This is part three of a three-part series where Andy Fisher of Merkle sits down with Bill Harvey, cofounder of TRA (TiVo Research) to discuss the state of the evolving television industry.
Andy: Can you give us a couple of really big, bold predictions about what you think will happen in the television industry over the next three years? Go big. Go bold.
Bill: Well, I can give a couple of different scenarios. They may all happen, some of them may happen or none of them may happen. But I do think that within the next three years, we're going to see a scenario of dueling optimizers. Buyers and sellers will each have their own system. The buyers' system, obviously, will try to get the best results for the buyer side. The sellers' optimizer will be kind of a yield maximizer, trying to get the most money for each piece of inventory and for packages. And during the upfronts, we'll see rapid fire exchanges between these optimizers with very little delay between the offering of a package and the firing back of a counteroffer of blacklisting certain of the bundled-in properties in the offer, saying, "No, we don't want those. Come back and fill in those missing targeted rating points and stay within our budget." And then the seller coming back with an immediate package that excluded those properties and so on. So I think that's one scenario that could happen in the next three years, or it could take longer.
Another scenario – and I think it would take longer – would be really having more than one currency. And one way that could fractionate is into one, an eyeball currency, which could be Nielsen or not and two, an ROI currency, which could be TRA (TiVo Research) or not. Another way it could fractionate is into two eyeball currencies. We have a very interesting situation right now where Nielsen is portraying the solution for OTT and streaming, as if saying “For the good of the industry, what we're going to do is we're going to take each network's server side data, which measures all the streaming and OTT activity, and you, the network, will give that to us, we're then going to aggregate it all, add value, and sell it back to you.” They don't use those words, but that's essentially it.
They had once made that proposition 10, 20 years ago to the cable operators, to the MVPDs: “You give us your set top data. It's not really worth anything until we make it research grade. We add value to it. So then we'll sell it back to you.” The MVPDs walked away from that. We’ve yet to see whether the networks walk away from it or accept it. At the moment, let's assume they accept it for a while. You might get to a point three years from now or five or eight, when we're all IPTV – everything is in servers. And then, if Nielsen did it all right and got away with it, then Nielsen won't even have a panel anymore. Nielsen will just be at the warehouse and the manipulator of the server side data. They'll be the co-op where all the data resides. They'll have done their magic and made it valuable, and they're selling it to people. Or someone might come up with an alternative idea saying, "Well, maybe we could do it cheaper without Nielsen since it's all our own data anyway. Why don't we just pool it, give it to the ARF or the MRC and have them do it. That'll probably take a couple of zeros off the end of the number that we pay each year, and we'll get exactly the same result." So that's a fork in the road. I guess I would see in the long-term reality, I would guess that in the IPTV scenario, eventually the server side data will be compiled by somebody who's cheaper than Nielsen but that Nielsen until then might still be in a dominant position based on all of the inertial forces.
Andy: Thank you for joining us on Merkle's Future of TV Series.
Bill: Thanks for having me, Andy.
For more insights on the state of the television industry view part one and part two of the three-part series.