There’s good news and bad news for the TV networks in recent figures released by Starcom, a leading media buying agency.
The good news is that the TV networks are making a substantial amount of money off of ads shown during online, streaming video releases of their programs. The bad news is that the writers want a slice of that rapidly growing pie.
While the TV networks argue with the Writers Guild over a new contract, with the main sticking point being the writers’ demand for a share of revenues from online sources, the Financial Times reports that the networks are indeed already making a good deal of money from advertisements on web showings of their programs. The four majors are on track to bring in $120 million from such ads during the current year, the FT reports.
The networks have claimed that the potential revenues from online distribution are speculative at this point and hence they cannot give the writers a specific piece of it. The current news would seem to put the lie to that notion.
This is clearly a result of the general increase in ad revenue online. The FT story notes, "The total online video advertising market will be worth close to $1.3bn this year after doubling in size in 2006, according to Accustream, the digital media research company."
The FT story points out that media buyers actually find the online streaming video market highly attractive because viewers actually see the ads, as opposed to on television, where they are more likely to skip them by switching channels or skipping through them on DVRs:
Media buyers expect streaming revenues to increase because online video commercials have better recall rates than traditional TV advertising.
“You get 85 per cent recall [with web streaming] versus single-digit recall for TV,” [Starcom senior vice-president and video innovation director Tracey Scheppach] said. Syndication of online video commercials across social networking sites will also fuel future revenues, she added.
All of this is profoundly changing not only the financial structure of the media but also how we as consumers get access to information and entertainment. The writers’ strike is a harbinger of how far-reaching the effects will actually be.