Akamai Exec Claims Broadcast Model Crumbling

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In a recent article over at Seeking Alpha, Akamai CEO Paul Sagan claimed that broadcast and network TV operators are in for a ‘Big Bang.’ But we all are ahead of the curve because we knew that already right?

“The broadcast network model is crumbling, so the only thing left is for TV stations to use their strong local identity and connections to become a 24/7 online video news and information hub for all things local. The Internet is the only source of growth…”

So broadcast will either evolve or die off apparently in the local sphere. He also stated that large portals can’t do local content which I believe is wrong. There are more than enough examples of local searches or local marketing online based on Geo-IP location and keywords  and that is old technology.

Sure, many of us are expanding our Internet usage time at the expense of our TV-watching time but that’s mostly because we can right? With content providers moving their content online it’s only natural. But I don’t know that it’s harming the local TV stations. There are still those who don’t have their massive LCD TV hooked up to their computer (though that demographic is certainly growing) and will want to watch first-run shows on their local broadcast station.

Upon further thought, this is a brilliant statement and strategy by the Akamai CEO, because who will many of these local stations turn to? A Mom & Pop local Webhost? Surely not, they’ll turn to Akamai which means by telling local broadcasters that they must evolve or die he is actually drumming up more business for his $4 Billion company. Interesting to say the least.

Sure, on-demand is the way of the future. Americans especially want it when they want it and won’t wait so they will turn to instantly accessible information. Where is that available? Online of course. But that’s not to say that the local broadcast TV stations won’t survive.  They still maintain a range of content that isn’t found outside of the local region. It means that they can fight back by keeping that content offline. Of course, they could probably monetize it better by putting it online and running pre-roll ads or by creating subscription-based services for their original content. That would certainly offset any loss of advertising dollars in the traditional broadcast area of their business and perhaps bring in new, forward-thinking advertisers who still target a local audience because their services or companies are locally based and operated.

This next quote was of particular interest I thought:

“There is almost no pure Internet video online; 99% of it is television. That is a gigantic opportunity on all screens that in a new industry can complement, not replace, TV. But the new business models have to follow,” Sagan said.

So local broadcast is not dead but will just begin to incorporate more online content and add interactive advertising capabilities. I don’t know that it adds up to the business model crumbling as much as to it changing over time like all things in the universe. Anyone who believes that they an keep their exact same TV business model as Internet video continues to grow is a fool. Instant gratification is a major driving force in consumer behavior nowadays and that certainly extends to video-consumption, but still, there’s nothing wrong with plopping down on the couch on a Sunday afternoon and watching and old episode of Blondie with a Dagwood sandwich is there? Wouldn’t it be even better if you could choose exactly which episode to watch from your local TV station’s library?

Perhaps we will begin to see a true meshing of the two-screens and instead of TV being ported to Internet we’ll see it go both ways with online content being ported to TV. It’s already begun, you just might not be aware of it. The current science fiction show, Sanctuary, was an online-only show that made the jump to TV. Several others are in various states of production as we speak.

In the end I don’t know that local TV can remain even a shadow of what it once was. They will certainly have to rethink their approach to their business and find a way to survive, especially when their own networks are taking viewers away by putting shows online and reducing the rerun viewership. Perhaps it will end up that the local TV stations all become news, weather and local sports focused venues with occasional original IPs and less network shows and support overall. In fact, they might have to if viewership drops to almost nil on first run shows. Those local TV stations not owned by the major networks would certainly be that hardest pressed to survive since they’re basically independent operators.

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