Devoted to show business and the entertainment industry

The input from Jeff Immelt concerning NBC (GE) on the CNBC business network, talked specifically about the need for the TV business model to change.

Joe Kernen asked Immelt if the broadcast business model was still viable, here's Immelt's response: "The TV network business model, Joe, has to change and will change. ... We've been through that in everyone of our businesses. ... Anyone out there that thinks the TV network is going to be run the same way two years from now is crazy."

Kernen also let it be known through his question to Immelt on what he thinks about the writers strike. He stated to, and also asked Immelt this: "You're making power turbines and jet engines, locomotives, a myriad of these incredible things (at GE), yet you have to deal with the whims and wishes of these flaky Hollywood writers."

Immelt responded to Kernen by saying, "We have lots of unions inside the company and not just the writers."
 
The reason I'm tying the business model together with the writers strike, is because Immelt's ideas will definitely have a big impact on the industry and writers in the years ahead.

One major idea Immelt has, one that his predecessor at General Electric, Jack Welch, shared, is the need to bring efficiencies into every area of a company. In other words, look everywhere for ways to cut costs. NBC News already experienced that with layoffs earlier this month.

Immelt is thinking something much longer term and lasting than that though. He's looking directly at the content offered on the network, and is looking at changing its focus. Those changes will change the way studios do business for a long time to come.

So how does Immelt propose to take costs out of the content offered on television? Getting away from too much reliance on scripted programming. In other words, we're going to see a lot more game and reality shows than ever before.

While Immelt says NBC will "selectively utilize low-cost content in prime," meaning not everything will go unscripted, it does mean a lot more reality and games shows will be a big part of their strategy going forward.

Studios have struggled in the new digital media world because they've attempted to run their businesses as if that world isn't upon them; at least in the speed of response to it. They've been much better than the music industry, but are still reluctant to let go of their former business model.

Television, regardless of stated purposes, are a business, and they must be run as a business, which means they must make a profit. To make a profit, the former model of primarily scripted programs is going by the wayside. It seems that world is now over.

There will always be a small number of scripted shows that capture the imagination of audiences and draws them to watch it, but overall the quantity will no longer be there.

People like to talk about the "dreaded" world of reality TV and game shows, and yet people continue to flock to watch them. I think one big reason is the interactivity involved, much of what the digital world has brought to the mix.

Even if you can't vote or be involved in a specific game or reality show, the nature of the show gets you involved by answering questions in your mind, or guessing which way things will go. That's an interactivity concept that attracts people at this time.

This means that even fewer writers will be needed in the future for television. The networks have learned they must go the interactive way with shows, which means games and reality TV. The result will be fewer writers developing scripts for shows. Many of the new shows simply won't have scripts.

To me, the writers strike is grasping at straws and a show of weakness and panic, rather than strength. Just like unions in the auto industry have had to adjust if they want to survive in the new market realities, so must the writers. The problem is their leaders are also working from the premise that we live in the same world we need last millenium. Yet that world's gone forever.

Even though the strike is allegedly based on Internet residuals, even that won't make much sense when you consider the world that's coming in relationship to television, where fewer shows that will offer residuals will be the order of the day.

In the upheavel in the media industry, measures to cut costs are going to be a big factor for some time to come. The disruption will take years to sort out and to experiment with new business models. During these times, any company must cut costs in order to compete and make a decent profit at the same time. That isn't going to change in the television industry either.

Who really makes the final decision in all this? The consumer. And for the most part, they're saying they like reality TV and games. For TV networks that's good news, as they're much less expensive to make, and are thus able to be experimented with more. For writers, it's are reality check they better make, as their importance to the industry, as far as numbers go, is over. Many writers in the industry better start thinking of new ways to use their skills, this one is going to dry up for many.

No matter what type of contract is agreed upon, you can't change the market with a contract. Unions everywhere are beginning to learn that the hard way.