The Dirt Floor
Henry Blodget looks at his own family, and sees the demise of the existing TV business model. It’s not going to fade away this week, but as the behaviors of the larger population shift into a mode more like Blodget’s the effect on TV will be almost exactly like the fall of newspapers. I agree with him.
I Don’t Mean To Be Alarmist, But The TV Business May Be Starting To Collapse - Henry Blodget via Business Insider
In our household, as in many households, television consumption has changed massively over the past decade, especially over the past 5 years.
- We almost never watch television shows when they are broadcast anymore (with the very notable exception of live sports)
- We rarely watch shows with ads, even on a DVR
- We watch a lot of TV and movie content, but always on demand and almost never with ads (We’re now so used to watching shows via Netflix or iTunes or HBO that ads now seem like bizarre intrusions)
- We get our news from the Internet, article by article, clip by clip. The only time we watch TV news live is when there’s a crisis or huge event happening somewhere. (You still can’t beat TV for that, but soon, news networks will also be streamed).
- We watch TV and movie content on 4 different screens, depending on which is convenient (TV, laptops, phones, iPad)
[…]
So, what are the key points of this shift in user behavior for the traditional TV business?
- “Networks” are completely meaningless. We don’t know or care which network owns the rights to a show or where it was broadcast. The only question that’s relevant is whether it’s available on Netflix, Hulu, Amazon, or iTunes. This means that one of the key traditional “businesses” of TV—the network—is obsolete.
- The majority of what we pay our cable company is wasted. We get broadband Internet from our cable company, and we use that constantly. But we also get 500 channels that we almost never watch, along with a couple (HBO, Tennis Channel) that we pay extra for and do watch occasionally.
- We rarely watch TV ads, and when we do, we’re usually doing something else at the same time—like typing. Also, the ads seem startlingly intrusive, because we’re not used to them.
More directly, what this means is this:
- The vast majority of money TV advertisers spend to reach our household (~$750 a year, ~$60/month) is wasted, because we rarely watch TV content with ads, and, when we do, we rarely watch the ads.
- The vast majority of money we pay our cable company for live TV (~$1,200 a year / ~$100/month) is wasted, because we almost never watch live TV and we can get most of what we want to watch from iTunes, Netflix, Hulu, and Amazon.
This user behavior has been changing for a while, and, so far, it has had almost no impact on the TV business. On the contrary, the networks and cable companies are still fat and happy, and they’re coining more and more money every year.
But remember what happened in the newspaper business.
Newspapers didn’t collapse in the ’90s, when the behavior of the creative and connected started to pull away from that sort of media. It was ten years later, and the newspaper moguls were *still* blind-sided by the web despite a decade of obvious change in the user base.
Blodget says that the old TV players will have to accept this change, and that TV will become just another source of video, and this transition will mean a huge loss of revenue for the traditional linear TV players.
In the long run, we’re in an age of experience: not audience. We don’t ‘watch’ TV or ‘consume’ media anymore: we are participants and TV users, not ‘watchers’. The old guard don’t get it, but we are turning a corner and leaving old TV behind.
I expect the TV industry to put up a fight, to resist being sucked into the black hole known as the web. They will redouble efforts to lock things down, to restrict access to the most popular shows and sports, and to act as a cartel to slow the absorption of TV by the web.
The game changer — not mentioned by Blodget — is that TV is losing viewers, and people’s behavior is changing. So, other players outside the conventional TV world are buying properties that will move more and more control out of the hands of the NBCs and ComCasts of the world. Like Google and YouTube.
A company like Apple can disaggregate the linear TV model, just like their iTunes and iPod did to the music business. It may lead to more ‘TV’ being watched in the long run, but less money streaming to the middlemen that structured linear TV so they could make huge profits.
The advertising model of TV already makes no sense, since people with mobile devices and tablets are already spending more time looking at the second screen than the TV itself. The fall of TV will come with a bang, as soon as some major player — Apple, Google, or Facebook, perhaps — rolls out a dominant second screen platform and starts selling synchronized advertising there, and all without paying the networks.
In the long run, we’re in an age of experience: not audience. We don’t ‘watch’ TV or ‘consume’ media anymore: we are participants and TV users, not ‘watchers’. The old guard don’t get it, but we are turning a corner and leaving old TV behind.
Source: Business Insider
