether is the NFL. Looking at where the NFL goes, live events aren’t going to go away, how things are delivered, where they’re delivered and what’s the business model that enables it. Because the cost of the NFL doesn’t go down, the cost of live scripted TV, and the cost of scripted high-quality TV doesn’t go down. But where it’s delivered, how it’s delivered and how it’s financed, that does change and will continue to change.
So cord cutting and cord shaving will continue, but that’s thinking of the world as either a broadcast, cable or over-the-top world, is very 20th century. We now live in the 21st century, where we know that people are hybrid viewers, and we know that people all want choice. And I think over the next few years we’re going to be seeing a choice shakeout and what is sustainable from a business model standpoint.
It seems like ultimately all of the programming will be delivered digitally. Or perhaps in the hybrid manner as you’re describing. Because that seems to be where the pendulum has swung, and everybody’s hurrying if they don’t already have one, to create an app. They want to diversify so that they’re there for whoever needs to get their content.
Again, I think that the television industry needs stop thinking in 20th century terms, and start thinking in 21st terms. As I said, we’re in the golden age of TV, so from a content standpoint that’s great. But secondly, we need to stop thinking about the old way: Is it broadcast, is it over the top? Is it cable, is it broadcast? The fact is, everything is delivered digitally. But what’s the business model behind it?
To its credit, I think television has started to think in 21st century terms, but we need to lose the baggage of the 20th century and embrace the fact that it’s all going to be digital, and that’s okay. It’s really more about doing what the television industry is good at doing.
Number one, understanding its audience, and number two, producing high-quality content. It’s become a little bit more complicated because how that content is delivered to the consumer has changed. But I’m an optimist. I’m very bullish about television because it means you’re now creating more moments, more touch points, more ways for people to get their TV. There’s only going to be more television in the future, not less.
The other piece of what you’re describing, especially if I’m a person at a network, is how do I capture credible ratings or viewer data?
Yeah, there’s a measurement problem. How do we measure? Again in the 20th century we had a version that worked. It worked because everybody agreed on it. To me, the measurement problem isn’t a technical problem. I’m a geek, I’m a technological futurist. It’s not a technical problem — we can track those eyeballs.
The problem is getting a business consensus to agree on the metric. And right now the industry is far too fragmented to be able to decide upon a metric. For many people, I would hazard to say, it is in their best interest to not set the metric. So I think that’s what the industry is going to be struggling with: measuring those eyeballs, measuring the impressions, making sure people get paid. And people should get paid, don’t get me wrong.
But the problem is getting to a consensus, getting to agree upon a bar so that then it can be modified. Then we have some things so that people can benchmark it to, so that we can get the rate. I don’t see that getting solved very quickly. But it needs to be solved.
Again, that’s one of the things that’s going firmly move us into the 21st century — solving the measurement problem. But again, it’s not a technical problem, it’s a business problem, and a business consensus problem, and right now we’re too fragmented.
Why do you say you say you would hazard to say that it might be in the interest of some people not to solve it?
Because it depends upon how they’re making money. If it taps into how they’re making money, it may even reveal how they’re not making money. So much around standardization ultimately is a good thing because it allows everybody to have a fair playing field, but with standardization there’s always people who win and there’s always people who lose when it comes to that standardization.
And part of the business model is many of the new entrants into the media landscape is disruption, which is a healthy evolution. The television industry has been evolving ever since it was created. And there’s always been disruption. Cable was a disruption. Broadcast and subsidiaries were disruption.
So disruption is not a bad thing, but many people are sort of making their shareholders happy simply on disruption.
So I think there’s good business reasons, but ultimately it is better for business that we do get some level of standardization and measurement because we’re in the golden age, and it’s very expensive, and that ultimately is all going to have to be paid for because if you don’t have the content — and again, all television executives whether they be over the top or broadcast will tell you that if the money’s not there, the content’s not there, and if the content’s not there, then the eyeballs aren’t there, and then the money’s not there.
