Up against Wal-Mart?
Discovery builds stake in school VOD
Just before teachers began welcoming students for a new year of learning, Discovery Education went on a back-to-school shopping spree that strengthened its position as a provider of digital content for elementary and secondary school classrooms.
The corporate sister of the Discovery Channel, which began aggressively pursuing the education market for video-on-demand content last year, announced Aug. 16 [2004] that it had acquired its main competitor, AIMS Multimedia, a California-based producer and distributor of educational media that operates an Internet-based VOD service for schools. A week later, Discovery Education bought Rainbow Educational Media, a family-owned production company that creates video material for grades K-8.
With last year’s purchase of classroom VOD leader unitedstreaming and the recent acquisition of AIMS, Discovery now owns what are widely believed to be the two largest providers of streaming video for classrooms. The company has yet to put a number on how many more schools it reaches via AIMS Multimedia because many schools license both services, said David Pendery, spokesman. Unitedstreaming alone serves 26,000 schools with 10.5 million students, he said. More than 14 million educators, students and parents had access to the service AIMS launched in 2000, according to an AIMS backgrounder distributed early this year.
“This looks to me, from Discovery’s point of view, like a really good acquisition and it’s a good value to add to the Discovery camp,” says Richard Hezel, an edtech consultant and researcher based in Syracuse, N.Y. By taking over AIMS, Discovery adds substantially to its library and subscription list, expanding its base for commissioning and brokering new instructional content.
The moves into classroom media by Discovery Communications, a private company valued between $10 billion and $20 billion, put it in a position that some public TV leaders had planned to occupy—operator of a convenient source of audio-visual classroom material that is expected to supercede the 20-minute video lessons of the 1990s and the 16mm films of the 1960s. A CPB-backed project to create such a nonprofit service, OnCourse, collapsed after the dot-com bust, lacking capital to begin beta-testing last year.
But stations are going ahead with regional on-demand services such as Chalkwaves, based in the Midwest, and PBS is considering taking a shot at the market, building a collection of adapted primetime material. It’s seeking investors and strategic partners to provide capital for a proposed Digital Classroom service (earlier story). PBS and its partner WGBH in Boston set a roll-out schedule that would require them to raise millions by the end of the year.
Public TV providers, especially those who create educational content, become “slightly marginalized” by Discovery’s blitz, Hezel adds. Unless public TV moves rapidly to provide more content in the two- to five-minute clips that educators want, it risks losing its prominent place in ITV, he says. “Public TV stations that might have contributed content now become more like clients.”
Discovery Education already counts many public TV stations among its satisfied unitedstreaming customers. State networks and community licensees covering at least six states and other individual licensees have multiyear contracts to represent unitedstreaming or AIMS to local schools—most arranged before Discovery bought the companies.
“We see it as competition, but what it means long term it’s too early to say,” says Elaine Larson, director of education for the Agency for Instructional Technology, a nonprofit producer based in Bloomington, Ind. AIT offers a streaming service, the Learning Source, and the agency has found that its customers’ needs for VOD are vastly different. Some want to control the content locally, for example, while others don’t.
Though most classroom VOD systems send the short digital videos by real-time streaming over the Internet, Larson and others say it’s not a viable delivery system because most schools’ Internet hookups lack the bandwidth for multiple teachers to retrieve rich media for their classes. “People need a lot of options,” says Larson. “That’s why it’s important for us as an instructional media provider to provide our content in any format.”
“When I talk to others I’m not nearly as threatened by this,” says Rod Bates, executive director of Nebraska ETV, which operates educational media provider Great Plains National. “Maybe I’m naïve, but this is not the first time we’ve seen for-profit educational services trying to enter the schools.” Both Disney and Channel One went after the education market, he recalled. They had deep pockets, but not the “Good Housekeeping Seal of Approval” that public TV holds among educators.
