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The Sky Isn’t Falling

One of the best ways to get clicks last week was to run an article announcing the death of the television industry. It’s something the tech blogs have been waiting on for years and the signs certainly seemed to be pointing in that direction: cable companies were all reporting their biggest subscriber losses in years, revenue was down and media stocks were tanking.

On the surface, it sounded like the Titanic just hit the iceberg. But did it? A closer look reveals things are not all that dire.

Let’s start with cord cutting. Those 500K losses the industry suffered sound like a lot. But with 100 million pay TV subscribers in the US, that’s really only one-half of one percent of the total user base. In other words, a rounding error.

More important, the pay TV industry is at something close to 90% penetration, and so some slippage is not unexpected. That’s not to say it’s a positive sign, just not an indication that the industry is months from collapse.

Cord cutting is also not much of a threat because the current cordless experience is not particularly user friendly. There’s much switching between inputs and apps and as others have pointed out, the cost savings are minimal, particularly if you’re trying to create  a cordless experience that meets the needs of an entire family.


For those who just want Netflix, or maybe Netflix plus Hulu, then paying for television service is indeed money wasted. And while many 20somethings may fall into that category, the vast majority are still pay-TV subscribers, which gives the industry time to figure out how to keep them in the fold. The changes needed aren’t all that radical and the industry has in fact already started to make many of them happen: create smaller, less expensive bundles, bring Netflix and other streaming services in to the fold, add on YouTube and other short form providers, make the interface look better, and enable TV Everywhere.

The second part of the “TV Is Dead” story—sinking viewership numbers—is even more easily fixed, only that fix relies on a third party: Nielsen. Ratings are down because people are watching TV on a time-shifted basis, often on OTT platforms and those OTT views are not counted. Nielsen has been promising to count OTT views for a while now and the system they are developing with Adobe will allegedly launch this fall.

Once that happens, and OTT views are actually counted, watch for ratings to rebound. Perhaps not to the levels the networks were hoping, but definitely higher than they are now.

That said, the ratings dilemma is far more troublesome than the cord cutting one. TV’s business model is based on viewers watching commercials during linear TV broadcasts. As time shifting moves from trend to the standard way people watch TV, then the industry needs to rethink that model, figuring out how to work things like branded content and native advertising into the mix, how to use data to enable “audience parting” (selling ads based on specific audiences rather than on specific shows or day parts) and how to harness the power of small-but-passionate audiences.

The TV industry is changing, and in order to remain successful it most certainly needs to adapt or risk seeing permanent damage to its long-term prospects. That’s a winnable scenario, and a whole lot different than the current narrative that has the industry in free fall with nowhere to go but down. It’s time the media understood the difference.


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