We’re in a moment of change, and we were in a moment of much more extreme change five years ago. So I think we’re in the moment now where we’re beginning to see what consumers want and understanding consumer behavior. Now we just need to knuckle down, sharpen our pencils and figure out how to do measurement and then how to make sure to get the monetization and the business models right.
It sounds as if change will continue, but perhaps at a slower, smarter pace than in the past.
I think about five years ago there was a bit more chaos and a bit more of the unknown. People were worried that the cord was going to be cut and that everything was going to be over the top and that people weren’t interested in traditional scripted television anymore.
Remember, that was the heyday of reality TV. It was still the heyday of people saying that scripted television was dead. The good news for the TV industry is it’s not dead. People really like scripted television, and that it’s important.
And you’re right, I think now we’re beginning to see a better idea of consumer behaviors, of consumer desires, and the work that needs to be done now is the more workmanlike, businesslike work. That means sharpening our pencils and figuring out how all of this is paid for.
And I think again, the other area that could bring a little bit more chaos into the market is what happens with live TV. Because again live TV is all digital, so the delivery of live television, if and when that begins to change, I think, will destabilize things a little bit more. But I think when it comes to scripted television, we were in a point of chaos about five years ago and now we’re reaching a point of maturity.
So the takeaway for television professionals is a largely positive one. There’s more television being made, and it’s being seen in more places.
I think it is. Again, coming from the chaos of five years ago, television’s still here and it’s stronger than ever.
But I think there’s some real work to do on the business side of TV. Where we got the technical part figured out, we’ve got the content part, from a scripted part, figured out — it’s the best ever. And there’s a little bit more to do on the live side.
But now there’s some work that needs to be done on the business side and on the financing side. That’s the not-so-glamorous hard work of producing and financing television. And I do think we’re going to continue to see change in that area, and that’s where a lot of work needs to be done.
And part of that, the first step in doing that is for the television industry to think of itself in 21st century terms and understand that television is everywhere consumers want it to be in whatever form consumers want it to be. And to think of it in that way, and not in 20th century terms, and the moment we think of it in that way, how you monetize it, how you measure it, becomes very, very different.
Showrunner, executive producer, Bates Motel, and creator, show runner, executive producer, Colony
You’ve been working in television since at least the 1980s. What do you regard as some of the major changes in the business during that time?
I think the biggest change is moving from three television networks to literally a place where you can’t even identify all the people that are making and distributing television. I guess the figure is something around 400 scripted shows [last year], and it’s created a profoundly different experience. I think that we live in a culture where there aren’t many viewer collectives, shared experiences.
You watch an event like the Superbowl, and you realize how unique it is that, basically, there’s a single cultural phenomenon like that. Television viewing used to be like that with regularity. There would be a single show that was watched by everybody, whether it was M*A*S*H or Dallas or ER —
Or Lost, Carlton.
Or Lost. But it’s so challenging in this environment to create something that becomes collective viewing that really has cultural impact across the entire television viewing audience.
I think one of the big advantages of what’s happened now is that we live in an era where quality is highly valued. When I started doing television, it always felt like the criteria was the widest possible audience, get as many people in the tent as possible, and the networks’ attitude toward the shows was, How do we make this as broadly accessible as possible?
And the corollary to that was, How do we make this as inoffensive as possible so that we don’t alienate people from coming to the tent?
Now it seems like the opposite is true. Really the goal isn’t to make the broadest possible show. That seems, I think, out of reach for most people. I think it’s really just the idea that you need to be, particularly in cable, you need to be somebody’s favorite show.
And maybe the goal is even to offend a fair number of people because then you’ll get attention and then your show will be watched. Do things that are dramatic and outrageous enough to get noticed.
I think the other thing that’s happened is that the type of shows that are being made now are just…there’s so many different types of shows that are being made, and it’s possible to make a television series for a niche audience, and this has resulted in a lot of really great television. Because there are different criteria, and there’s also real emphasis on quality.
