TV's Bold Digital Play

The broadcast networks, alarmed by the music industry’s hemorrhaging from Internet piracy, aren’t about to make the same mistake.

Fox is selling downloads from its recent American Idol finale at $1.99 a pop and garnered more SMS votes for its final two than the last American election. ABC launched news podcasts last week. CBS is selling episodes of shows like Survivor for 0.99 and launched its innertube broadband network last month.

“Finally the technology is here,” said Tina Imm, VH1’s Vice President for Digital Media. “The Web penetration is here. The consumers are here. The advertisers are coming.’’

So far, these efforts aren’t more than a rounding error in the networks’ bottom lines. But that will change dramatically over the next two years as viewers warm to watching their favorite shows on video iPods and cellphones.

The networks’ launches are historic because they largely bypass piracy by using the unique features of the web and mobile to their financial advantage. Their approach exemplifies how I believe music, films and other rich media will be monetized in the Brave New Digital World.

How are the networks accomplishing this? Let’s look at some examples. Take ABC’s decision to allow fans to view hit shows like “Desperate Housewives” and Lost” for free online. Traditional thinking is that such largesse would hurt TV viewership and thus ad sales. But ABC convinced advertisers such as Toyota and Procter & Gamble to add short ads to the online episodes. Arguably, these companies get better brand recognition by hitting fans into two mediums, rather than one – especially since you can’t click on your TV to buy Folgers.

Of course, you can also pay to download Desperate Housewives from iTunes or buy or click on Susan’s James Perse T-Shirt to buy it from Nordstrom’s.
Toyota, by the way, is also creating 10-sec spots to air before “mobisodes” of its hit show “Prison Break.” How big could that be in a world of 1.5 billion handsets?

These tactics would have been ineffectual a few years ago, when the broadband Internet was still used by only a fraction of the population and Web ad rates were dismal. But the Internet is now capturing a significant percentage of the prime time viewing audience.

Note how these efforts are largely immune to piracy. Who wants to steal a show that’s available for free? Why rip off a baseball broadcast airing simultaneously on TV and the Internet? Would you rather wait a few days to catch “Desperate Housewives” from a pirate, or get it for $1.99 from iTunes?

I’m not suggesting that the path to TV on multiple platforms will be easy. ABC’s announcement of free Internet airings of its top shows angered some affiliates, who worried that they wouldn’t be compensated for local viewers who fled to the Web. Fox sidestepped that issue by promising to cut affiliates a piece of the profit from shows it airs on the Internet.

“The economics for the digital model are quite different,” said Network Live CEO Kevin Wall, whose Live8 concerts last summer set Internet viewership records. “There will be a struggle, just as the record companies are struggling to make the transition.’’

Sports, in particular, presents sticky issues. How do you negotiate rights clearances for a Red Sox baseball game when anyone can view it streaming for free on the Internet or on a cellphone?

One answer: lock up rights to all platforms. ESPN, for example, negotiated the rights to air baseball games on TV, online and on its ESPN cellphone. Fox negotiated similar rights for the NFL.

“Consumers like to see a game retain the same brand when it moves from the TV to the web or mobile,” said John Smelzer, Fox Interactive’s vice president and general manager for mobile initiatives. “It creates continuity.”

With some imagination, you can see how the TV industry’s digital innovations could have parallels in film and music. Movie piracy would have less relevance in a world where theater goers could pay to watch it on the Internet or their mobile phones before it was officially released. Delivering movies by satellite and broadband Internet at the same time to movie theaters around the world would also help fight piracy.

Even for the music business, hope abides. Online sales are picking up. You can imagine simultaneously selling consumers rights to a U2 CD, hearing the music in their own online locker, downloading it to their iPod, or downloading a music video to their cellphones – and throw in a 25 percent discount to the next U2 concert and a fan magazine to boot.

You can quibble with me about these examples or how long it will take before TV shows, music and films become platform-independent. But it’s hard to deny change is coming.

“In five years, content will be content will be content,’’ said Network Live’s Wall. ``Consumers won’t care whether it’s coming from cable or the Internet.’’

E3: The Multiplayer Explosion..And What It Means for Hollywood

LOS ANGELES - Before I give you my take on E3, I'll first talk about my kids.

My 11-year-old girl and my 13-year-old are addicted to Runescape, a wildly popular game that allows young people around the world to become valiant characters in a world of chivalry, battles and, most important, community.

How big is the Runescape community (social networking for you techno-geeks)? Well, I tried to create my own account using usernames Michael, Mike, Miguel, Manuel, Michaelworld and finally Michaeldamn – all of which were taken. (If you don't believe me, try to start an account yourself on Runescape using those words).

I finally settled on Squid571.

My kids waste (pardon me, spend) countless hours talking to their buddies on Runescape and occasionally playing the game.

OK, now on to E3.

Even before you enter the massive L.A. Convention Centers, you're assaulted by the Championship Gaming Series booth, promoting a multi-city pro videogaming tour backed by IGN Entertainment, DirecTV and Mountain Dew. (“Millions in prize money,” says a booth staffer, although he admits he doesn't know just how much).

Inside the cacophony of E3, community is quietly part of nearly everything that's sold: from the massively multiplayer games for Xbox, PS2s and PCs to the WiFi equipped PSPs and Bluetooth-enabled Game Boy Advances for playing games with your friends at the bar or on the playground.

The Wizards of the Coast section on the floor is packed with people playing the cult game “Magic: The Gathering”, while 16 top “Magic” players are competing in the 10th Invitational Magic tournament.

Elsewhere on the show floor, four humans battled four locusts in Microsoft's Gears of War for Xbox; others were hacking each other down in Funcom's new Conan game; and multiplayer mayhem was breaking out at Sega's booth over its Full Auto 2: Battlelines, the sequel to its Xbox 360 hit. Meanwhile, Disney launched a series of multiplayer games for young aficionados of Game Boy Advance. “Gaming is becoming just another extension of what's already going on in popular culture,” says Pete Hines, Vice President of PR and Marketing for Bethesda Softworks, which demonstrated multiplayer Star Trek games at the show.

Now for the Hollywood angle.

The era of creating content and advertising aimed only at passive, solitary individuals is over. People want to share their games, content, skills, passions with other people.

That doesn't mean movies, TV and DVDs are passé. But it means they must be extended and promoted by creating communities of interest on the Internet, mobile phones, gaming consoles and live events.

That's why Fox bought MySpace, remember? And did you happen to notice that Helio launched MySpace Mobile a few days ago?

So if your idea of “multiplayer” and “community” is a bunch of studio suits at a hot party, it's time to retool your vocabulary.