Companies are finally aggressively marketing alternatives to TV and using the writer’s strike as user chum.

This is an economic problem for TV that will not be evident for many months.  Here’s why:

Ad rates online are at least 1/3rd lower than TV/Print rates.  Migrating the same viewership online cuts your revenue by 2/3rds at minimum.  Even if the writers get back to work, a good chunk of viewership has been lost for a long time.  That is, that viewership will take months to come back and the TV rates will drop as a result (no reach, no high CPM).  With less money at the studios and internet companies already on the cheap for original content development, writers will lose money.  networks will lose money.

where does all that money go then that would have gone to TV ads?

utilities:  search, email, social networks.  new site development.

in otherwords, it will be spread way out between 1000s of media properties and technologies.

in fact, like global warming, it’s already happening and any change now will simply lessen the damage.

Writers – just go work on the internet now.  get in before the rush of all the underpaid writers comes in late 08/09.

Studios -  better figure out this online, iptv, and mobile thing quickly.  Expect to need alternatives (subscriptions, itunes, huge archived downloads, live programming, more hd, straight to tv movies, etc. etc.) to overpriced tv spotsto subsidize underperforming concepts, shows and departments.

users/viewers – better learn to write and produce.  UGC stinks now and the quality of entertainment – in terms of excellent creative output relative to noise – is very low.

anyone read brave new world recently?

Peace,

~Russ

This never made sense as a defensive measure for writers to get paid for reuse of work on “new media.” It’s making less and less sense as this carries on. The logic and economics breakdown when you consider the only thing a work stoppage on television and movies does is push networks to rerun or break out the shitty shows. The lack of new, interesting content is just going to push more users not only into alternative internet programming but alternative entertainment in general.

Here’s some intelligent thinking from J. Nickelsburg from UCLA’s Anderson School of Biz:

While stockpiling and reality shows are two ways the industry has avoided bigger financial troubles, once these shows eventually run out of new episodes and if the strike still continues, Nickelsburg said he fears for the possibility of substitution.

“I think that’s actually a real danger if you’re not providing the entertainment that people are used to. The risk is the longer the strike goes on the more likely people will decide not to come back and go to other media. … (It is an) incentive for both sides to come back quickly,” Nickelsburg said.

One increasingly noteworthy form of alternative media is the Internet, with the rise of “webisodes” and Web sites such as Youtube.

“As consumers demand the new technologies, they will help create an industry which will be a growing industry and an alternative to scripted television shows,” Nickelsburg said.

As part of the report, the Forecast assumed that 10 percent of mass media consumers would eventually switch to alternative forms of entertainment and never return, the same percent that switched during the 1988 strike.

Ultimately, the Forecast predicts an economic impact of $380 million, with an even smaller impact if the strike ends before March.

To put things in perspective, the Forecast pointed out that every year the entertainment industry produces $20 billion of income in comparison with an overall $380 billion across industries the entire city of Los Angeles brings in every year.

Nickelsburg warned that nothing is certain because of the unpredictably of the strike itself.

“Do we know what’s going to happen? No, because no one knows how it’s going to play out,” he said.

Read the rest of Nickelsburg’s stuff. It’s useful insight.

I’m going to stretch something to make a point. Let’s look at the hockey strike from 2004. The sport was already not in great shape – far behind football, baseball and basketball. Look below at the traffic graph over a 6 year period. NHL produces no new entertainment for a long time. It’s still feeling the impact of that as likely lots of fans went elsewhere and don’t bring new folks in. I’ll wager if we plot some metrics for studios and content franchises (like SNL, late night shows, lost, CSI) over the long haul they will show great weakness for a long time to come.