Bates says unitedstreaming gained the edge as a VOD provider to educators because of its elegant and user-friendly interface, but he describes its content as “generally weak—it’s not very rich and not very deep.” GPN declined to license its content to the service, he adds. “We talked with Discovery and never ended up with a viable offer.”
Uneasy partners with Discovery
Pubcasters’ first drive to mount a national VOD service faltered when OnCourse ran out of capital last year. Many education-focused public TV stations had looked to OnCourse as the next generation for their long-term instructional ITV services. Without a nonprofit national service they could provide to schools, many stations signed contracts with United Learning, unitedstreaming’s parent company, which Discovery bought last year. The pubcasters say they were astounded by educators’ enthusiastic response to the on-demand service.
Stations in New York state are in the third and final year of a contract with unitedstreaming. “We are very happy,” said Peter Headd, education v.p. at WCNY in Syracuse. “Right now the industry we’re in is in real flux, but the good coming out of it is that teachers, home-schoolers and teacher-training colleges are open-minded about integrating video into classroom instruction.”
The New York stations have begun exploring whether and how they will continue
the relationship with Discovery. “There’s a group of people in
this state who are relying on this service,” says Pamela Johnson, education
v.p. at Buffalo’s WNED. “I don’t think that we can step
back from this approach.” While she advocates creating educational portals
featuring content from several providers, it’s not clear that pubcasters
or schools can afford multiple subscriptions.
Johnson and other station education execs say they’d eagerly offer adapted
PBS fare through their online portals. Surveys indicate teachers respect PBS
material (story at right).
PBS officials declined to talk with Current about the Digital Classroom project, but Mary Kadera (formerly Mary Halnon), PBS director of digital education, released a pointed statement.
Discovery’s recent acquisitions “leave little doubt that it is moving seriously and aggressively to capture leadership, revenue and mindshare within the K-12 market,” Kadera writes. “This audience is critical to public television by many measures. Education is not a ‘nice-to-have’ audience: for public television, it is a must-have.”
“PBS’s intention with Digital Classroom is to move public television out of the position of driving revenue and brand recognition to our competitors,” Kadera adds.
Chalkwaves, a regional instructional media service operated by KCPT in Kansas City, Mo., and WSIU in Carbondale, Ill., is also vulnerable to increased competition from Discovery Education. But it recently added Ohio’s eight public TV stations to its network. With the Ohio outlets on board, Chalkwaves will reach some 800,000 students, estimates Mike Zeller, director.
Chalkwaves’ edtech specialists determined in a CPB-funded experiment in 2001 that schools did not have the bandwidth to handle rich media. They began offering Chalkwaves Plus, which serves up video from a hard drive installed on a school’s internal network. In the next year, KCPT and WSIU plan to begin using DTV datacasts to update the content stored at schools.
Zeller compared Chalkwaves to the business model for independent grocers: public TV outlets “band together to gain access to content at competitive rates.” Stations take responsibility for choosing the content, in the same way they do for their broadcast schedules.
The risk is that Discovery will continue to buy up edtech companies, Zeller says. He compares the scenario to Wal-Mart opening a store on the outskirts of town. “They begin sucking in content at below-market prices and making it incredibly difficult to compete. The only way to deal with that is to aggregate our buying power.”
KCPT President Bill Reed wonders whether it may already be too late. “We’ve been crying in the Midwest for somebody—anybody—to pay attention to what was happening in instructional media and basically we were ignored.” PBS’s proposed Digital Classroom may be too expensive to mount at this stage in the game, he says.
Hezel sees a big opportunity for public TV to regain the edge in edtech through digital broadcasting. Delivering educational content wirelessly—especially the rich media that educators want—is a “great opportunity to exploit.”
Pubcasters’ existing partnerships with unitedstreaming are important now, but “the use of their own real estate will have a much greater impact on public broadcasting delivery into schools,” Hezel adds.
Web page posted Sept. 27, 2004
Copyright 2004 by Current Publishing Committee
