“Well” she said “there is nothing on the television. I don’t know why we have one, since its certainly not for what we watch. Well, my husband watches the cricket, of course. He’s cricket crazy, up half the night watching the Ashes from Australia, he was. And I like Crime. Of course, it only takes me 10 minutes to find out who the killer is, and you’ve got to watch all those ads before you can see you were right, so I mostly record them and take out the ads as I watch them…”
This extract from a 2013 survey (this family watched 45 hours of television a week) demonstrates once again that television remains the dominant source of entertainment in many developed societies, even if we do not switch on at 6pm and close with the National Anthem when broadcasting stopped, as British social critics of the 1970s feared we would. Barry Parr, now Outsell’s lead analyst in the sector has started to examine what is happening with a series of very well-argued articles (“TV’s complexity crisis is an opportunity for content owners” 13 January 2014 www.outsellinc.com). He set me thinking about what content owners in the print industry did a decade ago when they went through the parallel process – the traditional delivery format is broken and the traditional delivery mechanisms, with all of their complex supply chain relationships, are beginning to fail. Do the reactions of the print world and the record industry give a clue to the likely reactions of their television peers?
A first reaction in print was disbelief, followed swiftly by denial that the speed or range of change could be anywhere near as severe as commentators reported. So as book publishers were saying that “they will always want narrative and always in book form” so cable operators and channel owners in television are talking about brand loyalty, the high value attached to scheduling, and the importance of holding the line on pricing and packaging. And just as brand does not attach to publishers in entertainment markets but to authors, so brand does not attach to channels but to programming/shows. So as a result both types of middleman – publishers and channel operators – misjudged their users, as almost all intermediaries did in the analogue world, because it was impossible for them to see how content was consumed, and their knowledge of their audiences , despite all the surveys, the focus groups and the market research, was stale by the time it reached them. Only in a digitally networked world do you begin to overcome the problems of knowing audiences, and even then, asking them questions is less informative than watching their behaviour and mapping their reactions (recommendations etc).
Shortly we shall see television distribution, which five years ago in Europe was diminishing its creative efforts and outsourcing everything, beginning to buy back the outsourcers and talk about the value of “content”, as in “content will always be king” (book publishing c.1995). This will be followed by a great wailing and gnashing of teeth around further falls in channel advertising revenues, while every effort is made to seek alternative revenue sources. I quoted Jim Dolan, chairman of Cablevision, last year, when he pointed out that his many children of all ages, now used Netflix on Cablevision. He saw this as a signal to work on Cloud libraries and the ability in the network to download and store up to 10 programmes simultaneously. And surely this is a very proper reaction, but only if the cable players really see their future as utilities, with very well-regulated margins, competitive pressure from telcos in a similar bind and subject to fickle consumers who can change broadband suppliers on a click. So here is the second thing which television will find hard to buy: digitally networked markets increase consumer power immensely, and the contractual tie-in so beloved of cable and satellite is now a very shaky foundation indeed. Alongside Netflix, who can fail to see Google and Amazon as major market players here – and they really do understand about Cloud libraries and downloads.
If Jim Dolan really thinks that the US cable industry is “living in a bubble with its focus on TV packages that people must pay for as offered” (www.hollywoodreporter.com/print/599574) then there is at least a hope that a note of realism may be afoot which was absent in print and music. Yet TV has always been about mass audience and numbers of eyeballs sold to the advertiser. Can it work on a niche interest, subscription model? Spending time last year with Fred Perkins, a survivor of print (ex FT.com, ex McGraw-Hill) at Information Television (http://www.information.tv/?cid=3) in London I saw convincing demonstrations (caravanning and mobile holiday homes formed a classic model for this) which made me wonder why more niches, alongside other B2B or B2C digital content vehicles, do not use niche TV effectively. OK, I know that many magazine publishers invested in studios in the hope of getting into an aligned television market, and this never worked. But that was before the digital broadband network had further blurred and softened the edges between content formats and packages. My conversations with Fred, and stories like the BBC News item (www.bbc.co.uk/news/business-25457001) last week which profiled, in describing the prospects for internet television broadcasting, NTVE (Nautical TV Europe) based in Magaluf, Mallorca, and financed not by advertising but by sponsorship and product placement. But its distribution model is, well, fairly cheap… or free, if you don’t find that four letter word offensive.
So this may not be an option for Mr Murdoch, who was rather hoping that the satellite/pay TV model would continue to fund him through the next three decades. The signs at the moment are that, under the same digital network stress as print and music, TV programme distribution will change radically to a My network model, still paid by subscription but no longer powerful as an advertising medium. And beyond that? Maybe the subscription will be to a programme guide that enables you to decide what you watch, when and where and in what sort of device, with monthly billing depending on the choices made, the storage used in the Cloud and the deals that you make with programme makers? It is Your Choice!keep looking »