The catalyst for this post was Henry Blodget’s provocative post Sorry, There’s No Way To Save The TV Business. There’s a lot in the article I agree with, but also a lot of good counterpoints in the comments. Clearly it’s not yet universally agreed upon!
That article alone would probably be worth commenting on, but add it to a whole bunch of other articles I’ve been holding for comment:
TV: The Next to Fall by Jeff Jarvis at Seeking Alpha (i.e. strong/good) Media
We’ve been wringing hands over newspapers and magazines, but TV and radio aren’t far behind. Broadcast is next.
It’s a failure of distribution as a business model. Distribution is a scarcity business: ‘I control the tower/press/wire and you don’t and that’s what makes my business.’ Not long ago, they said that owning these channels was tantamount to owning a mint. No more. The same was said of content. But it’s relationships (read: links) that create value today.
Why Television Needs a Reality Check on Sustainable Business Models by Diane Mermigas
Time for a reality check. You know your business model is in trouble when …
Revenues and free cash flow recede and profits evaporate
The TV Industry Is Terminally Ill by Bruce Everis, also at Seeking Alpha
The demise of TV is because it is old technology. Quite frankly I find it pretty boring these days. They just cannot compete with computing, the internet and gaming. And they cannot compete because they are not interactive (except in a farcically limited way), they do not connect the user with other users and their content is purely linear. Their main market now is the educationally subnormal, geriatrics and babies, because these are the only people left who aren’t online.
Broadcast TV Faces Struggle to Stay Viable in the New York Times by Tim Arango
For decades, the big three, now big four, networks all had the same game plan: spend many millions to develop and produce scripted shows aimed at a mass audience and national advertisers, with a shelf life of years or decades as reruns in syndication.
But that model, based on attracting enough ad dollars to cover the costs of shows like “Lost” and “ER,” no longer appears viable. Network dramas now cost about $3 million an hour.
The future for the networks, it seems, is more low-cost reality shows, more news and talk, and a greater effort to find new revenue streams, whether they be from receiving subscriber fees as cable channels do, or becoming cable networks themselves, an idea that has gained currency.
For Television, It’s a Whole New World again by Diane Mermigas
Anyone expecting television advertising–including network upfront spending that could decline more than 15%–to rebound to former levels is in serious denial of the deep-set economic changes underway.
Systemic shifts in how companies and consumers make and spend money could throw media and other commercial players into a death spiral if they are unwilling to alter behavior and expectations. Advertising is not going away, but its fundamental economics are changing. That makes widespread media market deflation and deterioration (the worst being local media) much more than a cyclical glitch, according to a new Goldman Sachs report.
There are others but it’s too depressing for a Monday evening! For an industry that’s still making money and still incredibly popular – latest figures show the average American viewing about 310 minutes a day (just over 5 hours) – that’s an awful lot of doom and gloom.
And probably unjustified. New technologies have never wiped out any preceding industry. Film did not destroy stage. Radio did not kill film. Television killed neither radio nor film. It’s unlikely that Internet Video or Internet TV (call it what you will, I still like New Media with the caveat that it’s unmediated) will replace Television.
What has happened is that the role of different media has changed. Radio has few panel or game shows and very few drama programs anymore. These have migrated to Television. A lot of film production is dedicated to Television distribution so, instead of replacing the Film Industry, Television helped it grow.
So, it’s likely that Broadcast Television will remain – the big four networks will have a role. But I think we’ll see it change to feed the few mass markets remaining: sports (definitely); news (although most TV news is pre-recorded and edited before the broadcast); reality television, talk and game shows (because they’re relatively cheap to produce).
Pretty much everything else will migrate to on-demand consumption. There’s little loyalty to a channel, but there is loyalty to the programs. What a lot of TV executives haven’t yet realized is that people don’t care about their network or channel, just the individual programs that they carry. Increasingly – since the Betamax in 1976 – that has been consumed on the viewer’s schedule. The only thing I’ve watched real time in the last three years has been the Superbowl, because I’m at a Superbowl party! (And to be truthful, I’m there for the party and people first, the ads in the broadcast second with little interest in the actual game.)
As the audience for drama and comedy splinter, the advertising supported model is almost certainly unsustainable. Advertising online isn’t going to match broadcast revenues per viewer leaving only subscription or direct pay to support quality programming.
Not that any of this is going to happen overnight. Still, I have to agree with the doomsayers: the traditional advertising supported broadcast model (aped by most cable channels) is unsustainable long term for most programming.