Article on Digital and Traditional Media Convergence - MediaPost, May 5, 2011

1. Buggy Whips & Electric Cars: What's Video Got To Do With It?
Sam Vasisht, May 05, 2011 11:30 AM
I heard it again at the National Association of Broadcasters' convention: Traditional pay TV and
broadcast models are going to go the way of the buggy whip. This was not the first time, nor will it
be the last time that this phrase has been uttered by folks on the online video side of the business.
Interestingly, another set of observations I made on more than one occasion at NAB was the
difference in perspective of folks from traditional media discussing online video and those from
new media companies discussing the same. The new-media folks were for most part aggressively
touting the buggy-whip scenario of all the disruptions and upheavals that technology is wreaking on
the fundamentals of video distribution and consumption - concluding that the traditional businesses
will go by the way of the buggy whip.
The folks from the traditional business side of the industry were defending their businesses with
arguments of, well, business. Their position (if I may take the liberty to summarize and therefore
generalize some), was that the online video business models and revenue flow don't make for good
business at scale -- today. Online video is a good extension of traditional mass media and not a
replacement for it. The inter-dependent ecosystem of publishers, distributors and advertisers has
strong underpinnings that will not change overnight, even if the technologies are there to disrupt
the value chain.
For many of us in the industry, these two sets of arguments are not new. However, every time I
read commentary on one or the other side of the argument, I realize that people are either
oblivious of the counter argument, or conveniently choose to ignore it for whatever reason. I do
however know from firsthand experience that for a lot of people the traditional media food chain is
a blind spot.
The "buggy whip" metaphor is one that we are all familiar with for sure. The automobile made the
buggy and therefore the buggy whip obsolete. This metaphor comes up innumerable times in the
context of traditional media versus digital media over the past few years.
That got me thinking that actually very few things go the way of the buggy whip these days. Even
the music industry is still hanging on, raking it in with live concerts and still cranking out platinum
stars. Regardless, the woes of the music biz were inherent long before digital media came along,
as I wrote a few years ago in Streaming Media. In other words, music industry members were their
own undoing well before digital media appeared on the scene.
Rather than apply the dated buggy-whip metaphor to what is happening in video, I think what is
going on the in the automobile industry today offers a better playbook for our industry. I am
talking about the emerging hybrid and electric car technologies as an evolutionary step and a slowly
changing paradigm. The auto industry is slowly but surely developing and adopting these new
technologies, and a market is developing around them, even when the economics are not entirely
favorable. I could go on, but you get the idea. Eventually, it is bound to happen that the
traditional technologies will become obsolete. Meanwhile, the traditional technologies are actually

2. getting better.
But that is only half the story, as is the case within our industry. For many, if not most online video
startups, traditional media is providing the viability for their businesses -- think of most of the
OVPs, metadata and discovery companies, online publishers, connected devices, and others. At the
same time online video companies are providing traditional media an extension of their business
into emerging distribution and consumption trends. This is augmenting the existing ecosystem that
will expand before it is replaced by the new technologies in its entirety.
Let's look at an example of a new hybrid ecosystem: Consumers are purchasing Roku boxes
primarily because of Netflix; Netflix is gaining subscribers by the millions because it carries
traditional broadcast and pay TV programming; Revision3 (and others) are featured on Roku and
will be discovered by consumers on account of that, while they (consumers) bought Roku to watch
Netflix and probably would not have bought it to just watch Revision3. Meanwhile traditional
broadcast and pay tv programming (and some very old archives) are finding new distribution
channels.
The two sides of the industry have more in common and more interdependencies than is commonly
acknowledged. The fact that they show up at the same shows and even on the same panels is
evidence of that. While competitive tension is a good thing, being able to leverage each other's
strengths is a bigger force. The ones that will have the hardest time riding this rising tide are
those whose businesses rely on a fork lift replacement of an existing paradigm. For the rest, both
in traditional and online video this is a great time to be in media and an unprecedented time of
opportunity to build customer satisfaction and brand loyalty
Sam Vasisht is the founder and president of 21TechMedia, which provides C-level advisory services, strategy and
go to market consulting to digital media technology companies in the online video space.