George Kliavkoff, NBC Universal’s chief digital officer, calls it like he sees it. Appropriate, considering he came to NBC Universal from Major League Baseball.
In an interview with Forbes.com, Kliavkoff said that video distribution on cellphones in the United States is a broken business model and that the carriers and NBC Universal (as well as other big-media content providers) are “long-term greedy, not short-term greedy.”
No argument here.
In this country, if you look at the gross revenue of content distribution on mobile phones, 9 percent of the gross revenue goes to the content owners, 70 percent stays with the carriers, and 21 percent goes to content aggregators and other middlemen. We think over time that’ll get fixed. I believe the carriers are like us, long-term greedy, not short-term greedy.
In comparison with other business models, Kliavkoff said that in cable TV, DVD distribution, and in mobile devices in other countries, content owners get more than 50 percent of the gross dollars. He notes that the current business model in the U.S. is preventing more people from watching NBC Universal’s video on cellphones — never mind that watching video on cellphones, with maybe the exception of the iPhone, sucks.
Eyeballs will be driven by great quality programming. Very few people are going to invest in that unless there’s revenue associated with it. The revenue won’t come if there are no eyeballs. The quickest ways to get that wheel spinning is for there to be a more realistic revenue split — where the folks who are actually going to have to place the bets and make the investments on the new content are given the majority of the revenue. When that happens, the investment will happen, that will drive more quality programming, that will drive more eyeballs, and that will make the pie bigger for everybody.
OK. Eyeballs are driven to programming that interests people, quality or not (see: YouTube). And aren’t big media folks like NBC Universal already producing content for their networks? Just because they are not making more money from mobile device distribution doesn’t mean that they cannot produce content. And who’s to say that even if they received more money from the carriers that they’d funnel the profit back into programming?
Color me skeptical.
Kliavkoff is heading up NBC Universal’s joint venture with News Corp. — tentatively called “New Site” — to distribute their latest programming on AOL, Yahoo, MSN, and MySpace, which together reach about 96 percent of the Internet’s audience in the U.S. The programs will appear in an embedded player on the respective Web sites as well as on a new separate video site that NBC Universal and News Corp. will introduce. “New Site” is scheduled to launch in September.
“New Site” was originally thought of as big-media’s answer to YouTube and a way for NBC Universal to attach advertising to its programming on the Internet. Kliavkoff has since backed off the notion that “New Site” is a YouTube killer. Instead “New Site” will focus on professionally-produced, high-quality content rather than user-generated programming like what’s on YouTube.
As previously announced, “New Site” will offer movies on a download-to-own basis. Short-form trailers, behind-the-scenes content, and press junket interviews will be available to consumers for free.
However, while TV content will be free and available for streaming, NBC Universal will also offer episodes of its TV shows for download-to-own through “New Site” even though many TV shows, news programs, and sporting events are already available through the iTunes Music Store. Kliavkoff notes that 45 to 50 percent of video downloads through the iTMS are supplied by NBC Universal.
So NBC Universal will compete against itself in the iTMS with its own download-to-own TV shows on “New Site.”
Kind of fits the whole greed thing, doesn’t it?