Transcript Finding truth, in despite your lack of ability

Television Strategic
Investment Scenarios:
Your Role as a Disruptive Innovator
Dennis L. Haarsager
Digital Distribution Implementation Initiative
Digital Distribution Implementation Initiative
CORE WORKING GROUP
• Ed Caleca, PBS
• Jeff Clarke, KQED
• Dennis Haarsager, DDII
consultant; KWSU/KTNW,
NW Public Radio
• Byron Knight, Wisconsin
• David Liroff, WGBH
• Pete Loewenstein, NPR
• André Mendes, PBS
• Jim Paluzzi, Boise State
Radio
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A strategic investment
initiative funded by the
Corporation for Public
Broadcasting.
Joint
Radio
Television
External
Multidiscipline Experts Group
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Jon Abbott, WGBH
Brenda Barnes, KUSC
Rod Bates, Nebraska
Joe Campbell, KAET
Scott Chaffin, KUED
Beth Courtney, Louisiana
Vinnie Curren, WXPN (now CPB)
Tom DuVal, WMRA
Tim Emmons, Northern Public
Radio
Fred Esplin, Univ of Utah
Glenn Fisher, KTCA
Jack Galmiche, Oregon
John King, Vermont
Ted Krichels, WPSX
Jon McTaggart, Minn Public Radio
Paige Meriwether, KUED
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Steve Meuche, WKAR
Peter Morrill, Idaho
Meg O’Hara, WNET
Maynard Orme, Oregon
Allan Pizzato, Alabama
Lou Pugliese, onCourse
Don Rinker, Alaska
Meg Sakellarides, Conn. Pub R-TV
Bert Schmidt, WVPT
Jonathan Taplin, Intertainer
Kate Tempelmeyer, Nebraska
Tom Thomas, SRG
Mike Tondreau, Oregon
David Wolff, Fathom (now
Sunburst)
Art Zygielbaum, Nebraska
Disruptive Technologies
• Innovations that result in worse product
performance, at least in the near term.
• Bring to market a very different value proposition
(typically cheaper, simpler, smaller and frequently
more convenient)
• Usually are the cause when leading firms fail – not
sustaining innovations
From Clayton M. Christensen, The Innovator’s Dilemma
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Examples of Established Versus
Disruptive Technologies
ESTABLISHED
• Photographic film
• Wireline telephony
• Full-service brokerage
• Campus-based instr.
• Medical doctors
• MRI/CT scanning
• Offset printing
• Cardiac bypass surgery
DISRUPTIVE
• Digital photography
• Mobile telephony
• Online brokerage
• Distance education
• Nurse practitioners
• Ultrasound
• Digital printing
• Angioplasty
From Clayton M. Christensen, The Innovator’s Dilemma
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Disruptive Innovation
• “The pace of technological progress generated by
established players inevitably outstrips customers’
ability to absorb it, creating opportunity for up-starts
to displace incumbents.”
• “There are times at which it is right not to listen to
customers, right to invest in developing lowerperformance products that promise lower margins,
and right to aggressively pursue small, rather than
substantial, markets.”
From Clayton M. Christensen, The Innovator’s Dilemma
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Public Broadcasting Today
• “Everyone is baking their own cookies”
• “Hail Mary” method of funding depreciation
• Usage strong compared to other public service
providers (11.8B person contact hours annually for
public radio, 5.8B household contact hours for PTV)
• Policy support of public broadcasting less assured
• Our esteem is an asset that can be leveraged or
squandered
• Other public service entrants entering electronic
media, usually using disruptive technologies
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Electronic Media Today
• Conglomerates dominate ownership and control
diverse distribution outlets, with both “horizontal”
and “vertical” operations and pricing advantages
• Users are beginning to take control of when they
access programming
• Subscriber-based economic models (e.g., HBO) are
competing with ad-supported ones
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Television Today
• Cable/DBS are gatekeepers for the main receiver in
85% of homes
• Cable/DBS increasingly deliver original programming
• Cable/DBS focus is on quantity vs. quality
• Non-broadcast channels are on threshold of
overtaking broadcast channels in viewing
• Television advertising may erode as cable & DBS
develop greater advertising options
• No federal support for multicast; no active support
for non-HD models
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Pubcasting’s Diverging Fortunes
• Terrestrial digital transition is mandatory for TV,
market-driven for radio
• Content production entities are generally licensee
based (with major exception of NPR)
• Public TV viewing and number of members is steadily
declining, while public radio listening and
memberships have increased; revenues generally
following the same vectors
• Public radio players have explored alternative
distribution platforms to a greater degree than have
PTV’s
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Television In Five Years - 1
• OTA terrestrial will be of minor consequence as lastmile distribution to mass audiences
• Viewers will choose from increasingly customized,
personalized programming options
• Revenues from other than spot advertising will
become significant and competitive
• “Must convince” replaces “must carry” for multicast
channels; some stations will be shut out of cable/DBS
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Television In Five Years - 2
