Comcast, Netflix and the Implications on the Future of Media

Contributed by Peter Prodromou, President, Racepoint Global

The prediction of the catastrophic decline of television has always seemed a little shrill and frantic. Pure social media players have spent the past decade maligning this 80-year-old medium, even as networks have managed to drive up ad prices by more skillfully than ever slicing and dicing demographics. Social, with its mantra of more precise targeting and the ability to capture the customer closer to the bottom of the funnel can only dream of dealing of raking in the revenues that the dying broadcasters pull in every year.

Does this mean that broadcast has won and social was entirely wrong?  Not even close. It just means that a lot of the supposed gurus who predicted a complete destruction of traditional media are guilty of the same linear thinking with which they’ve branded broadcasters. The recent announcement by U.S. cable behemoth Comcast and web content giant Netflix are proof of this.

What do I mean? Simply this—that broadcast is acting as the straw that stirs the drink, leveraging the best parts of web media to propel its next period of prosperity. True, the traditional networks are a ghost of their former selves (despite capacity to charge huge ad revenues). And cable television is threatened on all sides by new programming like Netflix’s “House of Cards” and Amazon’s crowdsourcing programming model. Yet when Netflix wants to garner more audience, who does it look to for distribution? Why, of course, old, dying Comcast, a cable operator with a wounded television network at is core.

The reason is simple, large media companies like Comcast have something the web content producers can only hope for—deep penetration into every demographic group and a habit that is harder to break than cigarette smoking. Netflix has recognized this and decided to cozy up to Comcast, not only to for a wider pipe in the short term, but to get on a custom channel set top box and grab all those viewers who don’t watch its content on a laptop.

It isn’t just the distribution model where you can see the reverse influence of broadcast influencing web content providers.  It’s the content itself.  Sure, everybody loves their time on YouTube, but the programming that generates the buzz on Netflix and Amazon is good old-fashioned 60-minute dramas filled with Hollywood A-listers. That’s right, the path to prosperity for those Web giants is going to be through production of content that looks awfully familiar to the average 60 year old.

Does this mean that digital media is dead and that conventional television won? Not at all. What it means is we are about to see an era of a whole new brand of television, driven by a deep integration of traditional and web media companies. Much of it will be exciting and new…there’s absolutely no disputing the power of web content providers to produce higher quality programming and to drive new models of consumption through channels like YouTube. But the reality is, as long as people have large colorful boxes in their living rooms and traditional media companies have gobs of cash to spend, we’re going to see web programmers develop content that aligns with that paradigm.

Ask yourself the next time you’re launching a “House of Cards” on your 50-inch screen: What the heck is even remotely different about it than watching “True Detective” on HBO? The real question is whether these companies will be driven to adopt more conventional advertising models or if we’ll see something new.

The truth is, the era of network television as it was created, ended somewhere between the last episodes of “M*A*S*H” (before the public Internet existed) and “Seinfeld” (when penetration was still in its infancy). Yet the networks continue to find new life and cable operators, seemingly on the ropes, are about to embark on a new era of dictating programming and price. That is sure to be bolstered by Netflix’s dealings with Comcast.

For those of us who believe the Internet won, it’s easy to make a case that it will be the dominant programming model in years to come. But there’s an equally valid argument that television simply co-opted the model and forced web providers into their distribution channels and into their programming model. The truth is likely to be somewhere in between. Next time someone is forking over $2 million for a Super Bowl ad, or $500,000 for a 30 second spot for the “Modern Family” finale, consider that the dying breed somehow is continuing to prosper. And as communications professionals, we all need to adapt to that reality and develop strategies and counsel that fit the bill.

My industry colleagues will challenge this premise as a fossil of old thinking.  I would counter that those who don’t see this coming are engaged in a media paradigm that’s about five years past. As an industry, we need to recognize the trend and drive it. This isn’t an argument about hypotheticals—it’s an observation of realities.

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