I think almost all the companies that are producing content really see the value in having a quality show. So Netflix makes House of Cards and it puts them on the map as a programmer. Certainly HBO has made quality the primary criteria by which they make shows, and it’s led to great financial success for them.
FX is another place where I think John Landgraf has a fantastic aesthetic and a nose for quality. So the people that are funding and making shows are creating opportunities for great television.
It’s interesting you mentioned some of those places. You’re also seeing companies make changes in their programming aesthetic, and I think you’re experiencing that at USA right now. They did very well with shows like Burn Notice, Covert Affairs and Royal Pains. But with Mr. Robot and Colony and some of the new shows, they’ve shifted to a different type of program.
Yeah, I mean, it’s been really…you just need to watch USA successfully pivot and it’s really interesting the conversations we would get. I would get asked questions from critics like, Why are you doing this show from USA?
And then, six months later, it was, Well, I like your show, but it’s not quite as good as Mr. Robot. It’s amazing how quickly the perception of a network can be altered by a successful television show.
Right. It would also seem that in an environment that’s as busy as you said — John Landgraf is the one who pointed out that in 2015 he first measured 409 scripted shows, and then they had to correct that to 412 — getting noticed is extremely difficult. It would seem that marketing and promotion therefore become an even more important part of that as well.
Yeah, I think trying to compete in an environment where there are 412 scripted shows, it has an impact on the type of shows that are going to get made because if the people funding the shows have to look and say, Can we market this, is there some way to cut through the clutter and have our show be really be visible?
FX does an incredible job with their advertising, and they’ve succeeded in really creating really vivid imagery and memorable imagery for their shows. I experienced that obviously with The Strain. That was a campaign that walked really right on the kind of fine line of attention and controversy. And I think that’s great, I think that’s what you need to do.
It also means that we live in an environment where there’s a lot more emphasis put on shows that are made from existing intellectual property. And that part is not so great, because I think one of the things that’s always been a strength of television is that it’s been a place where new ideas can flourish.
There haven’t been the same constraints in television that exist in movies in terms of marketability. But I think that’s changing rapidly, and I think television is becoming more like the theatrical film business in that executives are really looking at not just the quality of the show, but can I market the show.
In a lot of ways it’s affected by what is the audience’s familiarity with and awareness of a given property. In the ideal scenario, you can combine those two. I think Hannibal was an example of a show that took an existing piece of property and did a fantastic job of reinventing it.
I like to think that with Bates Motel, Kerry Ehren and I have managed to make a very heartfelt, romantic tragedy under the moniker of the Psycho franchise. I’m not sure that’s a show that never could have been sold without the Psycho franchise. But ultimately, it’s very far removed from the movie, besides the iconographic imagery.
So I think that, as show creators, you’re kind of constantly struggling to find a unique story, but one that also, on a pragmatic level, can be marketed because the worst thing is to put the thousands of hours into making a TV show and then not have it make a sound out there, to have no awareness of it, which is entirely possible in the current television environment.
There are also variety of business models and companies. Netflix is a subscription service, as are HBO, Showtime and Starz. Hulu is a hybrid of ad-supported and subscriptions, and on the side that you’ve worked on, broadcast and cable, advertising is necessary. There is continuing frustration about accurate measurement of audiences because of the variety of platforms. What are your thoughts about that dilemma, and how do you see things shaking out with the prospect for standardization or something that people can agree upon, because ads are going to be necessary?
Well, I think it’s hard to understand how people in the linear broadcasting business expect anybody to watch a show linearly, when I have to deliver 42 minutes of content for a 60-minute program. So basically you’re watching one minute of commercials for every two minutes of content. Why would anybody watch that live?
