IBM’s Saul Berman Says “There Will Be Warfare Between Content Owners and Distributors”

Authored by Jay Baage on November 16, 2006 - 1:05pm.

[Coverage from DMW/CEA/NYU's Future of Television Forum in New York]
Saul Berman, IBM - Future of Television 2006

Saul Berman, Partner, media and Entertainment, IBM Business Consulting, was a keynote speaker on the first day of the nearly sold out conference. He gave the audience a captivating look into the future of television, based on IBM Business Consulting’s latest research. One of his points was that copyright issues that we have started to see in the case of YouTube are far from resolved:

“We see that there will be conflict or even warfare between content owners and distributors.”

The issue of copyrights was also discussed in a panel where representatives of all the three old beasts of network television - ABC, CBS and NBC - gave a good view of how they are approaching competition in the online space from companies like YouTube.

“We see a lot of experimentation outside the industry and that is creating a lot of anxiety for us,” said Albert Cheng, EVP, Digital Media, Disney-ABC Television Group.

All of them said that they do not see it as a viable strategy to make YouTube take down copyright infringed material from the networks, but rather they want to create better and more user-friendly online platforms of their own. While online advertising revenues are not yet a significant revenue stream for the networks, they said that they are seeing very promising signs of the potential in this form of distribution.

“We had 87% sponsor recall in one experiment with interactive flash ads on ABC.com, which is incredible as compared to sponsor recall on-air”, said Albert Cheng.

Research from CBS shows that, so far, Internet viewing of CBS programming has been incremental and actually building on-air viewing. David Poltrack, Chief Research Officer, CBS, reminded the audience that only 26% of the internet traffic on YouTube is from the US, the large majority is from abroad. Jean-Briac Perrette, SVP New Media/CFO NBC Universal Cable, acknowledged the growth potential for the networks on new platforms, but was upfront about the fact that significant revenues from these platforms are still missing:

“It is yet to be seen how those business models (on new platforms) add up.”

A comedic highlight was when one member of the audience asked about the next big technological breakthrough in television and David Poltrack responded:

“Give me a break. We’re fumbling our way through the current technology that is out there. Our testing facility just got hold of a Sony PS3. Just thinking of what you can do beyond the capabilities of the PS3 is frightening.”

Another keynote on Thursday was Robert B. Clasen, Chairman & CEO Starz LLC (owned by Liberty Media), who talked about the virtues of a new organization in place to minimize risk and maximize possible profits.

“We’re in the business of audience aggregation. It is as simple as that. We need to distribute our content in as many ways as possible,” said Clasen in what was his first speech since completing the acquisition of IDT Entertainment (now called Starz Media) and the launch of the motion picture studio Overture Films.

When asked about Vongo, the Internet subscription movie service Starz bought last January, Clasen said it is an important part in transforming Starz from a narrowly focused premium television business into a fully integrated media company:

“We like the subscription model. Vongo gives us an opportunity to expand our market and we see almost no cannibalization with our premium cable channel.”

A transcript of Clasen’s speech is available at starz.mediaroom.com.

A copy of IBM Business Consulting group’s latest study of the future of television landscape is available here.

Joakim Baage
New York