Broadcast TV for VICE won’t be successful

The news has been boiling away for about a year, but it’s finally out, the super-cool, millennial satisfying, cross-media juggernaut VICE is going to become a cable TV channel.

It’s taking the spot of under-performing H2 and is launching with a mix of programmes that it’s already made online alongside some new commissions. The channel slots are owned by the A&E Network (a joint venture between Disney and Hearst). A&E pumped $250m into VICE last year to grab a 10% stake in the business.

VICELAND, the TV channel will be in around 70m US homes from its launch in February 2016.

The chance of launching a successful broadcast TV network for 15–34s that plays predominantly documentary or niche entertainment is pretty low. This is a generation that is watching less and less broadcast television and those that do are brought up on a diet of low-brow, highly repeated, formatted shows that are designed to satisfy short attention-spanned viewers.

The business models for these networks are primarily from spot ads generated from bulk bought deals. It’s more about demography and location than it is about programming or channel brands. At best you might be in a slightly premium grouping. A&E will sell the spots and it’s sales team get a new logo to plonk on the ad schedules. VICE’s team on the other hand get to sell shiny integrated content, providing enough people want to buy it.

As Apple and others have found, clever high-cost ads attract experimental money (even a large amount of experimental money) but it’s from a small number of advertisers who want to be seen to be cool and also test the impact. Pretty much everyone then returns to the pile-it-high, sell-it-cheap delivery of commoditised spending. Hello iAd.

So, a young audience that is watching less and less television. An engaged/upmarket audience interested in cool, niche docs and entertainment who watch little linear television. And ad model that’s primarily based on bums on seats.

I’m not sure that even great content (which VICE definitely do create), a super cool brand, and good cross-marketing opportunities through VICE and A&E will be enough to make this linear channel a success.

So, why are they bothering then?

  1. Everyone, even the cool kids, want the validation of being a traditional media operator. A linear TV channel is still seen as ‘proper’ even with changing consumer behaviour.
  2. VICE are trying to become a modern media company to compete with the big boys. But to do that they need real scale. Their current valuation is based on what people are betting they’ll become. To justify that valuation they need to do what they can, quickly, to add scale and be, or at least seem to be, much bigger. A TV channel’s a great way to seem to do that.
  3. A&E need something back from sinking $250m into VICE today. They’ll do alright out of a ‘liquidity event’ when VICE is sold or floats and they’ll have a good opportunity for them, or their corporate overlords, to take it over or block one of their competitors grabbing it. But today, they’d also like some cool fairy-dust to show that they’re down with the kids. “Hey guys we’ve got this sweet distribution spot, if we chuck you 250m bucks will you package all your stuff into a channel we can sell? We’ll make it worth your while!”
  4. And this is the nub really — what’s the real deal? And how sweet is it? How much of the costs are A&E covering to bring them on? And how much new investment are VICE having to put into their channel? VICE aren’t short of a bob or too, so they’ve got cash to spend on content, but to me it seems that it’s the external benefits to them that significantly outweigh the fact that the broadcast channel will likely be a massive failure. Especially if they’re protected from much of the downside from a neat deal.
  5. To be a successful media businesses you need content and awareness (and then the ability to monetise that attention). A TV channel DOES totally help VICE with that. VICE is cool, but the vast majority of people have still never heard of it, let alone consumed any of it. Viral growth is great (and cheap) but it doesn’t necessarily take you mainstream. A TV channel, supported by a TV network will allow it to get a load of good old fashioned advertising. It might, notionally, be for the TV channel, but really it’s free media for the brand.
  6. At the same time, they’ll be able to accelerate the creation of more video content, that I imagine based on the current views isn’t entirely justifiable for VOD. Strangely, it will be more justifiable to invest for a linear channel as it’s recognised that investment in content is key to make a TV success. They’ll also be able to grab a decent chunk of cash, for what will be cool and award-winning, but relatively unsuccessful in selling units, integrated TV advertising. This will give them the appearance of short term success to again plough the money into content that’s really about bolstering their online presence.

So, whether the TV channel’s a complete failure (or not) — hey, unicorns etc — VICE wins from this deal. It gets to up its video output (that I imagine it will own all the rights of), it’s got a new thing to sell to its trendy advertisers to tie them into cross-platform deals on (and more importantly off) the TV channel plus it gets a load of marketing for its core brand. They can’t really lose.