Monday, June 16, 2014

Honda Stage Shouldn't Concern Cable Television

Honda Stage logo

Japanese automaker Honda recently announced a new foray into the internet which is pretty monumental and has shocked many media observers. Here are the details from USA Today:
In a move sure to be closely watched, Honda said Wednesday it is committing millions of dollars to create its own YouTube music channel featuring recorded performances from dozens of live events and concerts.
Honda is teaming with concert promotors Live Nation, radio giant Clear Channel Media and Entertainment, Sean "Diddy" Combs Revolt, Vevo and YouTube in the initiative. 
Billboard describes why Honda made this move:
The automaker has found TV a challenging place to reach its biggest growth segment, 20-to-35-year-olds, who are increasingly on the go, on their phones (U.S. smartphone penetration reached a record 65.2% in 2013, per ComScore) and fast-forwarding through ads when they watch linear television at all (DVR penetration reached an all-time high of 49% of TV households in 2013, according to Nielsen). Honda is allocating its entire cable budget -- “and some more,” says the company -- into music this summer. 
According to reports, Honda and their partners will be teaming up together in the following ways:

  • Live Nation events and artists will be featured prominently on the channel.
  • Clear Channel will co-produce concerts featured on the channel once a month. The concerts will held at IHeartRadio Theatre in Los Angeles (whose stage is being renamed Honda Stage) and will be simulcasted on Clear Channel radio stations/IHeartRadio.
  • Revolt's LA studios will also have their stage renamed Honda Stage and Revolt will co-produce concerts which'll be featured on the channel. 
  • Vevo will be distributing all of Honda Stage's concerts throughout their platforms.
This venture is a major win for consumers. Millennials will have another option online to watch some of their favorite artists perform free of charge. It's also a win for the internet. In order for YouTube to eclipse television, they need advertisers to trust in their product and content creators to invest loads of money (they get the best of both worlds in this deal). Despite these benefits, I don't understand how this helps Honda, here's why:
  • YouTube viewership is extremely sporadic. There is no guarantee who will tune in to watch a YouTube clip during a certain time period unlike in television where there is already a precedent set because of trends which have existed for years. Because of this factor, it may take longer for some videos to develop an audience which could make it harder to sell products in a timely manner. For example, a video promoting a 2014 model could pick up steam in 2015 or later.
  • There doesn't seem to be any brand interaction between the products and the artists performing. Placing your brand name in connection with a concert isn't going to create brand affinity unless consumers actually see the product in action hence why commercials still exist. As much as everyone hates commercials, they're still a pretty effective way to get your message out there if produced correctly.
Cable networks shouldn't be concerned with this move because viewers still watch the millions. There are many businesses and companies who still value the platform which cable provides which is why they'll never run out of advertisers. Here is a graph courtesy of TVNewser which proves that point. 


Independent cable networks such as Pivot or Fuse may be hurt by this move because it means there is one less established advertiser who is willing to take a risk on a network which doesn't garner high ratings compared to the ESPNs and USA Networks of the world. 

But the dearth in advertisers could help increase competition and creativity in the types of shows which get picked up by these independent networks. It's always great for television when a network owned by a non-media conglomerate is willing to take risks in an industry which has been known for being bland (blandness on TV has ironically helped the internet emerge).

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