Why Viacom and DIRECTV Fought the Wrong Battle: A Social Media and Marketplace Analysis

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.

14. The Chatter Grew Angry

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

37. MakeMeSocial.Net