Tag Archives: media

April 14, 2015 · 9:12 am

Time Shifting

The New York area was not built for cars.  Putting aside the crumbling infrastructure, the number of cars on the road has far outgrowth the roads’ capacity.  Fortunately, most people living in the city proper choose not to own a car and use the excellent public transportation to get around.  That’s not so true about many of my neighbors here in the suburbs as they commute to their jobs.  They deal with the crappy roads, bad weather, and interminable traffic jams for one reason: convenience.  They’re not tied to a train or bus schedule.  

There is a lesson for all of us in that which is manifesting itself in media.  People would much rather have control.  While the old model of media was audiences sitting down to watch content at the same time (at least within the same time zone), there is research that shows that model is long gone.  The folks at Hub Entertainment Research found that the growth of VOD, DVR’s and OTT services continue to erode consumers’ association of TV shows with a particular day-and-time, linear schedule.

  • Viewers time-shift more TV than they watch live. According to consumers’ own estimates, the average viewer watches 47% of their TV shows live and 53% time-shifted.
  • Among Millennials, time shifting is even more common. Viewers 16-34 say that only 39% of the TV they watch in a typical week is live.
  • A plus for traditional TV providers: most time-shifted viewing still happens through a set top box. DVRs (34%) and VOD (19%) account for more than half of all time-shifted viewing.

There is good news and bad news in this for content creators and their distribution partners.  Obviously where people can skip ads, they generally do:

  • 81% of VOD users say that when fast-forwarding is enabled, they fast-forward through most or all of the commercials during a show. In fact, almost half (49%) say they fast-forward through every ad.
  • The results aren’t much different among DVR users: 89% say they fast forward through most or all ads, and more than half (56%) say they use fast-forward at every commercial break.

The good news is that the library of content most providers/distributors have has become completely accessible.  Think about it – years ago, if yu missed an episode and failed to tape it (and it was tape!), you were screwed.  Not even remotely true today, and every one of those additional views is an opportunity for monetization.  That might be through ads or it might be through encouraging a subscription via the availability of the content.

Don’t assume that consumers taking control is unique to either commuting or to media.  Look at your own business and I’m willing to bet there are examples of how consumers are doing just that.  Like media, there are opportunities that come out of the disruption.  Are you ready to jump on them?

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April 2, 2015 · 11:30 am

The Coming Cable Shift

I got into a discussion with someone about the major shift that’s taking place in the cable industry. Specifically, we were discussing all of the ala carte services that are becoming available. Netflix, Hulu and Amazon Video are just the start. You’ve heard that major networks – CBS, NBC, ESPN, and others – are going to provide a streaming service via broadband. I wrote about that a couple of weeks ago so I won’t repeat myself . However, in a time when 13.5% of broadband households with an adult under 35 have no pay-TV subscriptions and 8.6 million US households have broadband Internet but no pay-TV subscription with millions more likely to cut the cable cord in the next year, the times are a changin’.

The person with whom I was discussing this didn’t think it was a big deal. First, the cable guys are also ISPs so they make their money (at higher margins) there. Second, people will find that paying a lot more for fewer networks isn’t so great after all. I told him he was missing a point.

When you pay the cable bill each month, much of that payment gets divided up among dozens of program providers. ESPN takes the biggest chunk, around $6 or $7 according to reports as does sports programming in general. Other networks get fees ranging from $1.50 down to a dime. That’s per household per month. You do the math.

The point he was missing is demonstrated by HBO. HBO is never a basic network, meaning it’s never just included. You pay $10 a month or so for it. HBO uses that money to fund a lot of spectacular programming. Now, so does Netflix.

When the model changes the cable guys are no longer distributing the pot to programmers as they see fit. Consumers are paying for what they watch.

Even if the out-of-pocket doesn’t change, the money goes to a much more limited set of content providers. They, in turn, will have the ability to invest in better content. Yes, I realize that 10 cents a month from 50 million homes is better than $2 from 2 million homes. The difference is that payment from the larger audience will never get bigger unless your network is moved to a bigger, more basic tier or you can negotiate your way to a bigger fee. Providing the network directly doesn’t cap your growth and developing a hit can provide a big growth in revenues. Think of your friends who will subscribe to HBO or Showtime just to watch a favorite series.

I would not want to be a minor network in all of this. I suspect we will see some bundling of like networks that don’t share ownership. I also think we’ll see many networks go dark or end up as free, ad-supported channels on some service – Apple TV, YouTube, whatever. One thing for sure – five years from now the business I grew up in won’t resemble the one we’ll be living with.

Thoughts?

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March 11, 2015 · 10:33 am

A New Dark Age?

Are you watching less TV than you used to? If the answer to that is “yes” then you’re not alone. Oh sure, you’re probably spending a lot more time in front of a screen, but when I ask that question I’m asking about cable network programming delivered live or watched via DVR within 3 days. That measurement, by the way, is known in the business as C3 ratings and there is not a lot of good news. Michael Nathanson, a senior analyst with MoffettNathanson LLC issued an analysis of recent data and this lede from the International Business Times sums it up nicely:

The biggest American horror story on cable last year, didn’t come from FX — it came from Nielsen. Ratings across national cable television networks tumbled 9 percent in 2014, triple the decline seen in 2013 and more than quadruple the 2 percent decline seen in 2012. To call it a crisis would be an understatement. If the trend continues, TV could be heading for a new dark ages.

Why the dark ages analogy?  You’re seeing it in the news.  Cable operators pay these networks a lot of money each month (OK, you’re right – WE pay…) but if no one is watching maybe losing those networks from their systems isn’t a big deal.  That sort of explains the stories you read about networks going dark on some systems (as I’m writing this Verizon just turned off the Weather Channel and Dish turned off Fox News for a few weeks)over what those fees might be.  Without a hue and cry from consumers who appear to be moving on to alternatives, the networks have no leverage.

While some in the industry are complaining yet again about faulty measurement methods, the reality is that people are shifting their viewing habits away from live, linear programing.  Even sports, which is supposed to be immune to this, suffered a 5% decline. You’re probably aware that HBO, NBC and CBS are launching their own streaming services. That sort of move might hasten the demise of business model that has fed TV networks with licensing fees as the cable and satellite distributors focus more on their broadband ISP businesses and less on TV.  After all, if they can distribute the programming services for free via their internet side, why pay?

Hopefully this is good news for those of us who pay for this stuff.  What do you think?

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