2011 Media Predictions, Featuring Groupon, Netflix, Apple... and Conan!

Yesterday, I ran my 2010 media predictions through the accuracy-o-meter and found I predicted well enough that I would foolishly tempt fate again and embark on predictions for next year. (The iPad is pictured here, because it's the best symbol of how media changed in 2010.) Here, then, five predictions for what will go down in media during 2011:

1. Groupon will go the Foursquare route, adding check-in style deals to its current menu of daily local deals sent to email subscribers. True, Groupon is still in roll-out mode, since launching on a market-by-market basis takes time, but going mobile seems like a logical near-term extension of what the company is already doing -- some deals can already be consummated via mobile device.

Another reason this seems like an obvious next step for Groupon is that for all of the buzz over check-ins and mayorships at local retailers this year, that activity has always sounded like the "pet rock" of mobile -- are most of us really obsessed with constantly telling people our whereabouts? What's always sounded much more compelling is letting select retailers know when you're in their store -- and reaping rewards for loyalty. The only question remaining is whether Groupon goes it alone, or pairs up with a Foursquare or Gowalla, to make this merger of locally-focused discounts and mobile live up to its potential.

2. In the Google TV/Hulu/Netflix video streaming industrial complex, Google TV dies, Hulu loses an investor, and Netflix -- despite having to sign more expensive content deals -- will reign supreme. There's a lot to digest here, but it doesn't take a Ph.D to see that this market is heating up in ways that will transform it over the course of 2011. Here's further detail on the prediction, in three parts:

a. Google TV -- let's discuss this, or -- wait -- contemplate what there is to discuss. It's been lambasted by critics, can't get arrested when it comes to getting a streaming deal with a broadcast network, and is, as we speak, combating rumors that it has asked Logitech, maker of one of its set-top boxes, to halt production. The worst part is that, even if it can clear up some of the issues that make it less than user-friendly, the networks still won't support it, no matter how much money Google throws at them. Why? To them, Google is the devil.

b. Hulu. Hulu, which is jointly-owned by ABC/Disney, NBC Universal and News Corp., is one of those sites that seemed like a good idea at the time -- but the signs are adding up that the partners aren't happy; someone will pull out. Even if it offers great content to consumers, its back-end issues are considerable. It has had to slash the price of its fledgling subscription service Hulu Plus, because it wasn't nearly as robust an offering as what Netflix offers for $8 to $9/month.

Then there are the ad inventory issues -- recently, NBC, at least, has been pulling back ad inventory from Hulu so it can sell it. Does this sound like a good partnership to you? Then there are those pesky content deals that some partners have been striking with Netflix. No wonder it recently put off its IPO. My first choice as an erstwhile Hulu partner would be NBC, not only because of it holding onto its ad inventory this year, but because of its impending merger with Comcast, which runs a rival site, Fancast.

c. Netflix. Sure, its stock has been fluctuating lately, but Netflix will continue to dominate for one reason: critical mass. At 16.9 million subscribers as of the third quarter, it is the major player in video streaming, and -- especially if its growth continues apace -- it will be harder for content producers to ignore, even as they try to extract more money from it in licensing fees.

Sure, Time Warner's Jeff Bewkes is talking tough, but ABC/Disney and Saturday Night Live just struck deals with it. And, keep in mind that it will take years for some of those earlier, cheaper content deals to expire; in the meantime, Netflix's subscriber base will continue to grow, and it will become ever harder to ignore.

What the industry needs is a good soundbite; right now, it's put itself in a position akin to those who try explaining the positives of coverage for end-of-life medical consultations to people who've heard a lot about "death panels." The online ad industry tries to explain to those who will listen that ads targeted to an individual's wants and needs are a far better experience, and that the higher ad prices targeted ads command help make content free. While true, it's way too convoluted. The government suggests a simple "Do Not Track" mechanism that works similarly to the widely-popular "Do Not Call" program of a few years back. Case closed.

4. The magazine and newspaper industries will press Apple to come up with a subscription plan on iTunes for their content; they'll come to a deal but no one will be happy. If you've followed Media Creature over the course of the year, you know that this blog is down on the "Apple iPad as magazine savior" argument. The biggest reason is glaring: there's no model on iTunes for annual subscriptions; instead, most magazines are selling their wares on a per issue basis, which means that, for instance, a year's worth of iPad-friendly Sports Illustrated would set someone back about $260 (!). No wonder sales are down for iPad-enabled magazines.

Further -- though few have done it -- magazines have to do a work-around to implement the obvious: making the issues free for print subscribers. Something is going to have to give here, and it's probably not going to be Apple, or it would have done so already. Instead, perhaps led by people like Nina Link, who heads the leading magazine industry trade group, and Randall Rothenberg, who just left the top post at the Interactive Advertising Bureau to become Time, Inc.'s chief digital officer, industry chiefs should make a visit to Cupertino, and start putting the pressure on Steve Jobs. Seriously. Otherwise, they should start loading up their iPad offerings with productivity tools and games -- which are the two biggest sellers in iPad-app land.

5. More and more often, cable ad pricing will rival network TV ad pricing. There were two major upsets in 2010 to the thinking that network TV advertising should cost more than advertising on cable: one, ESPN's Monday Night Football was one of the top-rated programs that night, only getting beaten with any consistency by sister ABC's Dancing with Bristol Palin the Stars; two, Conan O'Brien's new perch at TBS allowed the network to command prices comparable to broadcast late-night offerings The Tonight Show with Jay Leno and Late Night with David Letterman. (Previously, cable only beat network programming for things like the very special episode of Jon and Kate Plus 8 where the two broke up.)

Yes, this rectification of pricing was long overdue, as the one-two punch of Jon Stewart and Stephen Colbert have had stronger demographics to Leno and Letterman for a long time now -- but the point is that, finally, people are taking notice. The one caveat is that cable ratings were a little weak this year; then again cable nets used the low ratings to play the trick on advertisers that the networks long have: that because ratings are lower, advertisers have to buy more ratings points (the currency on which advertising buys are planned) to reach the same number of people, which decreases supply. Ridiculous, I know, but whoever said TV was rational?

There are more predictions I could make, but it's time to go. Media Creature wishes you a Happy New Year!