Media Report

US media analyst James McQuivey tells us about the 2008 National Association of Broadcasters convention and about new online services for program distribution, including the recently launched HULU...

Transcript

This transcript was typed from a recording of the program. The ABC cannot guarantee its complete accuracy because of the possibility of mishearing and occasional difficulty in identifying speakers.

Antony Funnell: Just a few days ago in Las Vegas they gathered for the 2008 conference of the National Association of Broadcasters.

The convention has always been an important gathering for those involved in the US media industry, and among those who attended was James McQuivey, a senior media analyst with Forrester Research in Boston.

Now we originally invited James onto the program today to talk about, among other things, a new video website venture called HULU, which was launched about a month ago.

But then I figured that given he'd just been on deck in Las Vegas at the Broadcasters' convention, perhaps we should start with his impression of this year's event.

James McQuivey: You know, I think one of the biggest questions I left the conference with was 'Should we still call it the National Association of Broadcasters any more?' You know, most of what was happening at this conference, compared to years past, was the announcement of new technologies, new technologies for consuming, as well as producing and distributing content, which we used to broadcast over the air, and more and more this conference has been taken up with people talking about internet-based delivery of content. So we're seeing a whole bunch of what's called IPTV, which is an Internet delivered television system, and we're seeing those set-top boxes in the system, in fact there was a whole sub-conference on IPTV there. And this is isn't even a broadcast technology, in fact it competes with a lot of broadcasters, depending on their region in the world where it's being implemented. I left the conference thinking Perhaps we should no longer call this the National Association of Broadcasters, we might need to start calling it the National Association of Video Programmers, because that's really what these people are.

Antony Funnell: And do you think there were other people there at the conference thinking the same way? Has it got to that stage yet?

James McQuivey: I think it has. One of the indicators that it had got to that point is this used to be a conference where the CEOs of major broadcasters up here in the States, our ABC or our NBC would have their executives or their lead news anchors would come and speak and offer keynote speeches, and that would be all the talk. But this year, that wasn't all the talk. People were talking more about the technologies, you know, What are portable video devices going to do to the future of broadcasting? How are we going to stream internet video over the internet in High Definition quality at an affordable rate? And that seemed to be of more interest than talking to, and hobnobbing with, the very large executives who otherwise used to dominate the show. And I think that's the trend now, we're going to these shows more to find out what technologies we have to pay attention to in a broadcasting environment, than to really talk to the bigwigs and hear what they have to say about the future.

Antony Funnell: All right, well let's talk about HULU which was a big announcement about a month ago. It's a joint venture video website between News Corporation and the American NBC network. Could I get you to briefly explain the background behind this site and how it works, how it's different from what else is on offer at the moment?

James McQuivey: Now that's a very good question, and I think one worth thinking through, because what has happened here in the United States, but it's also of course trickling around the world as different markets decide they're interested in following the model. What has happened is that here for example, let's take Fox (which produces some of the hit shows here) has been putting its top shows on Fox.com for people to watch and of course they have advertising in the show, and that's how they pay for it. And they're very successful. Fox can get 50 million people, or 50 million views of its program on Fox.com. The problem is that not everybody knows those shows are available on Fox.com, and Fox is looking at this and saying 'You know, if there were a way that we could take these shows and prepare them, sort of package them up and share these shows with major websites like Yahoo.com or AOL.com, or MSN.com, which is Microsoft's site of course, imagine the extra millions of yours that we could get. And imagine the extra millions of advertisements that people would pay us very good money to show to those extra millions of viewers. And that's really what has happened, is that Fox and NBC put their heads together and said, you know, we could all do this separately and make competing platforms, or we could combine our efforts and make a single platform so major advertisers can come into the one place and spend their money in one place, and then we can share our shows, not only with our own website, but out to Yahoo and MSN in these sort of ways. And that's what makes HULU unique, it's not just that television shows are online, that's starting to become very common; it's that it's the combination of shows from multiple broadcasters and the these shows are placed out across the web into any number of places where you might happen to be. So they don't actually care if you ever go to hulu.com as long as you see their shows across the web.

Antony Funnell: And you can share videos, can't you, there's a facility for people to be able to share videos, so I presume that that's good in terms of viral marketing for HULU.

