When a Lehman Brothers analyst downgrades your whole industry, it kind of makes you sit up and take notice. You’d think an announcement like that would ripple through the internet knee jerk mechanism called the Stock Market. Especially hit might be stocks like The Walt Disney Co., News Corp., CBS Corp., Time Warner Inc. and Viacom Inc..

Oh, wait – that did happen. Earlier this week, Lehman Brothers analyst Anthony DiClemente predicted that digital technology, ie: digital media, will have an impact on DVD sales, and hence, the profits that the TV and movie industry tends to rely on. Just like it did the music industry. It’s noted that profits have already dropped ~12% per Blu-ray disc products that are offered as iTunes downloads.

Part of the issue is the attitude of the younger generation to not want to keep movies they watch. Disposable entertainment in this age of iTunes and Netflix.

And sadly, DVD sales are on the decline which may seem to back up his observation, or it could just be the economy, so I don’t want to give that stat too much credit.

DiClemente added that DVR’s are also hurting the advertising revenue that the TV industry has become accustomed to.

Media Format and Ratings

Of course, earlier I touched on the dangers that television programs face in the relevance of the soon to be antiquated Nielsen system as more and more shows are DVR’d and downloaded from iTunes, as Jericho showed. After Jericho got trashed in the ratings for it’s beleaugered 2nd season, it was the most downloaded show on iTunes. The math (logic) just doesn’t add up, but the advertising dollars do, as far as network execs are concerned, and their fat paychecks are dependent on!

Despite the disparities that we, the viewers are suffering when quality content gets dumped, they say that studios are trying to get ahead of this technological deficit. (Great, then bring back Jericho and Journeyman!)

Despite putting shows online with limited advertising, the revenue from those efforts is only a small fraction of what they make. They say it’s due to the smaller internet audience, and that might be true.


Is Broadband the focal point of success?

Though Internet users comprise  ~70% of the population, many sectors of the population who have internet access don’t have any interest high speed internet. That includes the pragmatic or those who can’t afford such, never mind cable itself.

One factor I think is the downside to the digital media available is that cable companies target wealthier households, thus when they subscribe to the pricier packages, cable companies have no real incentive to make broadband affordable.

On the bright side, right now 55% of adult Americans have high-speed internet which is up from 47% from early 2007 and 42% in early 2005.

In contradiction to their antiquated box top TV ratings system, Nielsen actually does track internet use, but of the generic type. IE: The average duration a visitor may spend on a web page is 48 seconds. But somehow, they choose not to rate internet viewing of shows??? Gads, these people annoy me.

In closing:

If you’re old enough, you’ll immediately get this: Last weekend I was surprised at just how many television ads I was pounded with while waiting for Iron Man to start in the movie theater.

It used to be that you’d go to the movies, see a few previews that hinted at a storyline, maybe an advertisement for Coca-cola, then watch a movie. Now we get pounded with nearly all the good scenes and storyline of a show, ads for the movie theater, and inundated with TNT television series ads, BIG SCREEN style.

At this point, let me wrap up with a sobering thought, or dare I say, prediction for something down the pike: For alternate media to support the entertainment industry, we are going to be seeing TV like advertising in all media, whether it be downloads, online rentals, DVR’s or purchased DVD’s, and we won’t have the ability to bypass the advertising. We obviously don’t have much say in formats, as the Blu-ray vs HD DVD battle raged on without us. And did anyone one of us have any voice in what we wanted, or not wanted as some may be happy with what exists now? OK, technology does move on, but I’m trying to stretch to make a point.

I hope I’m wrong, but I sometimes fret about my freedoms as they come and go with the times.

Of course, some of this can be tempered with the state of the economy impacting the industry, and of course, various events like strikes, but that’s another day, another post.

Sources: SFGate, internetworldstats.com, consumer affairs, marketingvox, nielsen-netratings,

Image bas layer screen capture courtesy of codedsignal.com