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As the Kings of Content Battled,
The Digital Revolution Continued
Why Viacom and DIRECTV Fought the Wrong Battle
A Social Media and Marketplace Analysis
Introducing: The Kings of Content
• Viacom, the Producer of Content.
  – Channels include MTV, BET, Comedy Central, and
    Nickelodeon
• DIRECTV, the Distributor of Content.
  – Reported 19.89 million subscribers in 2011
Introducing: The Issues
• The two had been working behind the scenes
  to negotiate a new Carriage Agreement
• Viacom wanted DIRECTV to pay more to
  continue carrying their channels
• DIRECTV wanted Viacom to make less content



                                 @
  available for free online
Preparing for Battle
• As negotiations took a turn for the worse each
  side began a campaign to drum up public
  pressure on the other
  – Commercials, online ads, websites, videos, and
    social media accounts were used by both sides to
    sell their message
Preparing for Battle
• The message: If “the other guy” didn’t
  yield, DIRECTV subscribers would lose access
  to all Viacom channels
Preparing for Battle
• As seen in the chart below, very few people
  were talking about the battle on social media
  in the first week of July



                                        The green line
                                        represents the #
                                        of mentions
Preparing for Battle
• By July 9th people were tiring of the rhetoric:
The Battle Intensifies
• Unable to reach a fee agreement, Viacom
  pulled their channels from DIRECTV on the
  evening of July 10th
How Would DIRECTV Subscribers Watch TV?
DIRECTV Seemed to Agree…
• DIRECTV began promoting places to watch
  Viacom’s content online
• Viacom responded by pulling many free online
  offerings of their programs
  – The company “temporarily slimmed down our
    offerings as DirecTV markets them as an
    alternative to having our networks.”
     Carole Robinson, Viacom spokeswoman
People Responded Accordingly
• When Viacom pulled their shows offline, they
  pushed people to other online sources.
The Battle Intensified
• As seen in the chart below, pulling the
  channels had an immediate effect on the
  number of social media mentions

                  The spike in mentions
                  starts on July 9th, and
                  peaks on July 10th
The Chatter Increased
                                   July 2012
                         210,957 Mentions of their Battle



