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The Revolution Will be Televised Online

Dec 12, 2005  •  Post A Comment

Rowland Perkins, one of the founding partners of the Creative Artists Agency, recalled that when he was a television packaging agent at William Morris in the late 1950s, the entire budget of the pilot for “The Rifleman,” including production costs, writers and the salary for star Chuck Connors, came to $39,000.

Times have changed a great deal since then. Today that pilot would cost closer to a million dollars. And Mr. Perkins has moved into a new area that offers an opportunity to enter the media business at a lower cost. He is now chairman of NPOWR Digital Media, a company based in Oxnard, Calif., north of Los Angeles. Last year NPOWR launched the first in what is expected to be a whole series of broadband Internet-delivered channels under the brand name StimTV, the first of which offers a constant stream of music video clips.

Visitors to StimTV.com can peruse short (typically seven-second) clips from music videos. To see the entire video, and in some cases additional related material, the viewer merely clicks. On the side of the Web page are links to home video and book vendors and other places to buy related material.

NPOWR gets its video and trailer content, which was created as ads or promotions for bands, movies, TV shows and other businesses, at no cost, and it doesn’t charge studios a fee to run it. Mr. Perkins said the exposure of the promotional content is especially helpful in boosting sales of legacy products from a music, film or TV library. He said that in meetings with top executives at Warner Bros., Universal, Disney and elsewhere, “They got it.” Several execs called the proposition “a no-brainer,” he added.

As the viewer watches, StimTV places a cookie in his or her computer. The software begins to personalize what content viewers see based on what they chose previously. Once someone is a regular visitor, the channel is custom-tailored to his or her interests and tastes. Sometime early next year StimTV will launch its second channel, offering a similar menu of movie trailers. And soon it will offer teasers for upcoming TV shows, pay-per-view offerings, video-on-demand content and much more.

The patented technology behind NPOWR was originally developed as a tool for doctors who needed to sort through masses of data. It was soon adapted for entertainment. NPOWR was founded in 2001 by Dwight Marcus, a veteran media technologist, now chief technical officer of NPOWR and president of StimTV, and Robert Whitmore, a former movie and TV producer at Warner Bros. (and a onetime client of Mr. Perkins), who is now president and CEO of NPOWR.

“I look at it as a megatrend,” Mr. Marcus said. “We’re seeing a sea change as entertainment shifts from traditional media-and cable has now become traditional-into the Internet space. We have a revolution brewing here that is of unprecedented proportions.”

That revolution offers opportunities but is also threatening to those invested in traditional media. While it costs as much as $150 million to launch a new cable TV channel, NPOWR launched StimTV for “a fraction of a million,” Mr. Marcus said. “And once our model is up, it’s very inexpensive to add vertical [channels].”

Mr. Perkins and Mr. Marcus are adamant that StimTV doesn’t take away from the traditional TV audience because it acts as a promotional mechanism for products from music sales to home video to TV viewing.

At NBC Universal, where the Trio channel next month moves from cable distribution to broadband availability, the feeling is that it is too early to tell how much traffic will move to the new platform. But that doesn’t mean it is a threat. “Just because there is technological change doesn’t mean it takes away from older technology. Sometimes it is additive,” said Jeff Gaspin, president of NBC Universal Cable Entertainment, Digital Content and Cross Network Strategy. “People just do more. They multitask. They watch more and use more television.”

Others see the trend as a very real threat. “This is a classic disruptive technology,” said Harold Vogel of Vogel Capital Management in New York. “This is going to cause a loss of circulation in broadcast TV.”

“Every delivery platform that results in a more diffused audience is a threat to the conventional business model,” said Merrill Brown, founder and principal of MMB Media and national editorial director of News 21, a project that looks at the impact of technology-driven change on media businesses.

Mr. Brown said back around 1999, when the Internet first became popular, there were numerous schemes to deliver video directly to consumers. They all failed because in the era of dial-up service, it took too long and the picture quality wasn’t good. Now, he points out, half of American homes have some form of broadband service, and that is expected to increase to about three-quarters of U.S. viewing homes by 2008.

“If networks aren’t smart about understanding the economic impact and if they don’t move quickly to invest in the new model and make it work, they will suffer,” Mr. Brown said. “This is happening very, very fast.”

Music has become a fertile testing ground because there is free or low-cost content available and the youthful audience is increasingly difficult to reach with traditional TV channels. That is why, for example, MTV launched MTV Overdrive, described as a hybrid network that can be watched in a linear stream or over broadband (typically as an on-demand offering).

Thanks to the much lower cost of entry, broadband TV is also a hotbed of activity for new players. “The entrepreneurial opportunity is great,” Mr. Brown said. “You no longer have to go get a deal with Comcast. You don’t have to sell your soul to a broadcast network. You can do it yourself online.”

That is exactly what NPOWR is doing. Although it hopes eventually to offer its channels over cable and elsewhere, according to Mr. Marcus, it is the ability to get them started for a relatively modest investment that makes the new model so exciting.

“My assumption is that everyone who is in traditional broadcasting will be a broadband broadcaster as well within a matter of months,” Mr. Marcus said. “If they’re not, then they are asleep at the switch.”