LAS VEGAS – It is no doubt a tumultuous time for the television industry – writers’ strike not withstanding – and NBC Universal President and CEO Jeff Zucker didn’t mince words during his keynote address at the NATPE++ Mobile event when he described the struggle his company is facing as it watches traditional lines of thinking fall by the wayside.
“The tumult is likely to continue,” he said. “It has been a great run, but today we need a different message.”
Zucker acknowledged that a significant portion of the industry is under pressure and that the status quo ultimately will lead to failure. Change often requires a catalyst, he said, and in November Hollywood got one in the form of the writers’ strike, which has brought much of the industry to a grinding halt.
“It would have been a lot better if we didn’t have a writers’ strike,” but it could leave fertile ground behind in its wake, he said. “The current work stoppage has allowed us to stop and think about the business.”
Zucker admits he doesn’t have all the answers, yet says he’s committed to experimenting with new approaches to long-standing norms in the industry.
Change in the air
He hinted at major changes to come at this year’s upfronts in May, where the TV industry aims to sell upwards of $65 billion in advertising. Additionally, he said NBC Universal will be greenlighting fewer pilots as it looks to cut costs that never return on their hefty investment. Pilots, of which there were 80 for NBC last year (only eight became full seasons), have become standalone mini movies that cost tens of millions of dollars to make, he said.
“This is not about making less programs, it’s about making less waste,” he said.
Zucker also talked about continuing to embrace new distribution platforms in mobile and online. “We have to be everywhere,” he said, but didn’t elaborate on future plans.
“We’re starting to see mobile devices live up to their promise” of un-tethering consumers’ TV viewing experience from the home, he said.
“No matter what happens in technology people are still going to love great content,” Zucker added. “Quality content is still where it all begins.”
Mixed message?
However, earlier in the week Zucker sounded a down note on the mobile industry.
“It’s actually not that important,” he said at the World Economic Forum in Davos, Switzerland, according to media reports. “We’re obviously playing in this world, but playing in a small way.”
According to reports, Zucker said the mobile-phone industry needs to cut entertainment companies better deals for providing content to handsets. Entertainment companies like NBC typically only get a 10% cut of revenue share from the carriers, he said, according to reports.
“No one is really pleased with the economics,” Salil Dalvi, general manager of wireless platforms at NBC Universal, said in an interview with RCR Wireless News.
“We have to see these distribution platforms scale,” he said, declining to elaborate on the specific financial agreements with carriers.
Mobile video and television has been a learning process for all parties in this industry, Dalvi said. While NBC and its competitors want to learn more about what kind of entertainment consumers want from their mobile device, usage has to increase dramatically in scope.
“You have to get 20 million people to make any conclusions,” he said. “It’s clearly not the mass scale of product that Web video is at the moment.”
NBC wants to make the business worthwhile for the carriers too, he added. “What we’re trying to do is take new ownership.”
News has consistently been NBC’s top performing category in mobile, with entertainment and comedy generating interest as well. Drama and reality shows haven’t done as well on mobile, Dalvi said.
Regardless, the market still has some time to grow before it reaches any successful scale. Dalvi said it’s good to keep in mind that a good quality experience has only been available for about a year, while many new features and improvements are yet to come.
Viewers growing, but small
Mobile television and video is a “market that has been puttering along for several years,” Mark Donovan, senior analyst at M:Metrics Inc. said in a morning presentation at NATPE.
M:Metrics’ latest statistics show that mobile video is penetrating the market at a rate of 4%, indicating 9.2 million people watched some type of mobile video in the United States in November 2007. And that number represents a 60% increase from January 2007, he added.
“We’re starting to get an audience that gets interesting for programmers and gets interesting for producers,” Donovan said.
Video has long been “hampered with really poor quality,” but the adoption and buildout of 3G networks has improved quality tremendously, he said.
Approximately 4 million wireless subscribers are watching programmed video on their mobile device, 3 million consumers are watching on-demand video and at least 1.7 million subscribers are watching broadcast services, Donovan said.
Still, real growth is in the offing.
“I think it’s a year where the hype of the industry is going to be toned down a bit,” Mitch Feinman, senior VP of Fox Mobile Entertainment/Jamster, said in another panel at the conference
“Most people in the United States still haven’t seen or experienced someone watching video on their phone,” Donovan said. “To the extent that advertising can become a subsidizing mechanism here, we’ll see this market grow.”
Users surveyed by M:Metrics frequently cite cost as a major barrier to adoption. The firm expects mobile advertising to hit full stride around 2010. “It is still the Wild West out there in the world of mobile advertising,” Donovan added.
According to M:Metrics’ data, the top 10 mobile video and TV genres (ranked highest to lowest) are movie trailers, music videos, sports action or news, comedy, weather, entertainment or celebrity news, news, full-length television or film, TV highlights and animation or cartoons.
