THE EVOLVING MEDIA CONSUMER & THE FUTURE

OF LOCAL TV Bonten Media Group Leadership Conference

January 9, 2012

1I hate the future because it’s always wrong.And yet, perhaps foolishly, I’m going to talk about the future of television. Some of the trends we’ll 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

218 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, 19623

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

4Suffice 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.

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

6I 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 don’t much care about a company’s profit or loss. We care about the content and the experience.

LET’S LOOK INTO THE FUTURE

7In 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, I’m going to talk about how forces of disruption will impact local television, with ideas on how Bonten stations can be both.

8As 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.”

9This 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 profits of a method of delivering the app. Disruption.

10Like he sez: the Internet is ruining everything. At the root of change in today’s 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. We’ve known this now for 20 years. Why is this surprising anyone?

TEN QUESTIONS

•What is a channel?

•What is a remote?

•What is a screen?

•What is an ad?

• How do you watch?

• How do you share?

•Where do you watch?

• How do you create?

• How do you participate?

•What is reality?

11Before I get into some of the specific business issues and opportunities presented by the disruptive power of the Internet, let’s look a bit farther into the future.... I’ve organized this trend analysis as a series of questions.

WHAT IS A CHANNEL?

• Internet: always on

• Video on-demand: downloads & streams

•OTT: websites are networks

• Time- and place-shifted

12The 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 efficiently, and it was carried over into cable TV.

WHAT IS A REMOTE?

• Keyboard

• Second Screen (touch)

• Gestural interfaces

• Voice command

• Facial recognition

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

WHAT IS A SCREEN?

• TV is an application, not a device

• Screens are everywhere

• Screens get huge

• Screens in our pocket

14The invention of the cathode ray tube paralleled the growth of the content and advertising networks that filled those early screens. Over time, of course, we’ve 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 Self

• Interactive

• T-commerce, M-commerce

• Content as brand, brand as content

15Corporate advertising and sponsorship has financed 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)

16TV 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 reflected in content formats

17The 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. It’s happening already.

WHERE DO YOU WATCH?• Screens are pervasive

• Vivid portable screens

• Content (TV) follows you

• Cloud storage

• Stop & start all day

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

HOW DO YOU CREATE?

• UGC as an emergent form

• Faster, better, cheaper tools

• Crowd-sourced production

• Proliferation of outlets

• The rise of the fan/producer

19A great story well told, that’s 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 redefining what we think of as Television.

HOW DO YOU PARTICIPATE?

•Merger of story forms (linear, games, distributed)

• Rise of collaborative narratives

• Integration of big data

• Fan voting for more than just stars

20The 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 experience

• Perfected 3D

• Holographic video

•Olfactory and tactile

•Multiple POVs and camera angles

21McLuhan used the word synesthetic in describing television’s 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

22The seeds for tomorrow’s TV are planted, & are sprouting today.Tomorrow is now, with each trend I mentioned emerging in some form, maybe not yet a mass form. That’s where the fun begins -- determining how we get there, and, of course, who wins the race...

SIMPLY CHANGE TIRES

WHILE DRIVING23

...without blowing out a tire, crashing and burning. This is what we should avoid. It’s 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 let’s take a look at your strengths.

(+) LOCAL TV: STRENGTHS•NEWS, TRAFFIC, WEATHER•Go-to medium for LIVE•Don’t 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)

24Your 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

• Don’t think like ‘digital natives’

25Keeping 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

26Once 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 it’s 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 audience’s attention -- and trying to monetize them.

> MULTIPLATFORM STATION• Your station’s web HUB

• Microsites & hyperlocal

• YouTube & social sites

• Mobile: WAP, SMS,

• DTV

• Tablet apps

• Deals, contests & coupons

• Out-of-home, simulcasting, community/charity events

27So, 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 they’re 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

• It’s where your viewers view videos

28With the upsurge in broadband penetration and the launch of YouTube, the first 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. It’s 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

29Back 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 nonprofit, 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 fide 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.

IT’S A SOCIAL WORLD • YouTube feeds FB,Twitter

• “Likes” = customers

• Followers = dialog

• Subscribers = $$

• Don’t forget to blog

• Adapt

• Cost/benefit analysis

• Issue: Does YouTube undercut your own site?

30It'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/benefit 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?

31In today’s 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 KRCR’s Facebook page (the correct one!!)

ARE YOU ENGAGING?

32Here is a search for KRCR on Twitter. Fans mention the brand and include links to the station’s videos, very likely by clicking the Twitter button the station’s 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• Gamification• Rewards/badges• Sponsorships• Loyalty programs• Coupons

33Social platforms like Twitter, Facebook, YouTube and group texting make sharing a mass phenomenon alongside the individual’s media consumption. A new generation of social TV apps on smart phones and tablets connect into the social portals, and add unique value. Here’s 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 fans

•Stimulate production

• Find great content in your market area

34Engagement can come in other ways beyond the big social media platforms in one of the web’s biggest trends. Call it aggregation or curation, we are talking about intermingling content from other sources with your own branded content. Think Huffington 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 it’s 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

35It 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 find your familiar brand as part of the experience. Don’t 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

36Bonten knows how to partner in new media -- your station sites are powered by Internet Broadcasting & you feature content from CNN. Here’s 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 don’t disrupt your competitors, your business will be disrupted, and face certain demise over time. There’s 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• TWITTER:

@nickdemartino

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38Please feel free to contact me with questions. I will be posting this presentation on SlideShare. If you give me your card after the talk, I’ll 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

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