TCA: FX's John Landgraf Explains the New World Order

This time it was amp8220the elephant in the room at TCAamp8221 as he called it referring to the amp8220massive transformationamp8221 or amp8220disruption that the business is undergoingamp8221amp160 He was talking about the perils of Peak TV a term he coined during a TCA tour a couple of years agoamp160 amp8220For a while now many of us could see that we were heading from an optimal number of shows to an unmanageable number of showsamp8221 Landgraf notedamp160 amp8220In fairness there is still more great TV and more diverse TV each year than the year before and thatamp8217s certainly a good thing but it doesnamp8217t seem quite as special or at times as joyful within this paradox of choice and glut of oversupply the new marketplace has createdamp8221Landgraf then explained why in his opinion there is too much television and why this glut seems likely to continue on an indefinite basisamp160 But rather than drill down he went broadamp160 amp8220In my opinion if we want to understand the roots of the underemployment and stagnant wage growth that has afflicted the US economy and that underpins todayamp8217s uncertainty anger and political polarization we should look no further than the lack of market regulation that has over the past 40 years allowed one sector of our economy after another to be swallowed up by a single company or a tiny handful of giant oligarchsamp8221 he saidamp160 amp8220We are no longer just talking about utilities as monopolies duopolies or triopolies amp160We are talking airlines finance most physical and online retail Internet search Internet advertising usergenerated video social media ride hailing online payment and much moreamp8220These giant enterprises which now represent a huge percentage of our total economy are often very efficient and can at times actually be good for consumer innovation pricingamp8221 he continuedamp160 amp8220They are certainly good at facilitating ease of use facilitating the theft of intellectual property grinding the margins out of all kinds of brands and eliminating smaller rivals but unfortunately they have also rendered it almost impossible for midsized regional start up and family owned enterprises to succeed in most consumer markets and across many rural smaller urban and interior regions of our country amp160And since local entrepreneurship has always been the engine of America39samp160middleclass miracle this new structure has crushed opportunity and wage growth for many US families amp160The productivity of the American worker has more than doubled over the past 40 years while wage growth has hardly movedamp8221He went on to offer amp8220a Jonathan Swiftian parable for the Internet ageamp8221 noting that what he was about to say was not his own original idea but that he couldnamp8217t find the correct attributionamp160 amp8220A company starts a business that sells 100 bills for 90 each amp160Of course 90 is very cheap for a 100 bill and all you have to do to get this bargain is give your email address and credit card number amp160So the new business quickly amasses billions of users and trillions of dollars in revenue thus becoming the most valuable business on Earth while losing money amp160Why would investors extend seemingly infinite lines of credit to businesses which lose money while simultaneously devaluing businesses that are profitable amp160The answer is those investors must believe the government has lost its ability or will to regulate monopolies and therefore the key determinate of a businessamp8217amp160current value is its progress towards achieving an unassailably dominant future position even if there are current losses rather than profits so scale has become the only absolutely essential measure of value in the current economyamp8221Makes sense amp8230 but what has that got to do with the perils of Peak TVamp160 amp8220If youamp8217ve been curious about why thereamp8217s more television being produced than you or anyone can possibly watch understand that a good deal of that programming is being produced at a loss in the belief that it will drive a massive shift in the share of consumption which in turn will swamp existing competitors ultimately driving a fundamental shift in market valueamp8221 Landgraf explainedamp160 amp8220Even beyond television which is our current focus in this room we are all watching an epic battle unfold for who will control human attention which is both a finite resource and the most economically valuable commodity on Earth because who controls your attention controls the ability to monetize that attention amp160This is the root of the battle between Walmart and Amazon between Facebook and Google and Apple between Instagram and Snapchat between Netflix and Amazon and the legacy television brands amp160Itamp8217s creating the exhilarating race to the top as seen in the competition to create ever higher quality television programs but it is also creating a glut of content and the depressing race to the bottom in the dissemination of angerprovoking false or misleading information and endless volumes of relative mediocrity in so many