Since the dawn of time, people have been glued to their TVs. Radio used to be the popular form of entertainment but since the television was invented, Americans have been hooked like catnip. Television will be around until the end of the world (2012?), but the way we experience TV has and will forever continue to change. As the network model becomes less viable, we’ll see the rise of new technological platforms such as digital video recorders (DVRs), internet-enabled televisions, and non-network content owners (such as Netflix).
The financial element behind the current model is not sustainable. The networks have been bleeding profits since 2008 – the start of the Great Recession. Networks make money in one way: ad sales. Companies don’t have as much money anymore and advertising is usually the first thing to go when businesses start going in the red. Cable, on the other hand, has an advantage with its dual-revenue stream. Basic cable networks like FX and TNT are doing much better than the networks because they have subscription fees plus ad space to sell. Premium cable networks have been relatively unaffected by the recession. HBO still has 30 million subscribers at $10 a month. That’s roughly $3.6 billion in revenue a year.
I predict that within the next 15 years, network television will no longer exist. The parent companies that control the networks can’t afford to keep losing money. When there were only 3 channels (ABC, NBC, and CBS) each network was able to garner a significant market share. But now that there are literally thousands of things to watch on TV, people have so much more to choose from. Logically, the networks have less viewership – that’s why they will eventually have to charge for viewership. I think this will be for the better because the networks will have more money to work with and can therefore make better product. The rise of trashy television and reality shows is the consequence of not investing the money in quality programming.
Another thing to consider is that the network “brand” no longer exists. Back in the 3-channel days, each network had a brand identity. But now, any network show can fit in any network station. People don’t watch networks, they watch shows. And now, with digital video recording (DVR) and on-demand, people watch shows on their own time. The days of getting together with friends and huddling around the tube on to watch Seinfeld on Thursday nights are over. We’re busier than ever and refuse to conform to the traditional TV schedule.
TiVo changed the game with the DVR, empowering consumers with the ability to watch shows on their own time. With the proliferation of DVR, advertisers are having a much tougher time getting people to watch their commercials. Why would anyone sit through commercials when they can fast-forward them? These advertisers have demanded lower CPMs (cost per a thousand ad exposures) from the networks.
In my opinion having everything available on demand is the most efficient and effective television model. This concept is known as IPTV (internet protocol television). When I visited Shanghai earlier this year they were already using this technology in most places. It is one of the best and most economical ways of watching television. You just go to the menu and pick what you want to watch. It helps people save time – and since we all know that time is money, through the transitive property, IPTV helps people save money. It may not be quite that simple, but at its core, IPTV promotes a more efficient society. The only problem with this is live events like award shows or sports games. However, this shouldn’t be hard to work around, they can simply offer a “live-stream” section with all the live events happening at that hour.
If and/or when IPTV is the dominant form of watching television, the network identity will truly no longer exist. In fact, networks (both cable and non-cable) will no longer exist. The only “network” will be your cable provider. This might bother some traditionalists who remember the good ol’ days when they would sit around the tube, watching Bonanza, while eating their Swanson TV dinners. To those people I say, “Beat it old-timer, get with the program.”
Whether you like it or not, the internet is eventually going to be part of TV. IPTV works through a broadband connection and company’s like Verizon (FiOS) and AT&T (U-verse) use fiber-optic internet connections for their television platforms. With websites like Hulu and Clicker, a lot of people are watching TV on their computers these days. A merger of these two mediums is logically imminent.
The cyber company with the most destruction capability is Netflix. In an earlier post I highlighted how Netflix has the potential to destroy our current model. They already have the on demand set up which allows consumers to stream all types of content over a broadband connection. PlayStation3, Xbox 360, Wii, and even some Blu-Ray players are able to project Netflix content on televisions. If Netflix starts producing original content instead of just acquiring it, they could really put a dent in the networks’ wallets.
So will all this new technology really improve television, or will all the clutter make it even harder to watch? The technological revolution is imminent and while this might scare the traditionalists, I think it’s exciting. The old model is no longer viable and we need to look to the future. It’s really only the networks that are opposed to DVR, IPTV, and Netflix – for the sole purpose that these shows empower the viewer and allow them to skip commercials. Networks want you to conform to their pre-set schedules, but the consumers will not stand for that. They’re worried about finding a way to monetize the trend, but it’s not that complicated – just make it impossible to skip commercials on all DVR-ed or web-based programming (like Hulu and several network sites already do).
In an ever-going effort to save time, we’ve adjusted many aspects of our lives. Living in the age of technology, we have the luxury of new tools that conform to us and make our lives easier. We’re on the brink of a televisual revolution that will promote social efficiency by empowering the audience and we can’t let the networks’ corporate fat cats thwart our progress.
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