THE EVOLVING MEDIA CONSUMER & THE FUTURE OF LOCAL TV

Bonten Media Group Leadership Conference January 9, 2012

1 I hate the future because its always wrong.And yet, perhaps foolishly, Im going to talk about the future of television. Some of the trends well explore are here already, at least for some people, but how they evolve for the mass audience is a question. Others are perhaps ten years out, which means, maybe never.

WHAT I DO:

Strategy for the Digital Era

2 18 months ago I launched a consulting business to help companies in the age of digital disruption. I work with companies that are disruptive---start-ups, mainly. And I work with companies whose core business need to change -- those would be the disrupted! I provide strategy support, help deliver strategic partnerships and business developement, work with internal and external teams to build products and services. For 20 years I was Senior Vice President of the AFI in charge of media and technology. I launched programs like the Digital Content Lab that brought together Hwd. & SV. Partners included Intel, Apple, Microsoft, AOL, HP, Best Buy,IBM, studios & many others.

MEDIA ACTIVIST, 1962

3 In terms of my expertise in local television, I can tell you, I was an early media activist. <Story here>

4 Sufce it to say, as a young Army brat living in Fort Hood, Texas, I was an avid watcher of television, and by far my favorite program was Perry Mason, which I received over the air from nearby Waco Texas.

5 That year my father retired from the Army and took a job in Austin Texas, whose only TV station was KTBC -- the only local broadcaster afliated with all three commercial networks. KTBC broadcast Perry Mason two weeks later than the Waco afliate, and boy, was I mad!

6 I wrote an irate letter to the station, and guess what? They invited me down for a tour.. I had what social media marketers today are craving: one-to-one relationship with a brand! This experience opened my eyes to broadcasting at an early age AND illustrates that consumers care about their own experience, even today as it changes so much. We dont much care about a companys prot or loss. We care about the content and the experience.

LETS LOOK INTO THE FUTURE

7 In a time of rapid technological change, companies usually fall into one of 2 categories -- either they are disrupting the status quo or they are the ones being disrupted. In this talk, Im going to talk about how forces of disruption will impact local television, with ideas on how Bonten stations can be both.

8 As I began polishing my crystal ball, I stumbled across a few clips that seem relevant. The personal computer is dead -- Somebody is always ready with a prediction. Problem is getting it right. This deals with the rapid rise of the iPad & other tablets, and return of the walled garden.

9 This writer has joined the chorus that predicts the death of television, well really, the death of cable subscriptions, because of the so-called cord-cutters. Myself, I prefer to think of television as an application...Not going away, tho maybe prots of a method of delivering the app. Disruption.

10 Like he sez: the Internet is ruining everything. At the root of change in todays world is the Internet Protocol, IP-delivered content, and all of the links in the chain of content production and delivery made possible by digital content. Weve known this now for 20 years. Why is this surprising anyone?

TEN QUESTIONS
What What What What

is a channel? is a remote? is a screen? is an ad?

How

do you share? do you watch?

Where How How

do you create? do you participate? is reality?

How do you watch?

What

11 Before I get into some of the specic business issues and opportunities presented by the disruptive power of the Internet, lets look a bit farther into the future.... Ive organized this trend analysis as a series of questions.

WHAT IS A CHANNEL?
Internet: always Video

on

on-demand: downloads & streams networks shifted are

OTT: websites

Time-

and place-

12 The days are numbered for the channel as a fundamental organizing principle for content. This concept, and the business rules behind it, was a necessity in order to use the electromagnetic spectrum efciently, and it was carried over into cable TV.

WHAT IS A REMOTE?
Keyboard Second

Screen (touch) interfaces

Gestural Voice Facial

command recognition

13 The remote control was a revolutionary device because it allowed users much greater control of content consumption. But its a primitive and often very annoying interface that is being replaced.

WHAT IS A SCREEN?
TV

is an application, not a device are everywhere get huge in our pocket

Screens Screens Screens

14 The invention of the cathode ray tube paralleled the growth of the content and advertising networks that lled those early screens. Over time, of course, weve used screens to display all sorts of content, to the point where television content is simply another application.

WHAT IS AN AD?
Personalized, targeted The Virtual Interactive T-commerce, M-commerce Content

Self

content

as brand, brand as

15 Corporate advertising and sponsorship has nanced much of television, up until the rise of subscription television. With the rise of the Internet, and its ability to target individuals based upon data, the form of ads will change again.

