Business Trends for Video Content Delivery
An excellent analysis of the likely inaccurate valuation of cable networks in recent times is found in the Wall Street Journal dated November 7-8, 2009 entitled, Media Eyes Are Still Blinded by Cable by Martin Peers.
Recent years have seen increasing profit for cable television systems and the associated content that they generate. Whether the content is the Discovery Channel, Travel Channel or HBO, the fees that customers pay to watch this content has increased steadily. By contrast, the advertising fees paid to traditional television networks have not kept pace. This trend has led to higher and higher market values in recent years for cable content. Recent transactions such as The Scripps Networks Interactive purchase of the Travel Channel for a rich multiple on earnings suggests that the market believes that the income growth for cable television content will continue well into the future.
Is this market conclusion reasonable? As the television manufacturers begin building television systems that make accessing streamed video content over the internet easier and easier with the deployment of widget engines, the public is likely to find more and more of their television content on the web and on demand. This could be a challenging environment for the less known cable content as it competes with new content from the web that has never been available on the traditional cable systems.
It seems very likely that the audience will fracture even further than it has as television viewers expanded their attention from the major networks to a host of lesser known cable channels. With video content available more easily over the web, the market will likely see a "Long Tail" effect leaving even smaller audiences for the traditional networks and for the cable channel content that has been available in recent years.
These changes are coming very quickly and yet the market value of cable television content does not seem to reflect this evolution.
As always, I want to leave you with a pitch for using the Louisiana digital interactive tax credit program. If businesses are developing web platforms to stream video over the internet, Louisiana is a great location to develop the platforms and the video content using Louisiana's video production and digital interactive media tax credit programs. An enormous opportunity exists in the next few years for the emergence of such web platforms and their video production partners. If you need to know more about these programs, I would be happy to speak with you.
