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Adam JonesSenior Vice President NBC News
“The Cosmic Change in the News business”21 May 201021 May 2010
What Is The Future Of News?
Agenda
• Technology adoption and pace of change
• Decline of printed news• Decline of broadcast news• Internet; emergence of on demand• Growth of online news consumptionGrowth of online news consumption• Where are the opportunities?• NBC News case study - structural and cultural transformation
“The Dreamer”
by Quint Buchholzy Q
Technology Adoption Rates Increasing• Transformative media and communications technologies are gaining consumer adoption at increasing rates
• Achievement of critical mass (50% HH penetration) now frequently attained in less than a decade
80
60
70
80
ratio
n
71
40
50
ach
50%
Pen
etr
52
20
30
Year
s to
Rea
28
1815
19
14
0
10
Electricity Phone Radios Color TVs Cable
12
VCRs PCs
14
CellPhones
11
CD Players
10
Digital TVs
7
DVDPlayers
6
MP3Players
10
InternetAccess
Sources: Census Bureau, CEA, NCTA
Year of Commercial Introduction of Each Technology1879 1883 1896 1928 1954 1976 1977 1982 1985
TVs
1995y
1997y
20001991
Decline of Print News
Newspaper Ad Market Share Losses
2%5%5%
50.0
60.0
5%
10%
46.2 48.2 49.4 49.337 2
45.4 -8%
0%2%
20.0
30.0
40.0
-10%
-5%
0%
37.2
-18%0.0
10.0
2003 2004 2005 2006 2007 2008
-20%
-15%
Increased dependence on the internet medium for breaking news
$ in billionsSource: NAA.org, J.P. Morgan estimates.
New spaper Ad Spend Y/Y Grow th
• Increased dependence on the internet medium for breaking news• Emergence of blogs as a trusted news source and opinion
provider• Failure of newspapers to manage their existing cost structure• Failure of newspapers to manage their existing cost structure,
making their business model unsustainable in future
Market Reality of Broadcast News• Network news viewership is in irreversible decline as consumption shifts
to online and cable• Traditional network news business model is broken; revenue going down,
costs going up)costs going up)
16
18
1980 – 2020 Evening News Viewership
10
12
14
n M
illio
ns
1980 – 2020 Evening News Viewership
4
6
8
View
ers
in
0
2
4
0 2 4 6 8 0 2 4 6 8 0 2 4 6 8 0 2 4 6 8
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
ABC World News Tonight CBS Evening News NBC Nightly News
Competitive Assessment of News LandscapeA il 25 2006 BBC Di t G l M k Th N t dLandscapeApril 25, 2006: BBC Director-General Mark Thompson Noted
"There's a big shock coming. The second wave of digital will be far more disruptive than the first and the foundations of traditional mediamore disruptive than the first and the foundations of traditional media will be swept away, taking us beyond broadcasting.
We need a creative response to the amazing, bewildering, exciting and inspiring changes in both technolog and e pectationsinspiring changes in both technology and expectations.
On-demand changes everything. It means we need to rethink the way we conceive, commission, produce, package and distribute our , , p , p gcontent.
This isn't about new services it's about doing what we already do differently.
We should no longer think of ourselves as a broadcaster of TV and radio and some new media on the side.