HOW DO YOU WATCH?

Watch with friends (real & virtual) Motion capture, telepresence & holograms Interact w/content & characters Viewing becomes persistent & immersive (transmedia)

16 TV viewing is sometimes lonely, sometimes social, often simply ambient -- based upon circumstances within each household. In the future, other factors outside our physical reality will help change the viewing envirnoment.

HOW DO YOU SHARE?

Social graph integrated at every level Content discovery is social Sharing reected in content formats

17 The social web is the web for most people, and with IP connected TVs, second screens, etc., the conventions of the social web will naturally extend to the TV experience. Its happening already.

WHERE DO YOU WATCH?

Screens Vivid

are pervasive

portable screens (TV) follows you

Content Cloud Stop

storage

& start all day

18 Content consumption left the living room a long time ago. We will view anytime, anywhere.

HOW DO YOU CREATE?

UGC

as an emergent form tools

Faster, better, cheaper Crowd-sourced Proliferation The

production

of outlets

rise of the fan/producer

19

A great story well told, thats what we want from our media providers, along with information, education, escape. The advent of cheap production tools & ubiquitous distribution = an amazing revolution of content production that is competing for eyeballs and redening what we think of as Television.

HOW DO YOU PARTICIPATE?

Merger

of story forms (linear, games, distributed) of collaborative narratives of big data

Rise

Integration Fan

voting for more than just stars

20

The audience is becoming used to being in the picture -- certainly as surrogates, in the triumph of reality and competition formats -- but also directly in terms of interactive forms. Games are a big factor here. We will see story forms merge, new formats created, greater involvement and immersion.

WHAT IS REALITY?
Multi-sensory Perfected

experience

3D video

Holographic Olfactory Multiple

and tactile

angles

POVs and camera

21

McLuhan used the word synesthetic in describing televisions exploitation of multiple senses. We will see additions to the sensory, particularly spatial elements, that bring increasingly realistic experiences to life inside the home.

TOMORROW IS NOW ...

IP-enabled TVs/screens Content in the cloud Over-the-top networks Apps (TVs, mobile) Powerful mobile devices Voice & gestural command

Pervasive social graph Expanded TV shows Browsers & search across delivery systems The virtual self: content follows people

22

The seeds for tomorrows TV are planted, & are sprouting today.Tomorrow is now, with each trend I mentioned emerging in some form, maybe not yet a mass form. Thats where the fun begins -- determining how we get there, and, of course, who wins the race...

SIMPLY CHANGE TIRES

WHILE DRIVING
23

...without blowing out a tire, crashing and burning. This is what we should avoid. Its simple: the digital revolution simply requires a little change. Simply change tires.... while driving 80 miles an hour down the Interstate. Can you do it? Well, I for one, think you can. So lets take a look at your strengths.

(+) LOCAL TV: STRENGTHS

NEWS,TRAFFIC, WEATHER Go-to medium for LIVE Dont forget SPORTS! Brand identity, brand equity On-air personalities Local sales & national spots TV viewing is still growing Local advertising is still growing Economies of scale (station group)

24

Your stations have strong brands, you deliver live news, traffic, weather, sports -- tailored to local needs -- with on-air personalities. Pew: local TV still tops for breaking news. While online video ads grow, they still acct for about $2 billion in the US and over $3 billion worldwide (2012) TV ads is a $70b+ market.

(-) LOCAL TV: WEAKNESSES

Seismic technology shift Video is everywhere TV is just an application Legacy business model Digital demands new skills Protective of status quo Dont think like digital natives

25 Keeping with the tattoo motif, this one reads: Pain is weakness leaving the body. Ouch! Like music, newspapers, magazines, and other media before you, the local TV station faces a seismic technology shift. In particular, video is everywhere, and its consumption on many different devices continues to surge. No, TV still reigns, but look at rates of growth. As I said earlier, with the Internet as the platform, TV is simply another app. And yet, you have a legacy business model, based upon frequency and reach and an outdated measurement system. You have built teams whose primary skills are not in the digital realm. Constitutionally, most incumbent businesses PROTECT the status quo. You do not think like digital natives.

