jeremy borger [blog]

NBC and CBS will be offering their programming on …

NBC and CBS will be offering their programming on demand… for a price.

First, the NBC deal… DirecTV users will be able to view certain NBC shows, commercial free, for 99 cents. That particular episode will be available until the next episode airs. (usually the following week)

Next, CBS will be offering four of their shows on Comcast’s video-on-demand system (which is actually true VOD, unlike DirecTV, btw…) for 99 cents as well, although CBS will leave the commercials in.

It’s interesting that NBC and CBS are taking this route after it was announced last month that ABC/Disney would be offering some of their programming on Apple’s iTunes service for $1.99 per show.

The reaction to the NBC/CBS news by some people seems to be that they’re bypassing Apple with this move because why would someone pay $2 when they can get it for $1? Well, first of all, the current deals NBC and CBS have are limited in their reach. Only DirecTV subscribers in NBC’s case and only Comcast subscribers in CBS O&O markets for CBS. That’s a lot less people than have broadband Internet access, so if they want to reach as many people as possible, they’d be wise to talk with Apple as well.

How the pricing structure across the different forms of distribution will shake out remains to be seen, but keep in mind we always pay different prices for the same content right now anyway. You pay $8.25 to see a movie in a theater, $4 to rent it (or $20 to own it), watch it on the HBO channel you pay $13/month to receive, watch it for “free” on the basic cable network that’s included in your $40/month package, or wait for it to really be free on the broadcast networks. Granted, it doesn’t it go through all distribution channels at once. And as we move forward, content providers will have to figure out the right combination of distribution channels to hit at what time and at what price — broadcast TV, cable, VOD, Internet, cell phone, iPod… AHHH!! TOO MANY CHOICES!

I think the real interesting question is, as purchasing programming on demand becomes more popular, why do we need local network affiliates? Today, we do. They shouldn’t go shutting off their transmitters right now. But what about 5, 10, 20 years?

Two things will happen: First, the broadcast network shows won’t be bringing in as much revenue from going over the airwaves. They’ll bring in more OVERALL — via on demand, internet, mobile, etc — because more distribution channels means more revenue, but the broadcast slice will become smaller. And that will hurt the affiliates.

Second, the networks don’t need affiliates as much as they used to. In the 1950’s, the only way to reach everyone in a manner that was technically feasible was through local broadcast affiliates that would retransmit network programming. That’s not true anymore. NBC could go directly to Comcast and say, “Here’s our network feed. Screw the affiliates.” Matter of fact, when DirecTV first came on the scene, that’s what many people got — the network feed direct from the network, not through an affiliate. Until the affiliates complained.

Affiliates won’t go away entirely. Broadcast TV will not go away in the foreseeable future. But affiliates won’t be able to rely on the networks as much and broadcast TV will lose its dominance.

Affiliates should not be calling themselves “TV stations”, but “media companies”. They should put more effort in creating their own original content that is important to a local audience instead of just repackaging or retransmitting network stuff. And then they need to take that original, local content and distribute it in as many ways as possible — broadcast, on demand, internet, mobile, iPods, print, radio, etc.

I think you will see the FCC continue to relax their restrictions and you will see more TV/print/radio local media companies. Because if the news division of a media company can take its local news product and have the same reporter who put his story on the TV newscast also put it on the media company’s website, radio station, podcast, newspaper and on-demand channel, that ensures the media company isn’t relying too much on one distribution channel. That’s the only way to survive.