Viacom's dispute with cable operators -- first Time Warner and now Cablevision -- over iPad apps is not only about license fees but also advertising revenues.
Right now, viewing of TV shows on a iPad, while important, doesn't give advertisers all the information they are used to getting from traditional TV media deals.
Cablevision and Time Warner want to retransmit Viacom's networks -- MTV, Nickelodeon, Comedy Central, Spike, BET and others -- to iPads because they believe they are just additional screens into the home that they control. More importantly, they not only want to give their viewers more value, but want to wrap themselves around the cool-factor of the new digital video environment.
Next in importance for cable operators is the growing mobile video advertising market. By transmitting the exact same channels on mobile devices, cable operators -- according to their legal folks -- can now sell two to four minutes per hour of mobile ad avails. This is based on the two to four local ad minutes per network that they now get under their deals with the cable programmers.
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Viacom also expects advertising revenues from mobile devices and, like all TV content providers, wants full control over them -- plus possible extra monthly fees from cable operators. If this happens, cable operators would need to charge customers more for mobile apps -- now, or in years to come.
Nielsen still controls much of the video "currency" by which big national TV advertisers and TV sellers wheel and deal. But the big TV measurement company still hasn't worked the bugs out when it comes to what comparable data is available from "second," "third" and other screens beyond the TV box -- especially concerning different commercial inventory loads in traditional and digital TV platforms.
If Nielsen can work out its measurement problems for all TV sellers, groups like Viacom can monetize all those potential mobile video advertising opportunities. Cable operators already see mobile as an existing opportunity to sell advertising -- one that they believe doesn't require cable networks' legal permission.
But what if cable operators don't just target local-market advertising deals as they do under traditional arrangements with the cable networks? What if they were to include a broader national advertising footprint?
All of which makes for interesting, confusing, and -- definitely -- litigious cable TV industry times.
Very timely post.
One view is that MSOs are providing (1) the rights to that video within a specific window and (2) the broadband connection facilitating the iPad experience. The latter is not insignificant. We are just in the early days of true streaming VOD, and we are already seeing a mammoth leap just from Netflix subscriptions. The demand for bandwidth will increase even more once you factor in the requirements for first showings of popular shows like "Game of Thrones" or live pro sports.
Which is, of course, the basis for Net Neutrality arguments. (I think the FCC overreached by not defaulting to an agreement that most everyone could agree with, but that's a story for another day.)
As far as Nielsen -- why not consider database fusion as an alternative measurement? That is, take the zip code of the cable subscriber and ascribe the aggregate Nielsen data for that zip code, delivering a reasonably accurate proxy for targeting "acid reflux subscribers".
The revenue models is the big sticking point here, especially with Nielsen lagging behind. This is clearly a case of "you can't sell what you can't measure." Until Nielsen can convince the market they're measuring tablet viewing accurately (or until another player can do so), I bet we'll see a lot of networks looking to monetize with retrans fees over selling more ad time.