(!) NEW PLAYERS

Google & Microsoft (Bing) YouTube Anschutz (Examiner.com) AOL (Patch) Local.com & Auto Trader, etc. Groupon, Living Social Pandora, Weather.com Blogs, ad networks, mobile video

26 Once upon a time your competition for local advertising was limited, with television attracting the largest dollars because of the size of your audience, and the sheer impact of audiovisual brand messages. The web has eaten print alive, and is nibbling at your heels, especially with video viewing and online video ads presenting competition. No, TV has not been decimated -but its being disrupted, like other media before it. The game of frequency and reach is not as potent as it once was. Just look at the sheer variety of companies and platforms vying for your audiences attention -- and trying to monetize them.

> MULTIPLATFORM STATION

Your stations web HUB Microsites & hyperlocal YouTube & social sites Mobile: WAP, SMS, DTV Tablet apps Deals, contests & coupons Out-of-home, simulcasting, community/charity events

27 So, yes, local broadcasting stations have LOTS of competitors, but almost none whose brand umbrella is so large as local television. With your websites, you are already on your way to becoming a multiplatform station, offering content to viewers, and impressions to advertisers. You can continue this expansion to other websites that meet audiences where they are going today. Microsites and hyperlocal neighborhood sites are important trends we can look at. YouTube and other social networks, of course, which I will address in some depth. The fastest growing trend is mobile, and you can grab more views and viewers with WAP and SMS-enabled mobile sites. Digital mobile broadcasting, as well, allows your viewers to catch local news live and archived, even when theyre not near a set. The same can be done for the fast-growing tablet market. Many stations and newspapers have launched deals, contests, coupons, and other forms of advertising that keeps certain brands under your umbrella. Out-of-home means connected to retail networks in stores and gas stations. Simulcasting means using your spectrum to deliver additional content. And of course, leveraging your community and charity relationships into these venues offers advertisers great value.

PUT YOU IN YOUTUBE

48 hours per minute 3 billion views per day 44% of WW video views 33% of US video views 21 hours per month #2 search engine 10,000 content partners Its where your viewers view videos

28 With the upsurge in broadband penetration and the launch of YouTube, the rst competitor since cable TV has emerged. According to Comscore in October 2011, 201.4 billion videos were viewed online worldwide by 1.2 billion unique viewers age 15 and older, with Google-owned Youtube accounting for 43.8 percent of all viewing. In the US, total video viewing is now up to 21 hours per month, one third of which is YouTube/Google sites. Moreover, YouTube is the #2 search engine and has 10,000 content partners. Lots of other stats provided by YT in May http:// bit.ly/w0W0Gj. Its where your viewers view videos. You should be there.

YOU TUBE STRATEGY?

AFI in 2009 No channel strategy No subscribers Nobody sharing video No ad revenue Uploads by others DCMA takedown Playlists feed website

29 Back in 2009 a search for AFI or the American Film Institute might have looked like this search for a local TV station (KRCR) -- with links to random videos uploaded by others. No channel strategy of our own, and therefore no subscribers who received regular notice of our updates. And of course no revenue from videos that others uploaded -- or in the case of our nonprot, no referrals to our site. Our solution was to use the DCMA takedown provision that required YouTube to delete copyrighted materials uploaded by others, and to reach out to each of those fans to encourage them to link to the bona de versions we posted. All of our videos were high quality, and included a graphic ID and an outro referring viewers to our website. We also created channels on our own website fed by YouTube playlists that enabled us to broadcast videos created by others -- simply add to your playlist.

ITS A SOCIAL WORLD

YouTube feeds FB,Twitter Likes = customers Followers = dialog Subscribers = $$ Dont forget to blog Adapt Cost/benet analysis Issue: Does YouTube undercut your own site?

30 It's a social world online, with YouTube feeding Facebook & Twitter, and back again. When a customer "likes" you or favorites you or subscribes, this creates a one on one bond that you can cultivate. Your followers need dialog. Cannot feel exploited. But handled correctly, they are worth a lot of money. Don't forget to blog. Adapt to new players (example: Google Plus). Be careful in terms of how you apply traditional cost/benet analysis to social marketing. You are investing. Finally, does YouTube video undercut the value of what you publish on your own site?

ARE YOU ENGAGING?