                                                                 Twitter 82.9%
                                                                 Facebook 5.8%
                                                                 Blogs 1.3%
                                                                 Comments 9.5%
                                                               *Platforms contributing less
                                                               than 1% included forums,
                                                               videos, and images.
All mentions tracked were public and included references to both of the parties involved.
Since many Facebook users use privacy settings, posts on that network are likely
underrepresented. Short form posts on Twitter were quick commentary, while actual
Comments tended to be longer and more involved.
The Chatter Grew Angry
The Battle for Hearts, Minds, and $
• DIRECTV and Viacom both went online to
  reach and respond to their audiences
• They posted videos:
The Battle for Hearts, Minds, and $
• They used Social Media:
The Battle for Hearts, Minds, and $
• And they created websites:
The Battle for Hearts, Minds, and $
• The Battle was fought in board rooms and
  online
• But the Revolution was happening in living
  rooms and on mobile devices…
The Impact was Immediate & Severe
• Viacom’s ratings started to sink
  – MTV’s daily audience dropped by 43% (July 10 –
    13*)
  – Comedy Central’s daily audience dropped by 21%
    (July 10 – 13*)
     *Los Angeles Times, Nickelodeon ratings tumble from loss of carriage on DirecTV by Joe Flint, July 16, 2012
People Began to Find New Content
• DIRECTV began offering Disney Jr. to replace
  Nick Jr. for impacted subscribers
• Nickelodeon’s ratings dropped 20%*
• Disney’s ratings jumped 20%*
 *Los Angeles Times, Nickelodeon ratings down 20% after DirecTV drops network by Joe Flint, July 19, 2012
People Found New Content Sources
The Kings Made Peace
• After 10 days, Viacom and DIRECTV finally
  reached an agreement
• Viacom channels were restored to DIRECTV
  customers on July 20th
Trying to Maintain the Old Order
• Viacom and DIRECTV are not unique
  – In early July AMC pulled their shows from Dish
    Network after they failed to renegotiate a Carriage
    Agreement
• Why all of the conflict?
Trying to Maintain the Old Order
• These companies are operating based on
  multiyear contracts written before technology
  like iPads existed
  – Things like rights to streaming on tablets may not
    be covered under existing contracts
  – Technology and consumer behavior are changing
    faster than the contracts
So Did Peace Come Too Late?
• The way that content is consumed is changing
• During the battle even more people realized
  that offline content could be found online
The Digital Revolution
• People (of all ages) are consuming information
  and watching content on the internet and
  mobile devices*
  *Nielsen, State of the Media: Cross-Platform Report Q1 2011
The Digital Revolution
• The number of homes with broadband
  Internet and free, broadcast TV increased by
  22.8 percent over last year.*
  *Nielsen, Cross-Platform Report Q3 2011
From Digital to Content
• The Digital Revolution enables the Content
  Revolution
• The line between content creators and
  consumers is blurring
  – One smartphone enables both
The Content Revolution
• Dropping costs make it easier for people to
  make their own videos
  – In 1987 the average cost for a camcorder was
    $1,600
  – In 2012 a cellphone with a videocamera can be
    purchased for less than $200
The Content Revolution
• Videos are posted and viewed online
   – 72 hours of video are uploaded to YouTube every
     minute*
   – Over 3 billion hours of video are watched on
     YouTube every month*
  *http://www.youtube.com/t/press_statistics/ retrieved July 24, 2012
The Content Revolution
• The internet and social media make it possible
  for talent to cut out the middle man
  – In December 2011 Comedian Louis CK decided to
    sell his comedy special Live at the Beacon Theater
    online
  – In one week he had made over one million
    dollars…without the help of a major network
The Content Revolution
• The ease of “sharing” on social networks
  makes it easy for this new generation of
  content producers to gain an audience
The Share Scare
• But people aren’t just sharing content that
  they’ve created
• More people downloaded pirated episodes of
  Game of Thrones than watched it on HBO
  – Episodes averaged 3.9 million
    downloads, according to TorrentFreak
  – Episodes averaged 3.8 million viewers
The Share Scare
• The Original Kings of Content are all closely
  watching the courts
  – Copyright holders have been aggressively pursuing
    file sharing sites like MegaUpload and isoHunt
The Kings of Content: What Next?
• Hope the courts change human behavior?
• OR learn to exist in a new Kingdom of
  Content, where cats, comedians, and kids with
  cameras rule?
Bottom Line:
• The Revolution is not going away
• It’s time for the Kings to hit FFWD and catch
  up with the rest of the Kingdom – or risk
  losing their thrones
MakeMeSocial.Net

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As the Kings of Content Battled, The Digital Revolution Continued

