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TV Upfronts 2006

May 18, 2006

vcmike

The television industry has converged on NYC for the annual "upfronts," during which the major television networks tout their upcoming season of programming and try to sell advertisers big ticket "upfront" packages.

I am going out on a limb to predict that 2006 will be looked back on as a watershed upfront season.

Couple of reasons.

First, digital/broadband is no longer an afterthought but an integral piece of the broadcasters' offerings.  In response to advertisers' ever growing demand to reach consumers through digital platforms, the major broadcast networks are falling over themselves to satisfy the advertisers' ever growing demand for alternative digital ad inventory.  (I think it is now clear why we saw the spate of announcements over the last couple months that programmers like Disney and Fox would make substantial chunks of programming available on the web). And, perhaps an even more intriguing harbinger of things to come was the emergence of upfront campaigns by a number of broadband pureplays (including my portfolio company Heavy.com which had considerable success with their upfront campaign).  Advertising on the digital platforms has achieved critical mass.

Second, this is the first upfront where the TiVo ad-skipping phenomenon was widely accepted as an important, soon to be quite commonplace, aspect of television viewing. Even Nielsen is beginning to measure Tivo viewership. To be sure, there is a lively debate over what the implications will be.  Whether TV ads will go the way of 8-track tapes and VCRs as opposed to morphing into "TiVo-proof" models remains unclear (my personal view is the latter), but I think the industry now gets it that, one way or another, the Tivo effect is here to stay and one way or the other will have to be addressed.

Third, as a result of the above, the fact that television audiences have become exceptionally fragmented, and the growing recognition that traditional TV advertising just doesn't work that well, TV broadcasters clearly are losing the leverage they used to have over advertisers. In fact, a few major advertisers didn't even show up for this year's up fronts.

For me, all of this wraps up into yet another data point that the media industry is in the midst of some very dramatic changes and reinforces our view that it is an exciting and promising arena in which to be searching for new opportunities.

3 Comments

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  1. May 19, 2006

    I’ll go out on a limb and suggest that TV production and advertising are going to start going down different paths. TV is going to have to stop relying so heavily on advertising but the options are there when you look at things like DVD sales and ITunes-type downloads.

    Likewise, advertisers will need to find new avenues but the same things that threaten their traditional advertising methods (namely, the internet) can give them many new and creative advertising opportunities.

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    January 2, 2010

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