31 In todays social world, engagement is the key. Indeed, audience engagement is a form of measurement that advertisers will increasingly desire as the utility of ratings and shares becomes less viable. Engaging your audience where they congregate (places like Facebook) is imperative. Here is KRCRs Facebook page (the correct one!!)

ARE YOU ENGAGING?

32 Here is a search for KRCR on Twitter. Fans mention the brand and include links to the stations videos, very likely by clicking the Twitter button the stations website. Twitter is only one of many ways that consumers are connecting their networks of friends to their TV viewing, typically by means of apps on smartphones and tablets, all of which offer you engagement opportunities like badges, contests, and user-rewards.

2-SCREEN ENGAGEMENT
Direct connection Social Check-in Gamication Rewards/badges Sponsorships Loyalty programs Coupons

33 Social platforms like Twitter, Facebook, YouTube and group texting make sharing a mass phenomenon alongside the individuals media consumption. A new generation of social TV apps on smart phones and tablets connect into the social portals, and add unique value. Heres another way to engage consumers and connect with your brand customers.

> CREATE AND CURATE

Goal

= Engagement Curate = aggregate Creating is not enough

Co-create Reward Find

fans Stimulate production great content in your market area

34 Engagement can come in other ways beyond the big social media platforms in one of the webs biggest trends. Call it aggregation or curation, we are talking about intermingling content from other sources with your own branded content. Think Hufngton Post, Gawker, and many other sites. You are already doing this by syndicating CNN video content. We can do the same with other providers, both professional and amateur. If its on YouTube, we can drag that into a playlist, and feed it onto your website and social sites. You can create contests to create new video content, and let the market know that your station embraces the user-generated, curated and aggregated world we all live in today.

> USE YOUR SPOTLIGHT

Brand = value Build your brand Use your brand Reward YouTubers, bloggers Hi-lite social on your air Connect to your sponsors Aggregate content from others on your site Integrate with contests, sweepstakes, community events

35 It all comes back to your brand, which continues to offer great value in the marketplace. In the world of new media, you build your brand by leveraging it across many different platform environments. Wherever your consumers go, they should nd your familiar brand as part of the experience. Dont let them migrate to the newcomers. Grab their attention and their loyalty, and make it easy. Reward YouTubers and bloggers in your market area by republishing them/ aggregating them on your digital platforms, and highlight them on your air. Connect to sponsors, especially contests, sweepstakes and community-related events.

> PARTNER WITH OTHERS

Mobile Content Venture

Consortium of station groups & Fox, ION, NBC Pearl DTV (consortium of station groups)

Dyle - live mobile TV ConnecTV - tablet app Required hi-tech partners

36 Bonten knows how to partner in new media -- your station sites are powered by Internet Broadcasting & you feature content from CNN. Heres an interesting example in some of the newer platform areas--mobile digital broadcasting. Formed in April 2010, MCV partnership to bring mobile TV to market via the ATSC standard. On board are ION-TV, Fox, and NBC and Univision, plus a consortium of station groups that include: Barrington Broadcasting Group, Belo Corp., Cox Media Group, E.W. Scripps Co., Gannett Broadcasting, Hearst Television Inc., Media General Inc., Meredith Corp., Post-Newsweek Stations Inc. and Raycom Media. Both Dyle and ConnecTV brought station groups together with high tech partners in Silicon Valley.

DISRUPTED ?

DISRUPTOR?
37 Those are just a few of the implementations we might look at to execute an overall digital strategy for a local TV station or group like Bonten. This is, ultimately, a strategy that starts with the commitment that if you dont disrupt your competitors, your business will be disrupted, and face certain demise over time. Theres no question that every business on the planet faces challenges as the digital transition continues apace. The only issue is whether you see the future as a great opportunity, too. Now I would love to hear from you, questions, suggestions, and great ideas. Let me know how I can help you.

NICK DEMARTINO
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@nickdemartino www.slideshare.net/ nickdemartino [email protected] www.nickdemartino.net

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38 Please feel free to contact me with questions. I will be posting this presentation on SlideShare. If you give me your card after the talk, Ill send it to you, as well. Please check out my website, and if you like my blog posts, sign up for my newsletter. Much of the research for this talk can be found on my Delicious site, under either bonten or ott tags.

Thank You Very Much

39 Thank you very much. I hope you enjoyed this as much as I did.