So there has to be some evolution of the model. DVR use is getting constantly more pervasive. And yet that remains, for a lot of companies, a really critical measure of their success. So I don’t profess to have the solution. I wouldn’t want to have the challenge a lot of the executives have of trying to figure this out. My job is hard enough.
Making content is hard, but at least I know what I’m doing, and I feel like at the end of the day there is always going to be a marketplace for good stories well told. The ways in which the stories are delivered is very much out of my hands, and it’s evolving rapidly, and I’m really as curious as the next person about how it’s all going to shake out.
If you think about it, five years ago, if I said to you Netflix and Amazon and Hulu were going to be hugely viable producers of content, and places where creators really wanted to go and make shows, I think you might have rolled your eyes. And now they arguably, as services, have taken advantages over traditional broadcasters, particularly among the younger generation of viewers that’s so habituated to watching content online.
So I don’t really profess to have the answers about how it’s all going to shake out, I sort of feel like there are going to be tremendous opportunities.
I don’t think the television business is going away, I think for a long time there is still going to be a tremendous multiplicity of opportunity, there’s going to be an incredible opportunity for telling stories, and there’s going to be a lot of TV shows and a lot of really interesting television made.
The ways in which it’s distributed, I don’t profess to have a crystal ball that would let me figure out how that’s going to work.
I think the other thing that’s kind of different from a show creator’s standpoint is, I think, there’s opportunities to make different kinds of shows, the idea of shorter-order series makes a lot of sense in a world where there’s so many TV shows that it’s much harder to get a audience to invest 60 or 100 hours in a show.
So if you would watch 10 episodes of Fargo, or eight episodes of True Detective or The People v. O.J. Simpson, I mean, those are great viewing experiences. They’re super intense and they’re limited and as a storyteller you have this incredible advantage in that you get to go narratively from A to Z in 8 or 10 hours, I mean that’s a fun thing to be able to do.
Most television, you’re living in the sort of A, B, C, D letters of the alphabet, you’re resetting, you’re not moving fast. But shorter television really allows you the velocity of storytelling so high that it’s really fun to do as a writer and creator. And the audience really loves that experience and sort of feels relieved in this current environment to not have to make a massive investment to enjoy a show.
Distribution models are changing, too. In February, Louis C.K. put out a scripted show called Horace and Pete, starring himself and Steve Buscemi, on his website and is charging, $5 to watch it. That’s cutting straight to a fan base and eliminating a network entirely.
I think it’s really interesting. That’s kind of amazing and I’m curious to see whether that works, too. Louis C.K. has been very much on the cutting edge of connecting directly with his audience and going from selling specials. A series is a logical extension, and I don’t see why that won’t work for him.
Most of the conversations about the business of television are quantitative, but there’s also a qualitative component. There has been a lot of talk about diversity and the conversations that have arisen because of the Oscar nominations. How important is it to create programming created by, and cast with, people from underrepresented groups, both for companies, but for the industry overall?
I think it’s hugely important. The types of programs that we make need to reflect our country as a whole. One of the greatest strengths of our country is our cultural diversity, and I really hope that all these conversations and discussions lead to a wider array of programming where people can look at a show and point a finger and say, That’s me, I understand that, that’s closer to my experience, I can relate to that.
I had the experience of seeing that happen. I created a show called Martial Law for CBS, and over the years I’ve had so many Asian American people say to me, That show was really meaningful for me because I felt that I could relate to it.
So I hope the discussions that have been happening around greater diversity and the Academy Awards will lead to more [diverse] shows are being made, and I hope that more opportunities arise for different voices. In the television atmosphere, I think that will just mean more compelling programming and a wider variety of stories being told.
It sounds like the future has plenty of health and opportunity on your side of the business. That’s probably encouraging for the membership of the Television Academy as well.
Yeah. I mean, maybe this is a bubble, and we won’t have 412 TV shows [a year], but there’s still going to be a lot, and I think television is clearly a very viable business. The people making shows aren’t idiots. There are this many shows being made because people recognize that it’s a really good business.