areasamp8221Later responding to a reporteramp8217s question about the impact of one or two companies dominating any business Landgraf replied amp8220I think thatamp8217s Silicon Valleyamp8217s business strategy and operating model amp160There is ample evidence to demonstrate that Silicon Valleyamp8217s model is a amp8216winnertakeallamp8217 or amp8216winnertakemostamp8217 or a monopoly or duopoly structure amp160Silicon Valleyamp8217s model is to use platforms and algorithms and scale to essentially serve people what they need and to obviate the need for brands as much as possible and then to grind the margins out of brandsamp8220If you just talk philosophically about Silicon Valleyamp8217s future version of the world it would be that Amazon would recommend to you and sell to you every major product you would need and brands would become less and less relevantamp8221 he continuedamp160 amp8220In that world itamp8217s about scale amp160Itamp8217s about data amp160Itamp8217s about technology AI algorithms finance amp160Itamp8217s about being able to bring billions upon billions of dollars even at loss to bear on conquering markets amp160Thatamp8217s a very stiff headwind for anybody whoamp8217s not in Silicon Valley and not on that side of that business modelamp8221Landgraf then suggested that FX a new streaming service that FX and Comcast had announced days earlier that is set to launch on September 5 will fortify FX Networks amid this harsh new realityamp160 It will cost 599 a month and the initial rollout will be in Comcast homes amp160FX is havingamp160conversations with every other MVPD Landgraf saidThe new service will offer every episode from every season of many of FXamp8217s original series plus the simultaneous telecast of new episodes of current series as they premiere but without commercial interruptionamp160 amp8220For a while now even as FX has enjoyed its best years ever it has been obvious to us that we were going to have to considerably improve our strengths diligently shore up our weaknesses and aggressively transform our consumer model in order to thrive well into the futureamp8221 Landgraf saidamp8220We are just going to have to pivotquot he continued amp160quotWe are going to have to be better at serving up nonlinear contentamp160 This is where the ownership of the bulk of our programs and the depth and quality of FXamp8217s original programming output over the last 15 years which is I think itamp8217s fair to say unmatched by any other adsupported network can become the source of unique strength and consumer valueamp8221There are complications involving current and future content FX has already sold or might sell to Hulu Netflix and Amazonamp160 amp8220We still have work to doamp8221 Landgraf admittedamp160 amp8220Even if you were a subscriber to Hulu and Amazon and Netflix you still wouldnamp8217t have the full set of content thatamp8217s on FX but a lot of the content thatamp8217s on FX will also simultaneously be on either Hulu or Amazon or Netflix because weamp8217re making a transition from a linear channel that licensed content and then sold all that content off to other people and itamp8217s just not an easy business pivot to doamp8221Of course even Landgraf agrees that the average home is not going to subscribe to unlimited streaming services even as they continue to grow in numberamp160 amp8220Weamp8217re talking about a very very significant reordering of the structure of televisionamp8221 he saidamp160 amp8220I do think by the way that the relative stability of the MVPD system and the fact that FX still has three channels in the aggregateamp160225 million paying subscribers is a source of strength because weamp8217re not saying we have to get to 35 million subscribers or however many HBO has amp160Weamp8217re layering a new subscriber business on top of an existing businessamp8220But the reality is that nonlinear consumption with subscriber fees is a growing industry and we are at best amp8216flatishamp8217 inside the industry weamp8217re in nowamp8221 he concludedamp160 amp8220So I think youamp8217re seeing the beginning of a big trend and I donamp8217t think anybody knows for sure where that trend finally sorts outamp8221Click on the social media tiles above or below to share this content with your friends and colleaguesThe opinions and points of view expressed in this commentary are exclusively those of the author andor subjects and do not necessarily represent the views of MediaVillagecomMyersBizNet Inc management or associated bloggers

SUBSCRIBE FOR FREE MEDIAVILLAGE CONTENT | BECOME A THOUGHT LEADERSHIP CONTRIBUTOR

TCA: FX's John Landgraf Explains the New World Order

Author

Publish date

Channel

Ed Martin

FEMA and the Ad Council Encourage AANHPI Communities to Enhance Disaster Preparedness in New PSAs - Ad Council InSites

More Videos:

SUBSCRIBE FOR FREE MEDIAVILLAGE CONTENT | BECOME A THOUGHT LEADERSHIP CONTRIBUTOR

TCA: FX's John Landgraf Explains the New World Order

Enjoying This Commentary? There's More to Love

Ed Martin

FEMA and the Ad Council Encourage AANHPI Communities to Enhance Disaster Preparedness in New PSAs - Ad Council InSites

Cookies