Is it the end for TV?

TV, WE ALL take it for granted. Be it watching the All Blacks or simply catching the news, TV has been a part of our lives for decades and for all intents and purposes, is an immutable and solid part of our daily existence. Trouble is storm clouds are gathering on the horizon that could soon destroy or radically change what we’ve traditionally called TV. Is this simply a case of sensationalist doom mongering? Probably not, for a start there’s already a pretty solid body of historical precedents that suggest otherwise.

Back in the mid ’90s as the internet really began to take off, some speculated that newspapers would go the way of the dodo. Thankfully that didn’t quite happen, but there are still some really important factors here that TV broadcasters should be noting.

By going on-line, the behaviour of newspaper readers began to fundamentally change. They simply didn’t buy bits of dead tree and paw their way through them over tea and crumpets at breakfast time. Instead they began to visit web sites – the slow on-line stampede had begun, and it was unstoppable.

Even more concerning was the move away from a newspapers as their sole source of information. On-line netizens now browsed Trade Me instead of reading newspaper classifieds. As more and more businesses went on-line, this trend gathered momentum. When buying a house, people checked out real-estate listings from open2view.co.nz. Instead of clipping coupons from the paper to save on groceries, people began to get their goods from Woolworths on-line. A migration to the digital domain was underway and most newspapers had barely noticed.

After all, why should they? Back then readership and circulation numbers remained solid, advertising revenues were healthy. But not for long. In the late ’90s newspapers around the world began to bleed cash with many nearly going bust. No one had factored in the lag between a change in consumer behaviour, and the time it took for this change to hit the balance sheet bottom line.

Now it seems history could be about to repeat with TV.

At home, the way I watch TV has undergone some pretty radical changes over the past 10 years. Nowadays I hardly ever watch live TV unless it happens to involve breaking news. The arrival of hard drive recorders also means television advertising is treated with the contempt it deserves and is swiftly dealt with via the fast forward button on my remote.

What is most significant however, is the diminishing role that TV plays in the viewing habits of my household. We still watch a lot of TV shows, but an unlimited broadband plan means that the bulk of our idiot box content is now sourced digitally from iTunes (and thanks to the liberal use of a proxy server that spoofs a US IP address, Hulu) or sometimes YouTube (where there’s a surprisingly good selection of movies and documentaries available). Add Quickflix to the mix and there’s little reason to bother with traditional broadcast TV at all. Sometimes we even watch the on-demand content from TVNZ and Sky (both of which are excellent).

It isn’t just about where viewers get their content, or what they watch either. It used to be that at 6PM, millions of Kiwis would gather in their lounges with their dinners perched precariously on their laps to take in the day’s network news bulletin. These days, most of us get our current affairs fix in fits and starts from from the internet, be it via PC, smartphone or tablet. In fact the last time I made a conscious effort to watch TV news was when 9/11 happened (and even then YouTube trounced the networks when it came to delivering timely news and refreshingly different news angles).

If it wasn’t for the few house and garden or cooking shows which my wife avidly watches, plus breaking news stories, there’d be no reason for us to watch broadcast TV at all. I’d wager that like my household, many simply don’t see the need for traditional TV when they can get most of what they want on-line.

This has some pretty big consequences on how we (and a growing percentage of friends and acquaintances) watch TV. Back in the day we used to sit down and watch the box, regardless of what was on, even if it was simply to pass time (even the goodnight Kiwi was considered entertaining). Now we watch the shows we want, wherever we are, whenever we want to see them. We’ve become so used to zapping past adverts that they’ve almost become a novelty.

Judging by conversations I’ve had with many people, it’s also fair to assume that our behaviour isn’t all that unique. We’re probably a minority, but we’re also a rapidly growing one. This hasn’t escaped the attention of big broadcasters, either. Having launched their advert skipping set top box, US broadcaster Dish networks is now mired in a multitude of lawsuits from the big US TV networks, most of whom are realising that their traditional revenue streams (advertising) could dry up should Dish’s advert skipping technology ever see the light of day. The big networks allege that the consequence of this could be the eventual death of traditional television content as the advertising funds the shows people want to watch. Funnily enough, similar arguments were also talked up back in the ’80s as VHS VCRs became increasingly popular.