We should aim to deliver content to our audiences in whatever media and on whatever device makes sense for them, whether they are at home or on the move. “
Growth in online news video consumption
The Growth of Weblogs
50,000,000doubling
45,000,000
40,000,000
35 000 00035,000,000
30,000,000
25,000,000doubling
20,000,000
15,000,000doubling
doubling
doubling
10,000,000
5,000,000doubling
doublingg
03 03 03 03 04 04 04 04
05 05 05 06 06
Mar
Jun
Sept
Dec
Mar
June
Sept
Dec
Mar
Jun
Dec
Mar
June
Source: www.technorati.com
C it t k t t ibl t th h ti ll d d
Choice Fragments Market• Capacity to make content accessible to the consumer has exponentially expanded
− Digital bandwidth compression allows proliferation of cable programming− Broadband penetration and ease of use make online access available to most
consumers• Storage, access, and delivery costs decrease, enabling time, place and platform shifting
• Incumbents making more premium content continuously availableMore competition
for consumer attention emerges
Incumbents making more premium content continuously available• Taking advantage of new outlets to expose library content• Small players/new entrants who face lower barriers to entry• New open media: broadband, gaming, wireless, or over the top video
• Video highly searchable and available on an a la carte basis• Consumers grow increasingly comfortable seeking out their preferences
P l it l di t bl
Distribution and marketing have
less infl ence on • Popularity less predictable• Allows rapid emergence of new properties and brands
• In a crowded world, brands can matter more than ever
less influence on consumer behavior
Affi it b d • the brand may not be the same as we have historically thought• Stand-out brands are those that the consumer has a true affinity with–
properties such as networks like CNBC
Affinity brands still matter
Opportunity in the Bookends• As options proliferate most content will have a smaller audienceAs options proliferate, most content will have a smaller audience• As it becomes easier to watch what you want when you want it, content needs to
draw viewers on its own merits−Less of a halo effect: “what’s on next”−Less filler: “I’ll watch this because nothing better is on”
• As a result, there will likely be two winners:
Targeted content in desirable advertising categories
High quality hits and events
I f t d k t l b d −Search fuels long-tail traffic−Small “long-tail” audience, but bigger than at any other time in history
−In a fragmented marketplace, brand advertisers have fewer vehicles by which to reach mass market−UGC/ Low production value video history
−High CPMs−Passionate, engaged viewers
pwill not take the place of high quality hits−More ways to reach the consumer; hits can be even biggerhits can be even bigger
Extract from NBC News 2007 Strategy PlanStructural and Cultural TransformationStructural and Cultural Transformation
“If you want an innovative environment, hire innovative people, listen to them tell you what they want and do it " Arthur D Levinson Chairman & Chief
C f hi d b t i i t t
tell you what they want, and do it. Arthur D. Levinson, Chairman & Chief Executive, Genentech - the world's foremost biotech company.
Core franchises under pressure but genre remains as important as ever
Cost-orientated efforts will not sustain long term growth
Ability to innovate is key to generating sustainable growthAbility to innovate is key to generating sustainable growth
Need to understand the changing behavior of our customers
Focus on future needs and business models; on demand versus formatFocus on future needs and business models; on demand versus format
Recruit the right people (mix and skill set) to adapt to the new world
U d t d d C i t Th R litUnderstand and Communicate The RealityNo Change = Death
Extract from NBC News 2007 Strategic Plan HeadlinesStrategic Plan.. Headlines
• Radical overhaul of network news structure…complete redesign with focus on future needs and business modelson future needs and business models
• Consolidate editorial & technical production capability for multi-platform delivery
• Accelerate cost reduction initiatives
• Shift resources to support growth platforms (cable, online, mobile)
• Identify and fund growth opportunities (digital, productions, education)
• MSNBC is the jewel in the crown for margin growth; grab #2 slot from CNN
P t t #1 iti t b d iti d f th• Protect #1 position to ensure brands are positioned for growth
• Be mindful of risks; quality cannot be sacrificed, newsgathering is expensive, cost to intellectual capital and human talent during downsizingp p g g
• Deliver on financial commitments
News & Information Studio VisionCentralized Editorial & Operations Model
Productions
N th i Centralized Scheduling,
Centralized Editorial & Operations Model
Footage Available to All
Newsgathering Centralized Scheduling, Planning, & Resource Sharing
Intake
Edit i lCentralized News P d ti f All
Footage Available to All Story Producers with Alerts
Editorial Production for All Platforms
Edit/Graphics Technical Production Edit/Graphics Centers of Excellence
Publish Rights & Clearances /Publish gAcross All Platforms
Balancing “Centralization” and Brand “Specialization” is Crucial
Wireless – the latest “game changer”In 2010…
• PC penetration will exceed 1 billion (~15% of global population)
Mobile penetration will exceed 5 billion ( 75% global population)• Mobile penetration will exceed 5 billion (~75% global population)
• 1/2 billion people accessed mobile internet in 2009 and projected to more than double in next 5 years, overtaking the PC
• By 2011 over 85% of new handsets will be able to access mobile Web
K d i f bil ill b t f l ti b d• Key drivers for mobile usage will be money transfer, location-based services, search and browsing, health monitoring, IM and music
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