Bob Pittman Smacks Online Video
by Kara Swisher
Posted on January 25, 2008 at 12:02 AM PT
Bob Pittman, the longtime media exec who led AOL at its peak (and left the company after its merger with Time Warner turned sour), recently gave an interesting interview in which he takes a very counter view to the current craze around online video.
Of the explosion in the sector–every report and poll shows a giant leap in online video watching by consumers–Pittman (pictured here) is not so sanguine in a Q&A he did with VideoNuze that was published yesterday in advance of the National Association of Television Program Executives conference in Las Vegas next week.
(FYI, I will be there to appear at a panel on Wednesday with execs like former Disney head Michael Eisner, along with others, aptly called “Possibilities and Perils of Internet TV.”)
Of online video, Pittman focuses on those perils and notes that short-form Web fare is not really a big deal, however temporarily popular some of it can become.
“So we have to be careful not to talk about fringe uses as if they’re going to be major uses,” said Pittman. “But I don’t think broadband is competitive with TV, putting TV shows on the Internet is nice, but you’re talking about small audiences.”
Currently heading a New York-based investment firm called the Pilot Group, Pittman (who also co-founded and ran MTV Networks) is more disposed toward broadcast networks. Pilot has been buying broadcast, of course, in smaller markets.
Said Pittman (whose salesguy smoothness–his nickname was “Bob Pitchman”–I realized I really missed by reading the interview):
“Broadcast stations are greatly unappreciated. TV is America’s hobby. Look at any category, the biggest is always the most important. So we want to invest in a place where most people are. It is a fantastic advertising medium. There’s no substitute for TV advertising. It works like nothing else. It’s still wildly cheap–for the most part it’s a $7 to $8 CPM–compared with newspapers and magazines, which are $25 to $30, and it outperforms by every measurement–reach, time spent, effectiveness. It’s still wildly underpriced.”
I am not so sure I agree with Pittman, whom I got to know well when covering AOL and also writing two books on the company.
But he does have a point about how hard it is to watch quality online video and the need to get Web content to the television.
Said Pittman: “I think it’s going to be pretty hard to get something in the home that’s easier to use than pushing a button on my TV set that I already know how to do and I’m set up to do. To start connecting a box and moving stuff around, then my rule of thumb is about 10% of the population will adopt new technology because it’s cool and neat, but it will be hard to get past that threshold.”
More strongly than any TV exec I have talked to of late, who are mostly in a serious state of depression over declining viewership, Pittman insists that the Web is not hurting television.
“People keep talking about Internet as if it’s competing with TV. But what the Internet has really done is replace print–things like yellow pages, newspapers and traditional research books. It’s also replaced communications–phone calls, voice mail,” Pittman said. “So when you hear these stories about the Internet replacing TV, I think they’ve got it all wrong.”
Well, he’s got it all wrong, of course–it isn’t replacing it apples for apples. But it is replacing it in terms of time and attention of consumers, especially young people, which is exactly the same thing.
Nonetheless, it’s good to hear from the always pugnacious Pitchman.
Comments
He has a TV set that you can push a button on? What, does he live in a museum?
Most of us, whether we like it or not are at the mercy of half a dozen remote controls all designed by people from other planets (and not the same other planet apparently, unless you happened to buy your AV equipment from the same store, same vendor, same day). I know several households where there is one person who knows how to operate it all, and that person has to carry a beeper to be on-call for everyone else.
Web interfaces, as bad as they are, are trivial by comparison. I think with increased popularity, they will get easier, and the interfaces which will look more like an iPhone, will make current remotes seem like old Soviet military equipment.
More importantly, all “broadcast” media, and I include newspapers and magazines in that, have this delightful property of having the advertiser (a department store for example) depend on a middleman for evidence that their ad has been effective.
Face it, most people don’t want to see ads, in any medium, and will often go to great lengths to avoid doing so.
You can “target” ads in a broadcast medium, pots and pans advertised on cooking shows, etc. But not nearly so well as on the Internet where you can develop a profile of each household, if not each member of that household.
Finally, given the ability (assuming we get there at some point) to watch any TV show or movie that has ever been produced, on demand, will make going back to monitoring the broadcast schedules seem very tedious indeed.
Yes, there is a generational change involved, but we are well into it. Mr. Pittman and I are already past the age demographic that most advertisers are interested in and pay top dollar for. Those who are in that demographic are as comfortable with a mouse as with a remote control with thirty buttons on it.
Posted by Mac Beach at January 25th, 2008 at 1:26 pmPittman is probably right in the short term. There’s more money to be made from broadcasting broadly appealing content to the maximum number of people. However, he fails to take into account that the broadcast television audience has been fragmenting from the day it started. It’s amazing how we’ve progressed. Starting with three networks we were thrilled to welcome into our lounge rooms in the 40’s and 50’s, by 1970, Pink Floyd were lamenting that they’ve … “Got thirteen channels of s— on the T.V. to choose from” .
Technology developed and more channels grew on those cable systems so that by 1992 Bruce Springstein experience was… “There was fifty-seven channels and nothin’ on”
That’s progress. Just eight years later, EETimes commented:”Ever had the dish TV experience? Five hundred channels and nothing to watch, but boy, all those options.”
That’s the point Mr Pittman fails to see – eventually the aggregated viewers of “niche” programming are more people than are viewing the lowest common denominator of broadcast. Cable did it to broadcast having overall more viewers about two years ago. It may take another 10 or 20 years but it is inevitable that programming – not just short form consumer generated programming – but all programming will come via an on-demand, personalized channel basis. There will be no need for channel programmers when every viewer programs their channel from the pool of available television and movies in a creator to consumer marketplace, like that which we’re creating over at Open Television Network.
Short term, Mr Pittman’s on a safe financial get, long term he’s in the wrong race.
Philip
Posted by Philip Hodgetts at January 27th, 2008 at 6:02 pmJust read a study somewhere (hope someone can contribute the source of it) that suggested television viewers watch more TV in one night than online video viewers watch video in one month. If that is correct or even close, then in that light TV still rules. And I agree with Mr. Pittman.
On the other hand, Mr. Hodgetts puts together a great point of view as well. Fragmentation is a big issue and will only grow over time. I like what he is doing with the Open Television Network.
For both content creator and consumer, I think discovery and search will be the crucial element of success. In the fragmented world that is getting bigger by the day, how will the creators content be found? How will the consumer find what they want?
This is closely followed by the concern over how a creator will make enough money to survive in a small niche-based world of viewers. Advert does not work in niches or fragments. imo, this is where Mr. Pittman is still right. Only TV has the scale to generate enough cash to pay significant amounts to creators. On the other hand, Mr. Hodgetts, with his pay per download model at OTN, is going to be right eventually, since pay per download works in niches. Although you still need lots of downloads!
Posted by Jeff Bach at February 26th, 2008 at 10:40 amJB
Keep your eyes on AppleTV and the xBox 360.
All of the hardware is there for a ‘new’ internet driven TV experience. A experience that could bring people to the couch and away from the computer for internet video.
The movie rentals on these services are still a bit pricey, but they are as simple to rent and purchase as changing a channel.
I watch a fair amount of youTube and video podcasts with my AppleTV, it works quite well and I can share the viewing experience with my wife and friends.
The days of people hunched around a desk for a over the shoulder viewing experience could be numbered…
I find it relaxing sitting on a chaise lounge watching a HD TV. For the most part laptops have whining fans and are quite hot to the touch and tuff to get cozy with…
Posted by Michael Voigt at July 18th, 2008 at 9:46 am