Guest: Josh Bernoff - Forrester
Host: Michael Johnson - PodTech

Michael Johnson - PodTech
You are listening to PodTech.net, I'm Michael Johnson. On this Podcast to talk with Forrester Research Vice President Josh Bernoff, focusing on the future of online video and the changing role of broadcast networks. I spoke with Bernoff at the Forrester Consumer Forum Conference 2006 in Chicago and I began by asking him, how the traditional broadcast companies will fear in the near future even though popularity of user-generated video sites like YouTube?

Josh Bernoff - Forrester
Well, if you look at the big networks they have a serious problem, they have been losing audience for quite a long time but now they're actually starting to see dollars that used to go to network advertising. Moving over to the Internet, the real turning point was last year when ABC started to put it's shows on iTunes and there's been a complete shift in the last 18 months. Now, network see themselves as multi-channel providers and they are delivering their videos not just in the traditional way but through video on demand, through Internet streaming, through paid downloads and really trying to reach people with that content wherever those people might be interested in consuming it.

Michael Johnson - PodTech
How successful do you think it's going to be? I know that I personally have watched an episode of lost stream, so that's obliviously reaching me, who take kind of a late adapter of these technologies or not, but how successful do you think they are going to be?

Josh Bernoff - Forrester
Well, for now the amount revenue that's generated by these activities is relatively low. But, if you look at NBC in particular, which is in a very difficult position now being a network, it's rating is challenged. You're starting to see they put a huge effort behind this and the challenge is that Internet video is characterized by the desire for short clips and lots of them, whereas their expertise in the network business is in 40-minute or 25-minute television shows, which they only have a few. But I think with the development of channels like, Innertube from CBS you are going to see a lot of activity here and the idea that consumers would go to the big networks to get quality videos is certainly -- it seems reasonable. So, I think the share of the television business or the video business that goes to the big networks will continue to decrease as there's every thing from YouTube to thousands of Internet independent videos available on sites from Adam films to Rever (ph). But, I think that if you look at what a network is five years from now, it will be a multi-channel deliverer video or it will be a brand for a quality video not so much something that you tune into at nine o'clock on Sunday night to see a specific program.

Michael Johnson - PodTech
Now, with the emergence also we have revision now -- was it Revision3 I think from the folks at dig.com, where do you see that kind of -- because I know it's kind of an -- this is an interesting push from social media to online and they're offering video on a regular basis, how much do you see maybe consumer-generated stuff figuring in the future?

Josh Bernoff - Forrester
Well, the real important dynamic here is two things, first of all, technology means now that the ability to produce video and edit it is in the hands of anybody who can get their hands on a relatively an expensive video camera. In fact, if you look at Yahoo's recent acquisition that they made, you now can upload video to the Internet and edit it there instead of actually having a video editing product on your desktop. The other big technology change is that video streaming is cheaper and cheaper and cheaper. So, this means a surge of content. If you think of a pyramid sort of at the top is very high quality video that cost millions of dollars an hour to produce that sorts of network television. But at the bottom of the pyramid this random user-generated content that's the explosion and we're now in a position where people who would never have thought of themselves as video utters are producing all this content. So, it's just a much broader collection a lot more choices for consumers to watch then whatever available before.

Michael Johnson - PodTech
Do you think this marriage if you will of social media and a larger network is going to continue where we had Fox, now has MySpace which they just compared to YouTube they've got it for a pretty good price and do you think -- do you see that trend continuing?

Josh Bernoff - Forrester
Well, I see it continuing except that the available really popular social sites are starting to be pretty limited. The key here is that I think the networks recognize so the big media companies recognize that the Internet was an important area to compete in and now if you talk about big media companies, you have to include companies like Yahoo and Google alongside traditional companies like AOL, Time Warner. What's become clear is that's not enough. There are these social networks, these social platforms that they are very engaging specially for young people and if you want to reach those young people you have to get into that space. The challenge is that the game is almost over here that there are not a whole lot of these destinations left that have a whole lot of a value. I mean you look Sony which is a media company acquired Grouper. Well, Grouper wasn't that big and I'm not that sure that Grouper by itself is a sufficient platform for Sony to make a difference and with the exception of Facebook there's not that many of those properties out there that have got into a level of participation that would be attractive to a company that makes it's business from selling to tens of millions of people.

Michael Johnson - PodTech
What do you think that the networks are going to have to do again the media networks, the major media networks are going to have to stay fresh in the game because I know that at least I talked to the guy from Fox and not too long ago who supervises MySpace and they're sort of looking at different models rolling out some of their programs there as well. But what are they going to have to be thinking about is they sort of go forward given that they're losing onions here.

Josh Bernoff - Forrester
Well, let me draw a contrast for you here, think about a movie like Batman Begins for example. Well, that's not just a movie, its movies, there is games, there is websites devoted to it. A movie is a property that stands by itself but it's also a brand that can be -- can have a sort of whole halo around it of all sorts of other media properties, and if you look at television shows though, they tend to be still thought of as, this is the one at nine o'clock on Monday night. So, in order for the networks to really make this transition, they need to recognize that their products, their video is going to be consumed at different times a day through video on demand, through digital video recorders, through streaming, through downloads but beyond that there has to be a whole surround that with a whole cloud of fan sites, social networks, games, auxiliary video that never got onto the TV, animated episodes. If you start to think of television shows is being more like movies as a media property that has this whole surround of other stuff, then you begin to see what a network is going to look like in the future. Its about media brand, it's not about broadcasting.

Michael Johnson - PodTech
It's kind of like the packaging of DVD, that's the way you are describing that there.

Josh Bernoff - Forrester
Yeah, what's the difference between a movie and a DVD? Well, there's this cloud of other content that is relatively inexpensive to produce once the expensive movie is produced who might add 10% to the cost. Well, that's how TV has to think of itself, it has to create that cloud of content around CSI or Studio Sixty or Lost which turns it from once a week 40-minute experience into a real actual surrounding media phenomenon, a media brand.

Michael Johnson - PodTech
Who do you think has been successful at that and sort of currently, and it maybe an example of something that's stepping beyond the traditional broadcast model.

Josh Bernoff - Forrester
You know I'll tell you, it has been successful at it. If you're talking at big media brands look at American Idol, okay, it's an interactive experience, the web experience is extensive, there is a whole lot of gossip around it, there's outtakes, there's music clips, there's ringtones, and it's interesting. Part of the reason for this is because a reality show has no back end, it doesn't have a whole lot of syndication value. So, they say, well how can we make more money from this. They can't get it run on some cable channel later. Everybody knows who won, so I have to come out with these other alternatives. But there is no reason why that same kind of thing couldn't be done with scripted entertainment. Now, its important to point out here that the cable channels have already made this tradition to a great extent. So, if we look at Discovery or if we look at Home & Garden Television and their websites and their downloads and so on, they are milking the heck out of that content, they've got it in all of these different formats and that's because they recognize, its only so much they can make with that original broadcast, its only the big networks that are so focused on what the Nielsen rating is that have been really the slowest to move to this sort of change.

Michael Johnson - PodTech
Josh Bernoff it was great speaking with you really fascinating. We hope to hear more from you on PodTech. I am sure we'll visit you again at some point online. Josh Bernoff is Principal Analyst here at Forrester, specializing on television and media networks. Thanks for being with us on the Podcast and sharing your thoughts.

Josh Bernoff - Forrester
It's great to speak with you.