So I think it’s exciting. It’s been fun to watch the television business through the prism of my son, who’s just starting his career as a writer, and being very conscious of the issue of opportunity. And I think he feels incredibly optimistic, and I think it’s one of the most vibrant, exciting industries our country has. We get exported all over the world, and we excel in making great television, and I don’t see that changing anytime soon.
Cultural Anthropologist and head of the Research and Insights Group at Troika, a branding and marketing agency
How does your background in cultural anthropology differentiate you from other media analysts?
One main difference is that we’re always accounting for cultural context. A lot of market research will focus on the tail end: What makes you consume [something] at this moment? What do you like and dislike? Very tactical questions.
Anthropology makes you ask that bigger question about who that person is on the other end, why does that product or service have value for them, and how is the value created in part by the larger cultural arena that it exists in?
Your company’s entertainment division takes an optimistic view of the changes that are happening in the entertainment industry and emphasizes the opportunity that can arise from disruption. What do you see as the areas of greatest opportunity with regard to the ongoing disruption in television?
Because we can consume content whenever, wherever, however we want, we can use it to meet needs in our lives that we never could before. We can fit in exactly the right solution to exactly the right need at exactly the right time.
There is no way with a product in the marketplace that’s better able to meet people’s needs that we shouldn’t be able to monetize it better. I understand that will require reengineering the industry to translate that value more effectively, but I don’t believe that we can question that if we’re creating more value, we shouldn’t be able to extract more value. It just wouldn’t make sense.
One of the ways we think about that is the concept of fandom. Fandom is the deepest bond that we create with our content. I’m not exclusively talking about the kind of fandom that you may traditionally envision, like Trekkies of old. I mean fandom in a broader sense.
We did a quantitative survey in the fall, and 85 percent of the people we surveyed — American adults, 18 and over — declared themselves to be fans of something. And the number one thing that they said they were fans of was a television show. It out-rated sports or a sports team.
So our level of attachment to television is greater. If you broke it up by gender, it would look a little different, but it shows how important our bonds with our content are. We start there, to really understand those opportunities, what would it look like if you reverse engineered the value that you’re creating for people based on some of those deepest bonds that we create and you really look at how you can reorganize this industry around them.
I don’t know what the answer is yet, because we’re at the beginning, but I do think there will be incredible opportunity if we start with consumer first, from the ground up, and go that way with building out the future.
A lot of the conversations about the future of television focus on the business side and things that are largely quantitative, but there’s also qualitative component, particularly with regard to diversity and programming by and for underserved groups. How important is that for programmers, and for the industry overall?
It’s hugely important, and it operates at both the industry and the consumer level.
First of all, traditional categories of breaking up audiences are falling apart right before our eyes. We used to break up our audiences by gender, race, ethnicity and age, and that was it. Sometimes you’d have a second graphic profile to go with as well, but that was how we did it.
Our concepts of gender, race and ethnicity are ideas, they’re not natural facts, they’re ideas constructed about natural facts. And they are falling apart. They’re changing and morphing right in front of us. They are not stable ways to organize our industry. So that’s that.
That’s the very first piece of the equation, the holding on and being attached to them is more a vestige of the way those ideas have become structurally embedded in our culture than it is any broader sensible business practice. So you’ve got destabilizing categories of human difference, then you’ve got people who are living in the most diverse landscape America has ever seen.
This real experience is telling them that if this thing is going to meet my needs, my needs to see myself in these stories, my need to see my friends and people like me in the imagined universes that television creates and just to stay relevant.
It doesn’t have to be political correctness here at all. It just has to be a desire for a brand to remain relevant. So if you want to continue to be seen as relevant in this landscape, if you want to build a connection with audiences, you’re going to have to respect the range of ways that people see themselves and what all those social identifies mean to them. You’re going to have to show it to them in their television.