James McQuivey: You know it's absolutely the right strategy for them to do, and it was risky and a lot of people wondered whether or not if you worried that sharing would somehow equal taking for free, but as long as you share the videos the way they package it for you, you're sharing the advertising as well. They have a wonderful system where you can go in and identify, you know, if you watched a 45-minute television show and you really only want to share minute 5 through 8, because that was the funny scene that you want to tell all your friends about, we can actually go into the show and slide the beginning point out to minute 5 and the end point out to minute 8 and then you can take just that 3-minute clip and email it to your friends. Your friend then opens it up, first to access that 3-minute clip, gets a good laugh that you knew they would, and then they're sitting there looking at the HULU player, and they're thinking, 'Oh, I could watch more TV shows here, look there's a couple I can click here and see more shows like this, and boom! suddenly I have a new viewer'. And that's going to spread this video like wildfire. I think it's a very smart move. A lot of people doubted that they'd be able to pull it off, because working together as competitors is challenging.

Antony Funnell: And just before we move on to other things, just briefly, we're not in Australia able to see HULU at the moment, it's only available for people in the United States, but as I said, it's only a month so far; any idea as to how successful it's been?

James McQuivey: It's been very successful. Of course they're not sharing the numbers with us, we try to keep track of it by looking at indicators of how much traffic they're streaming. But right now, the best my estimate is, is in this one month of being available, they've probably had about 80 million video views. This is completely an estimate on my part. But 80 million video views, most of those will have three or four advertisements, so you think about it, we're looking at anywhere from probably 300 million advertisements that they were able to place in front of consumers, which of course that produces the money that they can use to improve the service. So I think they have to be very happy with it right now.

Antony Funnell: James McQuivey, another interesting move in the last few weeks was the deal between MySpace, which is of course another part of the NewsCorp empire, and a British-based production company which is owned by Elizabeth Murdoch, and that was to distribute video content overseas. How should we assess that move and how does that fit in to this overall NewsCorp plan?

James McQuivey: This is a very intriguing move from my position. I say intriguing because honestly, I don't think it's going to have a large impact over the next one, maybe even two years. The model that they've decided to follow is there's a lot of really interesting user-generated video going on in MySpace video, so users can make their own shows and post them or make their own clips and post them, and a lot of people just post videos of their cats chasing a ball of yarn around the yard. But some people will actually sit down and try to make a little drama, a little comedy, and post a video, and the power of the internet is such that if ten people like it, the next day it's going to be 100 and the next day it's going to be 100,000. And soon, you can literally have 12 million people who've seen your funny video and really think you're funny.

Well if you do that in MySpace, MySpace is in a position to say 'Let's contact those people and say We love your idea, we think this could be developed into a show, let's take that show and we'll buy the rights to that show and we'll distribute that show internationally, using this new relationship that we have.' So it's very ambitious. The reason I say it's ambitious is that so far, even though you can get 12 million people to watch your very funny home-produced video or semi-professional video, none of these shows has actually successfully turned into a serial, into a program that has 8, 10, 22 episodes that can bring viewers back again and again and again. And as a result, there's not a lot for them to distribute yet. I think what they're really trying to say is 'We're betting on the future'.

Antony Funnell: So the idea is that this production company, Elizabeth Murdoch's production company will pick these things up and give them a professional edge, if you like, is that correct? And develop them from there?

James McQuivey: Absolutely. They'll pick them up, they'll flesh them out, add the professional production value and then hope that there's still another 12 million people out there who remembered how funny that video is, and they'll say, 'Oh, there's a show based on that now? I want to try that show.' And that's the whole idea, and they're basically locking down the international rights under the belief that in the old days maybe they could pick up a show idea and market it in one country, see how it succeeds, and then hope that it works, and then they could start to sell it in other markets. They're saying, 'You know what? In order to fund these shows, we're going to have to start these shows with an international focus, make sure that they're popular around the world and that we will have a maximum chance of getting a success here.' And I think eventually it'll work, but definitely it's a little early to say that this is the year, probably even next year.

Antony Funnell: James McQuivey from Forrester Research in Boston.

And just before we leave the States, I should just mention that there's news this week that the managing editor of The Wall Street Journal is stepping down and being reassigned to other duties within the NewsCorp empire.

Now that's not overly interesting in itself, but what will be interesting will be the process for appointing a successor. If you recall, part of the deal Rupert Murdoch had to agree to before taking over the Journal and its parent company Dow Jones, was the setting up of an independent editorial committee.

Well that committee is about to have its first major test, because any new appointee to the managing editor role, as we understand it, is meant to first gain their approval. We'll keep an eye out.

Guests

James McQuivey
Senior media analyst, Forrester Research, Boston

Presenter

Antony Funnell

Producer

Andrew Davies

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