Tag Archives: Television

April 15, 2015 · 9:22 am

What Goes Up

One thing on which those of us in media could always count was the constant gradual increase of prices.  Oh sure, unit rates might drop as audiences came and went, but the underlying metric – the cost per thousand views (CPM) of a target audience – would almost always increase except in times of exceptional economic downturn.   When pricing the CPM of an in-demand target such as young adults, the increases could be pretty substantial. 

That truism may no longer hold.  Witness the start of this piece from the Media Daily News:

In what could be the first material sign that even network prime-time TV is not immune from the physical laws of a rapidly expanding media universe, the average cost of broadcast prime-time inventory has eroded for the first time since the recession. While the rollback is small — the average prime-time cost-per-thousand (CPM) of buying adults 18-49 on the broadcast networks fell 2.4% to $43.06 in 2014 — the fact that it declined at all during a non-recessionary period may signal that even the most premium advertising inventory has hit the wall on Madison Avenue.

It’s all the stuff you read about in economics class coming to pass, I guess.  Inventory is no longer a scarce commodity although one could argue that if we’re still approaching every impression as equal we haven’t learned much.  Cross-platform content may be triggering cross-platform buying, and the lower CPM’s from those newer platforms might just be a drag on the older ones.  The reality is that we’re moving from buying demographics to buying behaviors and so many of the old measures just aren’t applicable.  Men 25-54 can’t really be aligned with “people who visited a car dealer website in the last week” even though both can be purchased.  That said, the trend lines for all the CPM’s are headed downward which can’t be a good thing from any ad-supported business model.

I guess if you’re a buyer you don’t mind so much.  The problem is that over time much of the high quality bait (read that as content) for the audiences you seek may wither away, lacking adequate financial support from the inventory it generates.  The audiences will go elsewhere, of course, but maybe not to something that’s ad-friendly (or ad-supported).  Penny-wise and pound-foolish?

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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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