The one thing I find myself harping on with clients more than anything else is to watch out for all of those stereotypes that you rely all the time. Because we’re not aware of it, we really aren’t, and you’ll hear people say things like, “Well, women don’t like that” or “Men don’t like that.” And you think, Gosh, really?
You have to start to notice when you’re saying or thinking things like that, because you can’t make categorical statements like that anymore and make relevant business decisions.
Change can bring anxiety. How do you allay your clients’ concerns?
We won’t be able to succeed if we don’t let go of the baggage that negative thinking creates.
This industry is absolutely going to survive, it’s just going to look different. We’ve got to think about it in new ways. When things are changing, a metaphor is a great way to help people understand something in familiar terms.
For instance, with the emerging OTT landscape, we have a landscape of choice, and landscapes of choice are not unfamiliar to us. We have another one that we interact with every single day — our retail environment. That’s a landscape of choice. Exactly the same thing.
When we want something to meet our needs we go to a retailer, sometimes it’s an online retailer, sometimes it’s a physical brick and mortar retailer, and we go in and we purchase something off the shelf and then we come back out with what we need right? That is a proxy in terms of consumer behavior to what’s going on now.
So I try to help them think okay, so what we got emerging is kind of like a retail marketplace, and it’s a little bit like watching a mall get erected in front of us. When I think of it as a concept mall and that’s my shorthand for it here at Troika, where okay, so, so far in our mall we’ve got a few of those anchor department stores that are, that have already been built, we’ve got the Nordstrom and the Macy’s and the Bloomingdales.
Macy’s and Bloomingdales, those are kind of analogous to the Amazon, Netflix and Hulus of the world. Massive aggregators go there for lots of different things. When you want selection, that’s your go to place.
Then you’ve got something like an HBO Go, which really doesn’t have the full selection of one of those other competitors; you wouldn’t think of it as like one of the department stores. You might think of it as one of those more boutique stores in the mall that has more of exclusive brands within it but don’t sell their brands elsewhere.
But when you go to that store it’s always going to be quality; it’s always going to get a predictable experience. So you can almost start to envision what this new landscape could look like from the existing landscape of choice that we already see. That’s really helpful for our clients, because they’re brands. And they’re the ones who are going to be operating in this big landscape — almost like those retail brands.
So let’s say you’re a network and you’re considering opening up in the content mall. You have to ask yourself, Am I going to be another Macy’s or Nordstrom, or am I going to compete more at that HBO Go level, or am I going to be something completely new? And if so, what does that mean for my brand?
Am I going to be like the Levi’s store, where I sell my content and my Levi’s store in a fully Levi’s branded environment, but also distribute my product at Nordstrom and Macy’s? Because they have little branded areas with denim sections themselves.
What I tend to tell my clients is, it’s not that strange, guys. From a consumer point of view, this idea is already in existence, we just need to find a way to use some sort of analogy so that we can envision what it’s going to look like. We’re the ones who are stuck here, not consumers. We just can’t envision this business looking so different. I try to help them in those ways.
There has been a lot of discussion about the notion there’s too much programming today. What are your thoughts on the topic?
The idea that there’s too much of anything or not enough has a bit of judgment to it. I do think it’s kind of a moment we’re passing through. We’re seeing how much the market needs and how much we can take. We’re trying to find that line between what the industry can provide, still be profitable and what we can consume. I tend to see it as a process at work versus something where it’s necessarily a bad thing.
Netflix doesn’t release viewership numbers, but to companies that rely on data for advertising revenue, ratings information is crucial. Do you study audience measurement?
We don’t do audience measurement, but it’s a problem that has to get solved.
One of the reasons we’re struggling to capture the full opportunity within all this change is because we haven’t figured out exactly how to quantify all of this viewing. Also, you’ve got two different business models up against one another. So even asking if we could [measure] how much viewing is going on Netflix, capturing numbers is like using Italian to understand Spanish. It’s in the same romantic language family, but it’s not exactly the same.