March 28, 2006

Welcome to the Day-n-Date Slump.

This is the first of a series of trend columns to run this week.

The Day-n-Date Slump has already begun. And amazingly, Bubble has almost nothing to do with it. Why? Because it is television, not film, that has been the real guinea pig for this new distribution notion and while Amazon and AOL ramp up to cash in on what iTunes started, the place in the film business to watch is Warner Bros, followed closely by Universal, where the real future is starting to take place.

Warner Bros. is building its own online distribution infrastructure, coyly disguised as a distribution network for old TV shows that it is willing to give away for free to get people used to the habit.

Universal, in the UK, is offering what I believe will be the first successful iteration of the digital/DVD home platform to become industry standard, selling King Kong as a DVD with the option of two digital downloads... or vice versa.

And where is the online download revolution that was an irreversible tsunami six months ago?

Well, if you want to see the Scientology episode of South Park, you won't find it on iTunes. Not for $1.99. Not for $10.99.

You want to see Parker & Stone rip Isaac Hayes a new one by reassembling old dialogue and making his character, Chef, into a giddy child molester? Nope. Let's see whether Viacom allows that episode to be re-aired before May 5.

Natalie Portman rapping? NBC ripped it off the web and it has never turned up on iTunes.

Wonder Showzen, the MTV2 product which was born to be iPod fodder? Check out Comedy Central for the 25th broadcast and look forward to a DVD that will ruin Christmas for your kids.

Anybody with a DVR can possess all these shows already. With some very inexpensive software, they can all be playing on an iPod near you with the investment of an hour. And this is broadcast TV (now broadcast mostly via cable and satellite). Yet, even these open gateway programs are not moving to home delivery efficiently.

Why?

Because it is not generating enough revenue. And moreover, this is without the unions and agents and online distributors taking a major bite out of the revenue stream.

With YouTube, the reinvestment in iFilm, etc, etc, ad infinitum, there is more content to be uploaded, downloaded, and unloaded than anyone can possibly consume. Remember when you used to get the same "funny" e-mail a few more times 4 or 5 months after you first got it? Doesn't happen anymore. Why? Because the cycle has become so efficient that worldwide distribution - and worldwide boredom with it - is done in a week or less.

Yes, the top series (Lost/Desperate Housewives/The Office) on TV are getting some play on iTunes, apparently with a heavy emphasis on adult women going to the gym, anxious for an alternative to group TVs in front of treadmills, stairmasters, and the like. But the small victory there will have to be reconfigured in time, as the trend of individual televisions on each machine evolves into an On Demand opportunity.

That brings us to my recent HBO experience. In Bermuda, they are offering HBO On Demand, which allows you to pay for the privilege of not only watching The Sopranos whenever you damn please, but to watch Big Love anytime you want the week before it first airs. Clever.

And it was headturning to see the exact same advertisement on the HBO "air" in Los Angeles yesterday... except instead of touting On Demand, it was touting the number of replays HBO offers of its shows across its multiple channel base.

This is the future. Of course, it will be drastically altered by DVR dominance before this decade ends. But HBO is moving faster than the major TV networks. My bet would be that the seven HBO channels you now have will be converted into two or three primary networks, programmed on a schedule and four On Demand channels, say, one for relatively current HBO Original series programming, one for HBO/Cinemax documentary programming, one for HBO adult programming, one for a selection of movies available in a given month, and perhaps, one for "Family" programming. Eventually, the pipeline will be efficient enough and people will get in the habit enough to do all the On Demand programming one "channel."

This will hold for a while... until the program providers (see: studios) at companies not owned by Time-Warner decide that they want to mine this form of ancillary delivery for themselves. It's Not TV, It's FoxBO.

Of course, Showtime Networks is owned by Viacom/DreamAmount already, as HBO is in the Warner Bros family. Fox owns a huge amount of space on the cable/satellite dial, as does Disney. Universal is attached to a broadcast network, but will have to start buying its way into the cable/satellite space. And among The Six Sisters, Sony remains the floater, like an NFL team with a "poor" owner who can't really afford to build his own stadium in order to compete with the revenues of the Dallas Cowboys or in baseball, The Yankees. (Sony, not to pick on the studio, which is going to have a good year, is not unlike a massively steroidal Lionsgate right now. It delivers its own value as a content producer, but is not in the long-view infrastructure game that is defining the rest of the major players on the field.)

The irony of all of this is that as the industry gets revved up about charging for what has long been established as free programming, it is also flooding the world with so much content that it is devaluing all of its content. (It can fairly be defined as an industry wide phenomenon as all the broadcast networks are owned by the same company as the movie studios and less than 1% of the video programming available for paid download on iTunes are from any sources other than the networks, studios, or their cable subsidiaries)

Universal's UK experiment shows a clearer understanding of what the audience is "demanding." No one wants to pay for a show multiple times. But there are these various new delivery systems. Offering the ability to access something you are buy in Home Entertainment is a great Added Value and will soon be expected. Getting ahead of this curve is the industry's best chance of adding incremental dollars to the H.E. buy. The notion of "fight night" pricing is fading in a hurry and the chance to add 15% to a DVD sale is looking pretty good.

The one place where day-n-date will remain a hot topic is in the true indie world, though Mark Cuban will have to decide what business he is really in before the future there becomes clear. The four-walling opportunity (combined with marketing) that is being touted is not an audacious enough idea to make a difference. And the horrible admission that Landmark will not support day-n-date releases by distributors not owned by Cuban is a big step towards the ambiguity that fogged day-n-date in for years. The great model for indie day-n-date hasn't been offered up yet. But it is probably there. Delivery of digital projectors to at least 500 screens in the US is likely a critical step in developing any reasonable model.

EMe.