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SatTVPicIt’s a classic case of disintermediation – Viacom, DirectTV are damaging brands and setting up the successful disruptive innovation of the future – not by one of these companies.

I lost Comedy Central, MTV, Nickelodeon and VH1, among others…, in the dispute between Viacom & DirectTV, a content producer/distributor and a consumer service provider, respectively. The evolution of Viacom, DirectTV and Internet Video has given me incredible options. Viacom, as a distributor is losing to disintermediation and needs to innovate quickly, to survive. I have found alternative programming, my PC pushes content to my TV just fine, and there’s great comedy, and music on YouTube.

Brands Lose

The big losers here are the channels and their brands that are not reaching the consumers that used to demand them, and Viacom. Their brands are suffering – and they should be looking for alternatives to being held hostage to this legacy distribution business model. The most recent update from Viacom does not impress the consumer, nor the branded entertainment content provider.

Viacom is a distributor, and like all distributors, puts a wall up between the consumer/customer and the source of value – these TV stations. The TV stations may have tried to connect using other means with their audience, but in large part, the audience has no reason to stay, when a dispute like this breaks the connection with the brand – and there are easily accessed alternatives.

Disintermediation – Viacom, DirectTV

Viacom has failed to innovate. They have, in this case, pulled the classic Blockbuster bonehead move trying to hold onto the past. Meanwhile, dozens of Netflix-like innovators are producing radical and excellent content on YouTube channels, and YouTube competitor platforms like Vimeo and others. They don’t have the legacy (Blockbuster-like) thinking holding them back and are developing their subscriber base through social media connection. And, it’s incredibly disruptive – it’s a whole lot cheaper, more widely accessible to more people – a la Clayton Christensen.

It doesn’t take Jack Welch to figure out that this is doom for Viacom. Holding DirectTV hostage for more money for these channels is signing their death warrant.  It’s only a matter of time before socially produced content develops and improves and becomes the new Mad Men, or Damages –type programming, but coming from new non-traditional sources. I’m not going to predict where, but it’s pretty obvious that there are studios everywhere, and local theater everywhere, and these can come together and crowd source the new generation of programming.

Smart phones and tablets connect to the internet, and output 1080p video… Is the same picture in my mind shaping up in your mind?

Misplaced Strategy

The money for the lawyers, and the energy spent, not to mention the brand and opportunity cost in this little dispute would be much better directed toward finding a path of innovation. Be part of the impending entertainment content revolution. I still watch just about every Comedy Central TV show online, even though my DirectTV is not serving today’s shows. In fact, for my schedule, I watch the Daily Show, and the Colbert Report only online, anyway.

Static distribution networks are dying everywhere. It happened in retail software in the 80s and 90s (remember BusinessLand, ComputerLand and Entré Computer Centers?), it’s happening now in retail distribution of manufactured consumer goods (Amazon and Groupon have only scratched the surface) and it is going to happen in perishables like grocery (the rebirth of Peapod). Perhaps I should say, the distribution networks that don’t innovate and hold onto the legacy of past business models are dead.

Making The Observation

I don’t have a bone to pick here. I’m just making an observation that seems to be consistent with a number of things happening as the world’s economy evolves at an ever-increasing and alarming rate. The administrators of companies try to preserve the past to maintain growth for the future, and it is costly. Administrators in finance, accounting, legal, and other non-creative executive management areas of the company are not listening to the innovators – or they have driven them out of their company completely, and they don’t have a voice at all.

Who’s going to win between Viacom, DirectTV and Internet Video? I don’t really know. However, companies and industries can’t survive if they sacrifice investment in innovation for effort and expense put into holding onto the legacy of the past in terms of products, services and business models. This can’t be fixed unless the CEOs and C-suites of these companies recognize this, and make the appropriate shift, before it is too late.

Something to Ponder

Do you see the investing energy in a petty distribution argument as the precursor to another Netflix-kills-Blockbuster-like disruptive innovation? Do you see distributors suffering from disintermediation like other industries, primarily from holding on to past legacy, failing to innovate, and failing to grow into something that the consumers can demand in the future?

Please leave a comment, and let others know your perspective.

[Image Credit: Loadmaster (David R. Tribble) Creative Commons License via Wikimedia.org.]

One Response to Disintermediation & Viacom, DirectTV & Internet Video

  1. Looks like they resolved the issue and delayed the inevitable disintermediation of distribution for a bit longer. Beware, though, disruptive change is inevitable. And these channels need http://j.mp/MAlUX7 to look out for their own brands while getting closer to their customer.

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