Thursday, December 7, 2006

More On Yahoo & UGC

It seems that Yahoo is doing more in UGC than just joining forces with Reuters. Apparently the whole restructuring that is taking place will divide Yahoo into 2 main branches: "Audience" and "Advertising" and revamp the company to be more "user-centric". (Yahoo laid off Lloyd Braun, the executive hired to make Yahoo a major Hollywood entertainment powerhouse.)

This move by Yahoo underscores a major shift that many of the major Media & Entertainment companies are undergoing, including MTV and NBC. Why are these companies making such an aggressive push for a new grassroots digital infrastructure? The main reason is that they are performing poorly in their respective industries: Yahoo is losing major market share to Google in online traffic, and NBC is losing major television ratings to ABC. The solution? Reorganize your whole executive structure, layoff employees, and push for a more cost efficient "digital" business model.

Yahoo's approach is to make the online experience more user friendly for their customer base and NBC plans to rely heavily on cheaper reality shows rather than scripted comedies and dramas as well as digitally streamline their news bureau. The correlation is that these media companies, from both online and television, have realized that UGC/reality-based type of entertainment is not only popular but cost effective.

This sounds like a win-win for these M&E conglomerates and their audiences, but there are losers as well. As these companies rely more heavily on UGC type material, writers, actors and directors are left out in the cold. In a luncheon for the Hollywood Radio and Television Societies this week, creators of some of television's hit shows complained that broadcasters are using reality based programming as a "crutch and an excuse for the networks not to develop great scripted shows".

It is becoming clear that M&E is making a major transformation from a legacy of scripted, creative programming to a more do-it-yourself type experience where users are in control. I do not believe that the UGC phenomenon will ultimately make the television experience like viewing YouTube or MySpace online, but I do think that it will force television broadcasters to adopt a more non-linear approach to their programming where users have more choices.

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