Tag Archives: Cable television

May 22, 2013 · 8:54 am

Butterflies Or Blips?

A report came out yesterday afternoon which got me to think again about the changing television business. Coupled with a few other things going on, I wonder if they’re the harbingers of some sort of butterfly effect in the media business or if they’re just aberrations. Let’s see what you think.

Cable tv

(Photo credit: Wikipedia)

The report is from the Leichtman Research Group (LRG) and it showed that video subscriber gains in the first quarter of 2013 by top U.S. service providers were not enough to avoid a first-ever net subscriber loss in the category over a four-quarter period.  In other words, fewer people signed up for pay TV – which is pretty much any kind of cable or other video service – than cut one off.  As Multichannel News reported:

Leichtman attributed the downward trend to a combination of a saturated market, an increased focus by service providers on acquiring higher-value subs, and seeing some consumers opt for a “lower-cost mixture of over-the-air TV, Netflix and other over-the-top viewing options.”

So that’s one thing – cord cutting.  Is it overemphasized by many at this point?  Probably, but when you see something happen for the first time ever, you need to pay attention.  Then there is the bill submitted by Senator McCain to use regulatory incentives to encourage programmers and distributors to unbundle their channels and offer a la carte programming.  This means that if you don’t watch a channel you wouldn’t have to buy it as part of a bundle.  So if you’re effectively paying $5 for ESPN as part of a basic cable package and don’t watch it or want it available, you might get a price break.  Then again, those of us who do watch it might be paying substantially more each month as the user base diminishes.  Do I think the bill will pass?  Probably not since the idea has been around for years.  However, it might just be another butterfly flapping its wings, especially given that there are many more options for video (see point 1!).

Finally, ESPN cut staff yesterday despite record profits.  One would assume they know what their projected P/L looks like and they have committed a lot of money to rights over the next few years.  Making cuts now ahead of the new rights kicking in can help maintain that profitability   Again, another butterfly but pair it with the potential for ala carte cable and fewer pay TV buyers, and then ask if these are butterflies or just blips?  What do you think?

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April 30, 2013 · 9:42 am

The Business And The Binge

The folks at Harris Interactive released some new information about TV consumption and it doesn’t bode well for the traditional business models – not even for the dual revenue model that empowered cable and which traditional broadcast is mimicking these days.  While I think any of us who pay attention to viewing research both via the boob tube and via other platforms are aware that things have changed, these numbers show that they’ve done so to a far greater extent than one might think.  Let’s see if you agree.

Harris Interactive

Harris Interactive (Photo credit: Wikipedia)

You can read the data from Harris here but in brief what it shows is that younger people stream more stuff and set their own viewing times.  They also tend to “binge” view – they’ll watch all the episodes from a season of a show straight through over several hours.  If you’re over 55, there’s a 2 out of 3 chance you’re being your own program scheduler.  If you’re under 40, that becomes a 9 out of 10 chance.  Most of the way that on-demand viewing is done is NOT via a system controlled by the cable operators among younger demos.  While the older audience tends to use the services the operators make available via their set-top box or DVR, younger people have wandered well off the ranch.

As Harris points out:

Self-scheduled and binge television viewing trends suggest implications for the television industry at large, potentially impacting both advertisers and content producers.  For advertisers, the clearest impact is that some of these viewers will be taking in contact on platforms beyond their reach, such as Netflix and Amazon’s VOD services.

Content producers, meanwhile, have both positive and negative implications to explore. On the upside, the ability to quickly catch up on past seasons of existing shows, particularly ones with complex storylines, could give more viewers the opportunity to jump into new episodes without confusion. On the downside, viewers watching when they choose, not when it airs, can play havoc with ratings.

Taking that to next the step, when the traditional currency of TV – ratings – suffers through a huge deflation, the basic underpinning of the business will follow.  Yikes!

I don’t know that the above research is huge news – look at how your own media habits have changed.  What is surprising is the extent to which these changes are now a way of life.  Let’s see how the business follows the audience – nothing like “interesting” times!

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November 15, 2012 · 9:24 am

The Money Pit

Way back in 1986, Tom Hanks made a film called The Money Pit.

Cover of "The Money Pit"

Having moved into our second suburban house a year or two before – this one an old farm-house – I didn’t know whether to laugh or cry as the movie told the story of how a little crack in a wall is the first sign of a much bigger problem to come.

I thought of that as I read the latest version of the Nielsen Cross Platform Report. You can read it for yourself here and see if what I’m about to discuss reminds you of the same thing.  Nielsen found that TV viewing hasn’t dropped much from last year at this time.  In fact:

In Q2 2012, Americans spent more than 34 hours per week in front of a TV set. We watched traditional TV, DVDs and played games. Most of the content from these activities was delivered to us on the TV set in a traditional manner, over broadcast, cable, satellite or telco connection, and a growing amount was delivered by Internet connection. Americans also added another 5 hours in front of the computer screen using the Internet or watching video content.

No cracks there.  Except as I read through the report, a couple of things stood out.  First, Nielsen estimates tablets are in 20% of homes and rising.  Close to 40% of Americans who have them now use their tablets or smartphones while watching TV at least once a day.  They’re still watching even if their attention is now shared.  Crack?

Here is something else.  The amount of time spent watching traditional TV is substantially lower among people under the age of 35.  Those under the age of 25 watch roughly 22 hours a week while those over 50 watch twice as many hours.  The missing hours are spent watching on game consoles and mobile devices.  Given the desirability of the younger demos to marketers, this might be another crack in the house of traditional media.

Finally, the number of cord-cutters (homes with broadcast TV only and broadband internet), while still tiny (5.1 million homes) was growing while cable and broadband subs were shrinking (80 million to just under 78 million).  That kind of reminds me how we used to view cable TV‘s small audience gains in the early 1990’s while we, the big broadcast TV networks, had huge viewership.  That was a crack in the wall then, just as this might be now.

We’re still in that farm-house home, many repairs and a lot of money later.  The big media businesses aren’t going anywhere, but they might need to be thinking about the repairs to come.  The next few years will be interesting as they patch all the cracks.

How have your viewing habits changed?  What does that imply for your marketing or for your business?

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