So, what does all this mean at the end of the day? Over time, the traditional concept of TV or channels is likely to become irrelevant. People simply don’t care which network owns the show or even what channel it’ll be aired on. The only question that’ll matter to most will be can they go on-line to get it. The challenges associated with making money out of an on-line TV model could mean that TV networks find themselves struggling to survive.

Even pay TV wont be immune from coming changes. At home I am on a basic package from Sky and we get a number of channels that only a few short years ago would have been unthinkable. Unfortunately, we don’t watch the bulk of what is broadcast, even though we are paying for it.

So will companies continue to throw money at TV advertising even though the bulk of the population no longer watch them? Will pay TV companies survive even though a growing number of us almost never watch half of what we’re being asked to pay for?

So far, this swing to digital video content has had next to no impact on TV networks. But don’t forget what happened in the newspaper business. Back in the ’90s it took nearly a decade for these digitally driven changes to manifest and hit newspapers. So it is probable that change is imminent, and when it hits, it’ll hit hard.

Assuming that TV broadcasters are indeed impacted, it is possible that they’ll be replaced with on-line services, brimming with vast digital libraries of content. Unlike traditional broadcasters, on-line services should be able to act as far more efficient content production, acquisition, and distribution mediums. To some degree this is already underway with both TVNZ and Sky offering on-demand viewing options.

Consolidation and acquisition could also happen, and over time, less profitable networks around the world could be snapped up by more profitable networks. Locally, this could have consequences on the type and amount of content locally produced. Unprofitable shows and overpaid presenters will struggle to survive . A big squeeze on production costs is likely and much of the fat will get squeezed out of the equation. Cheap as chips reality TV shows that don’t require overpaid actors or costly sets will be greenlighted over traditional (and comparatively expensive) drama (the impact of this on viewer IQs is potentially boggling). Question is will viewers put up with it or will they migrate to another source on-line that has the sort of content they actually want to watch.

The cost of traditional pay TV will also have to drop – users used to getting their entertainment fix on-line for free (or next to free) will expect more for less, or they’ll simply stop paying and go on-line. While the typical pay TV viewer might value the TV content they get through their package, as soon as they can figure out how to get the shows they actually want to watch on-line, they’ll stop paying.

In short the boundaries between TV and other on-line video content will probably start to disappear. We’ll pay for content, either through subscription or pay to view, and we’ll still get some of it for free. This could mean that the money currently being wasted by us and TV networks could be spent much more efficiently. So as with newspapers, the TV business will have to get a whole lot more efficient. TV won’t disappear (newspapers certainly haven’t), but thanks to the digital realm, it’ll certainly be a very different looking animal. PAT PILCHER

5 Comments

  1. Nice article Pat. Again it echoes my thoughts that while people may well sit themselves down in front of the TV for hours, they watch the programs – the ads are skipped, ignored, channel surfed or used as toilet/kitchen/computer breaks.

  2. TV won’t disappear, it will evolve.
    The thing that will go the way of the dodo, is homes with numerous TV’s, littered through out the house. Instead, ‘television’ will be watched on tablets / computers / phones etc. I can already take a Freeview BluRay recorder and use it to stream TV shows directly to my iPhone – whether they’re on air, or on the HDD. So why buy a bedroom TV?

  3. @stun – interesting point! it sounds a lot like the newly launched smart glass from Microsoft where content will stream to a raft of third party hardware… Ironically this is one of the reasons why traditional TV will have to change – traditional viewing habits are changing rapidly and this is also seeing a growing amount of content sourced on-line and not from the networks.

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  5. I don’t understand why CBS, FOX, & NBC execs don’t want us to enjoy commercial-free TV. I’m a DISH employee – AutoHop is great because you can easily watch commercial-free TV. Public Knowledge, a consumer advocacy group, is taking a stand for consumers by creating a petition that tells CBS, FOX, & NBC media to keep their hands out of your living room & DVR. Sign their petition to keep control of how you watch TV http://bit.ly/KFdn1Q

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