Veteran programmer Rob Barnett recently attended a breakfast meeting of television executives where the talk turned, as it almost always does these days, to “disruption,” the industry buzzword for the way new technology is upsetting the TV applecart. From somewhere down the table, he heard a question: “Has anybody here cut the cord?” — that is, dropped cable service in favor of just watching TV through the Internet? Barnett shrugged and raised his hand. “Mine was the only one,” he recalls. “But when it went up, I saw beads of sweat break out on the foreheads of some of the guys across the table.”
When Barnett and 5,000 or so others gather Monday for the National Association of Television Program Executives (NATPE) convention at the Fontainebleau Hotel on Miami Beach, there will be plenty of sweaty foreheads, some acquisitive smiles and — perhaps most numerous — blank looks of confusion. Not since cable turned the old three-channel TV universe on its head in the late 1970s has the industry been in such a state of disoriented befuddlement.
New technologies that give viewers more say in what they watch, where they watch and how much they pay for it are great for consumers. But they’re inducing a collective nervous breakdown among industry executives, who have to figure out new ways to make money in a business facing serious threats to its traditional sources of revenue — advertising and cable-TV subscriptions.
“Technology this year has really disrupted the industry, even upended it,” says Chris Sloane, president of Miami’s 2C Media production company. “We’ve talked about this coming, but the future is now and not always for the good.”
The industry last year was blindsided by everything from a leap in the use of TiVo and other digital video-recording devices that pushed Nielsen ratings down as much as 50 percent to a new device called the Hopper that allows viewers to instantly zap by commercials.
But the biggest tremors came from the Internet, which is threatening to remake television as thoroughly as it already has the newspaper and music industries, by letting viewers bypass cable to watch shows online.
• There was explosive growth in what the industry calls over-the-top or OTT, little boxes that sell for as little as $50 or so and allow viewers access to hundreds of streaming-video Internet television channels from their TVs. Apple and Roku, who make the most popular OTT players, have sold about five million apiece. But other companies like Amazon, Google and Western Electric are pushing into the market, and industry analysts say Intel, the world’s largest semi-conductor chip manufacturer, is also poised to leap into the OTT business.
Another major OTT force: video-game consoles like Xbox and PlayStation, which can also be used to watch streaming Internet video. “They may be doing more business than anybody,” says Andy Tarzon, founding partner of the media research company TDG. “Xbox is the leading viewer for Netflix content.” It will, soon enough, have its own content; parent company Microsoft late last year hired senior CBS programming executive Nancy Tellem, who helped develop Friends and ER, to direct an on-line TV operation.
• The use of programming services that deliver television program via the Internet is mushrooming, with Netflix, YouTube, Amazon and other big names — even Walmart — setting up or expanding operations. “More than anything, that’s gotten everybody’s attention,” says Terence Gray, a longtime network producer who now runs the New York Television Festival. “When you see YouTube’s $100 million investment in programming, or what Amazon’s studios did last year, or Microsoft hiring Nancy Tellem, this is no longer a conversation. This is being done.”