1. WBD Has Other Plans For Westworld
Warner Bros Discovery announced that it was putting the kibosh on former hit “Westworld” and a few other shows and removing them from HBO Max in order to sell them to the FASTs.
And you would think that the sky had just come crashing down and pigs were taking flight and talking from the way that much of the mainstream media reacted.
To be clear, it’s not as if WBD is locking these shows in a hermetically sealed vault, never to be seen by human eyes again.
They’re just selling them off to the various FAST services as a way to save money on residuals while making money on syndication.
Which makes a whole lot of sense given that, without carriage and retrans fees, the profit margin from streaming is not going to be anywhere near the profit margin from linear. (You can read my full rant on that here.)
It does not mean streaming will be unprofitable, it just means that the carriage and retrans-funded gravy train has run out of fuel and that reality has set in.
And that WBD seems to be one of the only major media companies that gets this.
Why it matters
Except for a few months back in 2014 when everyone was following the Aereo case, the mainstream media has remained blissfully silent about the massive amount of money the various cable and broadcast networks receive from the carriage and retrans fees—tens of billions of dollars each year since the Cable Act of 1992.
The impact of all that money is hard to overstate, but think, if you will, of the networks as lottery winners. All that money is flowing in and they’re handing it out to all their friends, relatives, co-workers and random needy strangers.
That’s created an ecosystem where everything is overpriced, from production on out. Want $10 million to shoot a single episode of a hit show? No problem. Residuals that guarantee the actors and producers on those shows will have generational wealth? No problem again.
But there is an actual problem with all that: After 30 years, the industry has gotten very used to that sort of massively inflated pricing structure. Meaning that most of the people working in the business today have spent their entire careers with the assumption that the money would keep on pouring it.
And it corrupted everything. The production companies got massive amounts of money, so they paid their employees and vendors a massive amount too. Those vendors, in turn, then paid their sub-vendors massive amounts. And so on and so on.
People bought houses and planned lives around the fact that those massively inflated numbers were just the norm.
And when it all comes crashing down, there is, of course, a world of pain.
Followed by a slightly less painful adjustment period where television becomes a profitable business, rather than a massively profitable one, and the people who work in it are merely affluent rather than generationally wealthy.
This has long been the case in the television industry in the rest of the world (carriage and retrans is a US-only phenomenon) and they’ve gone on to have happy productive careers while producing excellent shows.
So it’s not the end of the world even though it might feel that way at the time.
There are a number of reasons why WBD is at the forefront of all this change, mostly stemming from AT&T’s mismanagement, but also from some clear-eyed leadership that understands that at some point all of the other major media companies will need to follow suit.
These cutbacks and the ensuing reduction of spending may give an advantage to Apple and Amazon, for whom TV is something of a hobby business, but then again it might not.
Because the one thing that won’t change is that success is always going to boil down to how good your shows are. And multimillion dollar budgets ensure high quality production value. Not high quality scripts.
So there’s that.
What you need to do about it
If you’re WBD, ignore the haters.
You’re on the right track, and while cutting costs is going to rile up the mainstream media and the people getting dinged, what you are doing is both smart and necessary.
At the same time, you are getting massive buzz for “White Lotus”. As in I am only slightly exaggerating when I say that the New York Times and New York magazine have run a new story or op-ed about the series every day this month.
If you are one of the other media companies, look at what WBD is doing and the blowback they are getting and learn. That means when your time comes, you’ll want to get your PR teams out in front of it. You want to put an end to the whole “TV is dying!
Related: Wolk’s Week in Review: Both linear and streaming see losses and layoffs, Churn picks up
Streaming was a big mistake!” clickbait narrative that has currently taken hold and as always, a good offense is the best defense.
If you are a consumer, this is very good news, at least for your wallet. Because who do you think was paying all those billions for retrains and carriage fees?
You.
It wasn’t as if the MVPDs were going to pay them. They just passed the costs on to you in the form of higher bills at a time when you had no other options.
2. VIZIO's New Calibration Panel For ACR
Vizio’s Inscape launched a first of its kind calibration panel for its ACR data this week in a move that should quiet down some of ACR’s naysayers.
A calibration panel is essentially what it sounds like: a way to make sure that the ACR data Inscape collects from its 21 million opted-in users is in line with the size of those groups as per U.S. Census data.
It’s the basic idea behind panels—that they are a representative sample of the U.S. population—and it’s about time that ACR data, which pulls from a much greater pool of viewing, followed suit. The result will be currency grade data for ACR, something that should help bring measurement fully into the digital era.
Just ignore all the kicking and screaming.
Why It Matters
If you talk to anyone who works in the measurement field, you’ll find that despite ACR’s ubiquity, there are still sizable pockets of misunderstanding. (How’s that for a euphemism?)
One valid criticism however, was that there was no proof that the ACR data sets were representative of the general population. There were all sorts of theories about this too, that one OEM was too high end so they only counted rich people, another too inexpensive so they were only on guest room TVs.
None of this was true, mind you, but it was often accepted as such, and so Inscape’s NRP (National Representative Panel) should help put the kibosh on that. And not just for Vizio, but for ACR data in general.
For those of you who are new to the measurement game, a quick review of what ACR is and how it works:
ACR, or automatic content recognition is a way to measure viewing on smart TVs. It is particularly useful because it is able to measure what is on “the glass” or the TV screen, meaning it can understand viewing across streaming and linear from the same TV.
It works in a manner similar to Shazam (HT to Inscape’s Ken Norcross for that one) in that it captures a few pixels from what is being shown on screen and matches those pixels against a database to see what show is on. (Said databases for linear being maintained by CCR Media, our newest Thought Leaders Circle members.)
The key advantages to ACR data, in addition to being able to measure both streaming and linear, is that it can provide second-by-second measurement, measure ads and programming separately and, of course, pull from a much much wider pool of viewers.
So you have all that, and now, thanks to Inscape’s National Representative Panel (NRP), you have a currency grade dataset that is calibrated to the census too.
That’s a win for the entire measurement industry, not just Vizio.
What you need to do about it
If you are a senior agency executive and you still don’t understand ACR, time to educate yourself. Like the internet, it’s not going away.
If you are another company that collects ACR data, this is good news for you too in that it will help to boost overall acceptance of ACR data while taking the wind out of the naysayers' sails.
I still think you should all combine forces in some manner to provide a national ACR dataset, but until that happens, this is a good thing.
If you are a brand and you are worried that ACR data might not accurately reflect viewership, this should put your mind at ease. Most of the measurement companies you’re working with already have their own versions of calibration in order to produce currency grade data, but having a more widely available set, one that everyone can work from, is a positive development for you and your programmer counterparts as well.
If you’re Inscape, well done. While this sounds easy on paper, it is actually quite difficult to pull off and requires much precision and critical thinking. So kudos.
Alan Wolk is co-founder and lead analyst at the consulting firm TV[R]EV. He is the author of the best-selling industry primer, Over The Top: How The Internet Is (Slowly But Surely) Changing The Television Industry. Wolk frequently speaks about changes in the television industry, both at conferences and to anyone who’ll listen.
Wolk's Week in Review is an opinion column. It does not necessarily represent the opinions of Fierce Video.