Tag Archives: Television

December 4, 2014 · 12:06 pm

Is TV Terminal?

I spent 23 years of my professional life working for TV companies.  I miss them sometimes.  Then again, when I come across some of the information I’ve been seeing over the last couple of days, I wonder if there will be anything left to miss in a few years.  The business model I learned and practiced in my youth is rapidly becoming unworkable and the media landscape that’s emerging calls into question the viability of the entire system.  Let me explain.

Let’s begin with the basic premise.  The TV business is about aggregating eyeballs to sell to advertisers.  Yes I realize that extracting (some might say extorting) payments from cable operators has become almost as important a part of the business as the old ad model, but once the audiences disappear those payments might be jeopardized.  After all, if you pull your signal from a distributor and no one cares, where is your leverage?  The bundled model in which consumers pay for networks they receive whether or not they watch them has been a bit of a safety net for many outlets.  If the system “unbundles”, what happens?

That’s why a few bits of information paint a grim picture for my business alma maters.  This from GigaOm:

TV viewers are abandoning traditional broadcast and cable networks for online streaming services, and new devices in their living rooms are making it easier for them to cut the cord. That’s the gist of two new studies from Nielsen and GfK.

Or the Wall Street Journal:

Viewership of traditional television dropped nearly 4% last quarter, as online video streaming jumped 60%, according to a new report from Nielsen, crystallizing a trend for TV-channel owners amid ratings declines.

What effect does that have?  Business Insider says:

Data from The Standard Media Index — which claims to pull 80% of US advertising agency spend from the booking systems of five of the six global media global media holding groups, as well as some  independent agencies — shows that television ad spending showed a “considerable drop” in October, and was down 9% on the same period last year.

Streaming video viewing was about 4.8% of the time spent on traditional TV.  A year later it’s almost 8%.  Still small, but Nielsen doesn’t measure Netflix viewing (which is by far the greatest source) on anything but PC’s.  Quite a bit is viewed via tablets and over-the-top devices so this number is understated.

Is network and cable TV at the end-times?  No, but it’s not unthinkable anymore that those times could come.  CBS has launched a stand-alone streaming service, as has HBO.  One can’t help but wonder what happens when ISP’s, many of whom own traditional networks, stop (allegedly) throttling services like Netflix or eliminate usage caps.  Add the dawn of the “ala carte” era in cable packages and suddenly the TV world looks very different.

Thoughts?

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October 13, 2014 · 10:43 am

Shaving The Cord

You might have heard something over the weekend about a glitch in the Nielsen ratings system that affected the estimated audiences all the way back to March.  While that is kind of problematic for the TV industry, it was other Nielsen data that presents much more of a long-term problem.  As Cynopsis reported:

The top 40 cable channels have lost more than 3 percent of their distribution over the last four years, according to a Wall Street Journal analysis of Nielsen ratings data. How to account for the decline, which exceeds the loss of subscribers? Pay-TV customers are signing up for less expensive bundles with fewer channels, says the WSJ. “What we are seeing is some cord cutting and some cord shaving,” Nielsen global president Stephen Hasker told the paper. “Consumer time and attention is shifting.”

You can read the Wall Street Journal article by clicking through.  As someone who spent a long time in the TV business I understand why channels are bundled.  Way back when, the market was far less fragmented and the business model evolved where there really weren’t tiers other than the true premium channels of HBO and local sports networks.  Today, even the “major networks” of ABC, CBS, Fox, and NBC attract audience ratings in the low single digits even for top programs.  Yes, DVR viewing can boost some of their audiences as much as 80% but think about it.  What’s the difference between watching “Gotham” via Hulu (the internet) or on your DVR (the cable bundle)?  Other than being able to skip the commercials on a DVR, not much.  In fact, one could argue that advertisers would prefer that consumers watch in the non-skippable internet interface.

The real point is that how consumers come to content has changed and yet the people who are the middlemen in offering the content – the cable companies – haven’t moved off a business model that evolved in the 1980s.  As the  Journal sates:

Data points are piling up to show “cord shaving” is for real. At least two pay-TV providers say about 10% of gross TV subscriber additions are customers who are taking a slimmed-down bundle—in contrast to the bigger ones with hundreds of channels that can cost upward of $100 a month.

So the choice for the providers, as it is for all of us in our businesses,  is to change or to shrink.  They can’t just keep raising prices.  At some point that makes the problem even worse as consumers pay more for channels they don’t watch.  What’s your solution?

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July 28, 2014 · 9:21 am

Where Are The Kids?

Suppose you produce something that is widely consumed.

Braun TV

(Photo credit: Wikipedia)

One day you notice that your customer base is getting older in composition. “Duh,” you’re saying – people age. Of course, but if there continues to be an influx of newer and younger consumers, and if product usage remains steady in the younger segments, there isn’t a problem.

So you do a little digging and find out that use of your product by younger people has dropped off. In fact, use among 18-24 year olds is declining at a fairly rapid pace and over the last 3 years it’s down 18%. What now?

This isn’t a hypothetical case.  Welcome to the world of television.  Nielsen put out their quarterly viewing report and here is how one post summed up the results:

In the space of 3 years, Q1 TV viewing by 18-24-year-olds dropped by a little more than 4-and-a-half hours per week. That’s equivalent to roughly 40 minutes per day, says the report. In percentage terms, traditional TV viewing among 18-24-year-olds in Q1 2014 was down by almost 7% year-over-year. Between Q1 2011 and Q1 2014, weekly viewing fell by almost 18%.

I suspect that if you took sports out of the mix the declines would be even larger.  The younger segments haven’t stopped consuming some of the content but they do so using on-demand video both on the traditional TV screen and alternate screens such as their phones, tablets, and computers.  They’re also off playing games and watching others do the same.

I recognize that the TV business in which I grew up is dead.  How can you sell audiences that don’t exist?  Without the dual revenue stream of payments from cable and satellite operators for the programming I suspect we would have seen some TV companies go dark.  Interesting times just keep getting more interesting in the media business (he said echoing the old Chinese curse).  What’s your take?

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