Linear TV’s Moment of Greatness, Flickers
Linear TV has been having a tough time lately. Although rumors of its imminent demise are premature, those who confidently predicted the business was not being hurt by cord-cutting, for example, are being proven wrong. Long time sales executives, greatly respected by the industry, are being shown the door as sales revenues decline. As with poet T.S. Eliot’s Prufrock, I have seen Linear TV’s moment of greatness flicker. Here are some of the reasons why:
Wishful Thinking on Cord-Cutting
Back in 2013at the VideoSchmooze Online Video Forum, industry analyst Craig Moffet statedthat cordcutting de-accelerated in 3Q13, meaning that it was going down, unlike whatwas reported in the mainstream technology press at the time. According toMoffet, the fact that it was misreported as accelerating, “speaks to a desirein the tech press for parables – overthrowing the oppressive MVPDs. But themath tells you otherwise. There is no question that people are cutting the cordbut it is not a torrent. It is a trickle.”
Obviouslythat was wrong. Less than three years later, the cord-cutting spigot went froma trickle to a rush and now in 2019, MarkHuffman writes that, “eMarketer predicts that the number of pay TVhouseholds in the U.S. will drop by 4 percent by the end of the year to around86.5 million homes. It further expects the free fall to continue, with pay TVsubscriptions falling below 80 million by 2021.”
Lesson: Wehave to stop feeling that others are out to get us and focus instead on the realityof the trends … and act.
Over-Confidence in the Loyalty of theViewer
How manytimes have I read that today’s viewers still watch lots of live TV? In June2019, the NCTA released the resultsof a study that showed that two out of three adults watch TV live. “Notably,of the people who said they watch TV live on a regular basis, two out of three(66 percent) are most likely to watch via a pay TV service such as cable. Whileapps and smart TVs are clearly on the rise for many, and especially amongyounger generations, the majority of people still favor sitting in front of atelevision to catch the latest episode of their favorite show, to stay up todate on the news, or to keep up with sporting competitions.”
But the Nielsennumbers tell a different story. According to MarketingCharts, which analyzes Nielsen’s viewing results, 3Q18 was the firstquarter on record in which 18-34 traditional TV viewing (live + time-shifted TV)dropped below 2 hours per day and declined 23 minutes per day compared to 3Q17.The article stated, “In percentage terms, the amount of time 18-34-year-olds asa whole spent watching traditional TV (live and time-shifted) in 3Q18 droppedby about 17.2% from the previous year. Needless to say, that’s a huge chunk – adrop of about 1 in every 6 minutes in just a single year.”
So what ishappening here? Digital has supplanted traditional TV for youth. In the same study,Nielsen reported that 18-34-year-olds “spent one hour more per day in 3Q18using apps and the web on smartphones alone than watching traditional TV.” Andnotably, many 18-34s don’t watch traditional TV at all – only 73% versus 86% ofall adults.
Lesson:Traditional TV is less important to younger viewers and time is on their side.
Dog Paddling to Retirement at the Networks
Theinability of some top management at some companies to risk implementing momentouschange (possibly forfeiting short term profit or even courting failure) is thesilent killer of the network business model. Sometimes it is because the systemrewards short term efforts - bonuses are bestowed on an annual basis based on theyear’s performance. Sometimes it is from sheer shortsightedness where they justdon’t see how innovations can help their business. Whatever the reason, thesefolks stick to the status quo, essentially dog paddling to retirement.
Withoutnaming names, one company who didn’t see the value of set top box data 12 yearsago is now struggling to catch up to the data wave and, perhaps somewhat relatedly,just reported an 11% drop in the company’s U.S. advertising revenue.
Lesson: Thinkand act long term, even if you are not around to see it.
“We have lingered in the chambers of the sea
By sea-girls wreathed with seaweed red andbrown
Till human voices wake us, and we drown.” -Prufrock