  • 1. As the Kings of Content Battled, The Digital Revolution Continued Why Viacom and DIRECTV Fought the Wrong Battle A Social Media and Marketplace Analysis
  • 2. Introducing: The Kings of Content • Viacom, the Producer of Content. – Channels include MTV, BET, Comedy Central, and Nickelodeon • DIRECTV, the Distributor of Content. – Reported 19.89 million subscribers in 2011
  • 3. Introducing: The Issues • The two had been working behind the scenes to negotiate a new Carriage Agreement • Viacom wanted DIRECTV to pay more to continue carrying their channels • DIRECTV wanted Viacom to make less content @ available for free online
  • 4. Preparing for Battle • As negotiations took a turn for the worse each side began a campaign to drum up public pressure on the other – Commercials, online ads, websites, videos, and social media accounts were used by both sides to sell their message
  • 5. Preparing for Battle • The message: If “the other guy” didn’t yield, DIRECTV subscribers would lose access to all Viacom channels
  • 6. Preparing for Battle • As seen in the chart below, very few people were talking about the battle on social media in the first week of July The green line represents the # of mentions
  • 7. Preparing for Battle • By July 9th people were tiring of the rhetoric:
  • 8. The Battle Intensifies • Unable to reach a fee agreement, Viacom pulled their channels from DIRECTV on the evening of July 10th
  • 9. How Would DIRECTV Subscribers Watch TV?
  • 10. DIRECTV Seemed to Agree… • DIRECTV began promoting places to watch Viacom’s content online • Viacom responded by pulling many free online offerings of their programs – The company “temporarily slimmed down our offerings as DirecTV markets them as an alternative to having our networks.” Carole Robinson, Viacom spokeswoman
  • 11. People Responded Accordingly • When Viacom pulled their shows offline, they pushed people to other online sources.
  • 12. The Battle Intensified • As seen in the chart below, pulling the channels had an immediate effect on the number of social media mentions The spike in mentions starts on July 9th, and peaks on July 10th
  • 13. The Chatter Increased July 2012 210,957 Mentions of their Battle Twitter 82.9% Facebook 5.8% Blogs 1.3% Comments 9.5% *Platforms contributing less than 1% included forums, videos, and images. All mentions tracked were public and included references to both of the parties involved. Since many Facebook users use privacy settings, posts on that network are likely underrepresented. Short form posts on Twitter were quick commentary, while actual Comments tended to be longer and more involved.
  • 15. The Battle for Hearts, Minds, and $ • DIRECTV and Viacom both went online to reach and respond to their audiences • They posted videos:
  • 16. The Battle for Hearts, Minds, and $ • They used Social Media:
  • 17. The Battle for Hearts, Minds, and $ • And they created websites:
  • 18. The Battle for Hearts, Minds, and $ • The Battle was fought in board rooms and online • But the Revolution was happening in living rooms and on mobile devices…
  • 19. The Impact was Immediate & Severe • Viacom’s ratings started to sink – MTV’s daily audience dropped by 43% (July 10 – 13*) – Comedy Central’s daily audience dropped by 21% (July 10 – 13*) *Los Angeles Times, Nickelodeon ratings tumble from loss of carriage on DirecTV by Joe Flint, July 16, 2012
  • 20. People Began to Find New Content • DIRECTV began offering Disney Jr. to replace Nick Jr. for impacted subscribers • Nickelodeon’s ratings dropped 20%* • Disney’s ratings jumped 20%* *Los Angeles Times, Nickelodeon ratings down 20% after DirecTV drops network by Joe Flint, July 19, 2012
  • 21. People Found New Content Sources
  • 22. The Kings Made Peace • After 10 days, Viacom and DIRECTV finally reached an agreement • Viacom channels were restored to DIRECTV customers on July 20th
  • 23. Trying to Maintain the Old Order • Viacom and DIRECTV are not unique – In early July AMC pulled their shows from Dish Network after they failed to renegotiate a Carriage Agreement • Why all of the conflict?
  • 24. Trying to Maintain the Old Order • These companies are operating based on multiyear contracts written before technology like iPads existed – Things like rights to streaming on tablets may not be covered under existing contracts – Technology and consumer behavior are changing faster than the contracts
  • 25. So Did Peace Come Too Late? • The way that content is consumed is changing • During the battle even more people realized that offline content could be found online
  • 26. The Digital Revolution • People (of all ages) are consuming information and watching content on the internet and mobile devices* *Nielsen, State of the Media: Cross-Platform Report Q1 2011
  • 27. The Digital Revolution • The number of homes with broadband Internet and free, broadcast TV increased by 22.8 percent over last year.* *Nielsen, Cross-Platform Report Q3 2011
  • 28. From Digital to Content • The Digital Revolution enables the Content Revolution • The line between content creators and consumers is blurring – One smartphone enables both
  • 29. The Content Revolution • Dropping costs make it easier for people to make their own videos – In 1987 the average cost for a camcorder was $1,600 – In 2012 a cellphone with a videocamera can be purchased for less than $200
  • 30. The Content Revolution • Videos are posted and viewed online – 72 hours of video are uploaded to YouTube every minute* – Over 3 billion hours of video are watched on YouTube every month* *http://www.youtube.com/t/press_statistics/ retrieved July 24, 2012
  • 31. The Content Revolution • The internet and social media make it possible for talent to cut out the middle man – In December 2011 Comedian Louis CK decided to sell his comedy special Live at the Beacon Theater online – In one week he had made over one million dollars…without the help of a major network
  • 32. The Content Revolution • The ease of “sharing” on social networks makes it easy for this new generation of content producers to gain an audience
  • 33. The Share Scare • But people aren’t just sharing content that they’ve created • More people downloaded pirated episodes of Game of Thrones than watched it on HBO – Episodes averaged 3.9 million downloads, according to TorrentFreak – Episodes averaged 3.8 million viewers
  • 34. The Share Scare • The Original Kings of Content are all closely watching the courts – Copyright holders have been aggressively pursuing file sharing sites like MegaUpload and isoHunt
  • 35. The Kings of Content: What Next? • Hope the courts change human behavior? • OR learn to exist in a new Kingdom of Content, where cats, comedians, and kids with cameras rule?
  • 36. Bottom Line: • The Revolution is not going away • It’s time for the Kings to hit FFWD and catch up with the rest of the Kingdom – or risk losing their thrones