17 June 2009

NBC = "No Bloody Clue"?

So my prior post about Media Dinosaurs drew a fair amount of feedback - particularly around my comment that the state that big media was in is the result of "ignorance and/or arrogance."

Rather than go into any historical rebuttal - I will offer one simple exhibit to justify this statement.

Yesterday, PaidContent.org published an interview with Jeff Zucker, CEO of NBC Universal. The interview focused on what is described as "the digital future."

I think Zucker's statements give fantastic insight into not only the current state of big media but also the causes of the issues (most) big media companies are facing.

So... from the top.

Zucker was asked when he realized that the internet was something that was "going to change the way our industry is." His answer is illuminating.
It was probably when Lazy Sunday exploded on YouTube because I think that was the real recognition that we as a company were not properly set up to exploit something like that and yet the demand for it was intense.
To be clear... Lazy Sunday aired on SNL December 17, 2005 and became a YouTube phenomena in Jan/Feb 2006. So... what Zucker is saying is that NBC didn't realize that the internet was going to impact the business of television until 2006. To put this in context, that's 8 years after Google was founded and 2 years after Google went public. It's 17 years after the "invention" of the web and more than a decade after the introduction of the first commercial web browser. It's 8 years after the IPO of Broadcast.com. It's 7 years after the creation of Napster and 5 years after Napster's offspring effectively ended physical recorded music sales as an industry.

When it's mentioned that, to date, NBC has kind of fumbled around trying to find a strategy for the internet and failed in all efforts, Zucker's response?
Don’t forget. NBC had Snap. Had we not given up on Snap, the fate of the company might have been unbelievably different. Who’s to say that Snap wasn’t Google?
Honestly, I cannot think of a response to do justice to this. "Divorced from reality" is simply insufficient.

When taxed on the perceived lack of direction (historically) and the lack of defined "digital strategy" - Zucker responds:
Our digital strategy is to make our content as available as possible on any platform and to grow it organically rather than by acquisition and to center it around the entertainment side and be as strong on the news and information side as anyone in the business through all of our outlets.
So... I'm starting to get a more clear picture here. Yes - as we can see from the earlier responses, Zucker (and probably NBC leadership in general) not only entirely missed the Internet and the Web (and seem to still not get it at all) -- they also don't understand what "Strategy" is. Jeff.... that is a reasonably clear statement of some of your content and growth tactics - it's not a Strategy and it is most certainly not a "digital strategy" in any way.

But there is more...

When asked if he regrets the acquisition of iVillage ($600MM for a company that had a history of lack of reported financial irregularities and had never had a profitable quarter in its history) Zucker says no, he thinks it's a valuable part of their "strategy" and offers the following "interesting" justification:
It’s like having the flagship store in the mall for women and what we’ve tried to do with women an NBCU is put a lot of great boutiques around that mall with Bravo, Oxygen, Today Show, Biggest Loser, and our ability to reach women on a horizontal basis, rather than just on a vertical sale, but across all of our properties—cable, online, broadcast, entertainment, news—really distinguishes us in the marketplace and gives us an advantage.

And how is that "women love the mall" approach working for you Jeff?
It’s an additional enterprise sell that some of our clients want at this point and some don’t, which is fine because we want to be able to provide opportunities for what our clients want, not to sell them what we want. It’s there all year round, not just for the upfront selling period.
Yeah... not biting, are they?

Then... my favorite part of the interview...

Zucker is asked if digital can be profitable and, in particular (in a follow up) if digital could be profitable if it were a standalone business. This, to be clear, is the big question everyone in media should be asking right now. "If we killed our legacy distribution, production, consumption etc business units and went pure digital - what would our margins look like?" And what was his answer?
That’s the thing. On a standalone basis would it be profitable? We’d have to really look at that.
Let me get this straight.
You'd "have to really look at that"?
In other words... you have no idea if you'd be profitable as a pure digital business? You've never had anyone run the numbers? You've never before asked that question?

In my last post I wrote:
In essence, I think most of us saw a long time ago that print was in trouble.
Then we saw that radio was in trouble.
Now people are seeing that TV could be in trouble.
On the basis of this interview, I'd like to change the "could" in that last sentence to "is".


At 4:36 PM, Blogger N said...

"who's to say that snap wasn't google?"

i want that on a t-shirt.

better yet, let's get that in the air with some skywriting.

At 7:36 PM, Blogger Joss said...

In the Late 90's I had the pleasure to work on a digital series for NBCi that spun from the storylines of one of their prime-time programs, "The Pretender". I saw at that time an embracing of new media (from NBC, the show's producers and the viewers) that I have rarely been witness to since. Keep in mind, this was a time when the aim was distilled to 'enhance and extend the experience.' Our budgets were lean, but our efforts were efficient and our products (web games) were embraced for what they were - entertainment, pure and simple.

Those innocent ambitions later gave way to pressures to 'enhance and extend revenue generation.' Not unlike the evolution of the financial markets, the entertainment business has undergone a transformation toward revenue efficiency in a vein attempt to diversify the risk associated with their investments in programming (I'll leave my commentary on why so much of today's programming is risky for a later date). I guess this makes sense. Unfortunately, the same executive charisma that ushers this charming logic into an organization, brings with it a lack of creativity to do anything more than (as Zucker put it) "exploit". Consumers know what's going on though and will enjoy someday seeing their exploiter face his fears (reality TV style).

At 12:51 AM, Blogger Mark Kortekaas said...

Having worked on the first nbc.com team back in the mid 90s, nbc was actually ahead of it's time. In retrospect we were too ahead of revenue. Say what you will, but MSNBC was named MSNBC for a reason, it was to marry traditional media and online - that was 1996. The marriage "failed" for the reason they had two newsrooms, the joining was largely in marketing only (yes i am WAY over-simplifying).

Then there was the failed .com bust NBCi which did make them gun shy, like everyone else they spent too much ahead of revenue.

On the snap comment - I could have shorted all banking stocks ahead of last year's melt down but that doesn't make me an investment guru.


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