• Erosion of audience and revenue threaten existence
of many licensees; may be fewer licensees
• A variety of technologies, wired and wireless, to
compete for delivery of services
• Audiences will still value storytelling, but truly
compelling content will continue to be scarce
• First stations in the new mobile video/multimedia
service will begin operation
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Plausible But Unexpected Wins
• DTV killer application – content or service – that
accelerates adoption
• DTV universal set-top box works with a wide variety
of digital services, including DTT
• New broadcast models (rich media, mobile) prove
economically viable
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The Closet of Our Anxieties
• DTV DOA with stranded $1B+ investment; diminished
credibility with funders
• Minimal or no federal funding for public TV NGIS –
capabilities drastically reduced
• Early surrender of analog spectrum
• Continued reduction of funding for public
broadcasting (now seems likely for television)
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Strategic Investment Scenarios
Investments may be individual or
collective
Collective Investment Modalities
• Toolkits – activities or tools licensees can use to
achieve best practices without need for collaboration
• Service Clouds – stations outsource significant
activities created for specialized purposes
• Colonizers – efforts to operate public broadcasting
mission elements independently with or without
station involvement
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Scenario 1 – Sustaining
• Make strategic investments in initiatives that sustain
the legacy (broadcasting) business
• Tends to maintain operational independence
• Preserves as much “gross tonnage” of public service
as possible, at least in near term; lengthening the
“glide path”
• High investments in “toolkits,” somewhat lower
investments in “service clouds,” little in “colonizers”
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Scenario 2 – Repositioning
• Make strategic investments in initiatives that
reposition public television in new directions
consistent with historic mission
• Capacity and scale created at collective level
• Emphasis on editorial (programming) rather than
operational independence
• Accepts the current “glide path” but creates new
“climb paths”
• Increased investments in “service clouds” and
“colonizers”
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Public Television Investment Scenarios
Diverging Investment Possibilities
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Increasing magnitude and risk
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Sust
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Strat
Innovation Modality
1 Tool Kits
Innovation Modality 2
Service Clouds
Strat
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Innovation Modality
3 Colonizers
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Repo
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Diminishing ability to make parallel strategic investments within both scenarios
DLH, 1/7/03, p. 1
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Consultant’s TV Provocations
• Form “virtual broadcast groups,” digital distribution
companies that operate key functions of current stations
across markets
• Provide elective, centralized station operations services
through PBS
• Create public service “digital condominium association”
with other state, national and international advanced
networks
• Task system economics panel with devising strategies to
redeploy [insert ambitious amount here] to priorities
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Questions/Provocations for
Integrated Media Professionals
• Most broadcasters seem to treat the Internet as a
sustaining, rather than disruptive, technology
innovation. Most indicators, however, point to it
being the latter. How do you design your services
differently in each world?
• If we consider the Internet as a disruptive technology
for broadcasters, what investment and service
strategies should we follow in delivering IP services?
• How do we exploit the emerging Wi-Fi and (at least
for joint licensees) DTV wireless data capacities?
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Contact Information
Dennis L. Haarsager, DDII Consultant
1019 Border Lane, Moscow, ID 83843-8737
208-892-9445 • e-fax 206-770-6100
[email protected]
www.technology360.com
Associate Vice President, Educational Telecommunications & Technology,
Washington State University
Box 642530, Pullman WA, 99164-2530
509-335-6530 • e-fax 888-455-1070 • [email protected]
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Quotes Appropriate to Change
• Where a calculator like the Eniac today is equipped
with 18,000 vacuum tubes and weighs 30 tons,
computers in the future may have only 1,000 vacuum
tubes and perhaps weigh only half a ton. – Popular
Mechanics, March 1949
• We would rather be ruined than changed, We would
rather die in our dread, Than climb the cross of the
moment And let our illusions die. - W.H.Auden
• The first principle is that you must not fool yourself and you are the easiest person to fool. - Richard
Feynman
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Television Strategic
Investment Scenarios:
Your Role as a Disruptive Innovator
Digital Distribution Implementation Initiative