Video on Demand or TV-by-ultimatum

October 25th, 2005

Wayne Friedman writes about the issues surrounding Video on demand or VOD
Friedman writes

But networks are not there yet. There are real money and other business issues to tackle. For networks, that means not biting the hands that feed them, including that of their affiliates. When and where does an original or repeat episode run on VOD? How does it affect the network's advertising sales? Do its affiliates get compensated? What about union issues?
Some of those last concerns have already come to the surface and caused headaches surrounding Walt Disney's decision to let some ABC network and Disney Channel shows be sold on a per-episode fee via Apple's iTunes Music Store. Immediately after the Disney news, ABC affiliates complained loudly that they weren't advised of the move ahead of time, since the arrangement could conceivably affect their bottom line in years to come.

I was having lunch today with a colleague and at one point we were discussing the future of big media infrastructure, monopolies and living in a world of increasing personalisation. Where does value lie, and how does one release them in a world which is de-coupling from our old safe static analogue one?
Who owns the distribution channels and who pays for what? I said I believed its about looking at and creating value propositions that release value for both customers and companies. Who pays depends on how that value is released.
And the thought that producers produce and consumers consume is considered passé by management theorists goes to the heart of this debate.
The issues that Friedman raises over VOD is one small example of this trend.
And all monopolies it seems are under threat.
As we say in our book

The new digital economics has removed the need to decide between whether one has richness or reach. Today, you can get both. This changes essentially everything. It changes the way customers can access information and changes the way they use it. It changes the way business can communicate with their customers and it also changes how a business might go to market. It changes the linking between channels, that link businesses, customers, suppliers and employees. It offers opportunity and it offers your once helpless competitors the chance to radically rethink their business strategies and attack vital parts of your business model. New and hungry players are taking every opportunity to enter the value chain, hoping to disintermediate you and your brand promise.
We are still observing the very beginning of this, business guru Gary Hamel says, "the least appreciated effects of digitization is the fragmentation of customer attention. Customers become harder to find and more difficult to keep."

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