Halfway To Oblivion - Or Salvation?

by , May 29, 2012, 7:30 AM
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Halfway to oblivion, are we?

Or to salvation? You be the judge. Seven years ago, amid flying spittle and other signs of deep agitation, a notorious crank predicted the end of network television by 2020. Audience hyper-fragmentation, DVR ad avoidance, online competition and the immutable law of supply and demand were conspiring, this guy claimed, to undermine broadcast’s business model.

These were obviously the ravings of a lunatic -- one too irrational to comprehend that the society and the culture simply cannot live without CBS, NBC, Fox, ABC and CW. They are so much a part of our lives -- and our habits, and our memories, and our cultural iconography -- how could they possibly disappear? When the man in the tinfoil hat replied that desire for the status quo has nothing to do with economic viability, people just rolled their eyes. Or edged away in discomfort.

One of them was David Poltrack, head of research for CBS, who dismissed the notion on the grounds that -- duh -- network TV is too big to fail.

“If, in fact, that current system deteriorates to the point that advertisers and marketers abandon it,” he was quoted as saying in 2005, “I don't see anything that's going to replace it in the entire marketing infrastructure of the country, and the economy is going to be diminished, and that's a lot bigger problem than just a network television problem.”

Precisely -- which is why the crackpot vision was too apocalyptic to be taken seriously. I remember this all vividly, because the crackpot is me. Now seven years have elapsed since I first articulated The Chaos Scenario. Let’s just see how insanely wrong I was.

Back in 2005, the major networks’ audience had been shrinking for a decade to a mere 16.5% of TV households in prime time. That’s for all five of the nets put together. Seven years later the aggregate rating is down to an optimistic 13.5% -- optimistic because that number includes DVR time-shifters, who skip past commercials. For advertisers, those viewers may as well not exist. Removing them from the ratings, only 11.5% of households are watching network shows live in prime time. The other 88.5% are doing something else.

Oh, and the number of TV households itself declined last year for the first time in two decades. In the most recent Nielsen numbers, HUT was down by a million despite overall population growth.  Oh, and in the first quarter of 2012, NBC -- despite a Super Bowl bonanza -- showed an operating loss. Oh, and ubiquitous, low-budget singing and dancing competitions –- the programs that have kept the nets afloat because of relatively large audiences and relatively low production budgets -- are showing alarming signs of fatigue. Both Fox’s "American Idol" and ABC’s "Dancing with the Stars" scored their lowest-ever ratings in their season finales.

And after the public finally loses interest altogether, there is nothing cheaper to replace the talent shows with. The only remaining step down is security-cam feeds.

So, one might ask, with all of the key metrics trending catastrophically downward, how have the Big 5 managed to keep the lights on till now? Can it just be the cheapo programming?

No, it’s the cheapo programming combined with what I call the Chaos Alphabet: desperate CMOs buying GRPs at insanely inflated CPMs because if you’re an advertiser who craves reach you are otherwise SOL. In the economics of scarcity -- and what economics aren’t? -- the scarce commodity has become mass itself. The disappointing 17.8 million viewers "Dancing With the Stars" earned for its two-hour finale still won the broadcast ratings week. So CMOs are still lining up at the TV upfronts with wads of cash and saying, “Please gouge me” -- in the same way motorists are willing to pay $10/gallon at the last gas station before Death Valley. To some brands, even the incredibly expensive Incredible Shrinking Mass Audience is better than no mass audience at all. TV fragmentation has made them crazy.

The obvious beneficiary of all this disarray should be the Internet, and sure enough, its share of the advertising pie continues to grow. There was even an online Newfront market this spring, which could be a sign that online programming can now sit at the grown-up's table. The nets are, of course, trying to become a part of the online ecosystem, like the buggy-whip manufacturer investing in the nascent driving-goggles industry.

But will the eventual integration of the Big 5’s infrastructures and the online platform create the hybrid that saves everybody?

Mind you, I’m a certified Cassandra, but I can’t see how. . CBS, ABC, NBC, CW and Fox will lose audience share to the Web at a much faster pace than they’ll gain revenue from it -- because as an advertising medium, not to put too fine a point on it, the Internet sucks. It disrupts the status quo without -- apart from search -- offering any reasonable platform for advertisers, or any promising model for profit.

So now what? Till now, the networks have dodged the bullets that have shredded newspapers, magazines, book publishing, the recording industry and Hollywood. Will they finally be mowed down in the fusillade? The Chaos Scenario imagines the end of broadcast as we know it by the year 2020. I’d be curious to hear alternate scenarios, but at least on my calendar, we are halfway there.

8 comments on "Halfway To Oblivion - Or Salvation?".

  1. Dan Auito from Next Century Studios
    commented on: May 29, 2012 at 11:01 a.m.
    Bob, I'm rolling, over here. Beautifully written satire with oh so much truth and foresight presented. Gen Y and the Millennials's watch and interact with most everything online: Ipad's, Phone's, Laptops, XBoxes and playstations etc... Niche specific interactive programming on demand 24/7 is certainly taking hold and the old passive interruption model is now indeed going the way of the books, newspapers, music etc... Hopefully we in the online world of web video production and syndication can begin to convince traditional advertisers, agencies and media industries that online video has arrived and achieved scale with premium and quality content, allowing for maximum branding and performance opportunities. It's also Keyword Researched, Tagged, Titled and Described to attract billions of potential worldwide viewers 24/7 365 on demand. Also note that when someone has an Ipad in their lap it appears larger than any big-screen across the room, now add headphones and WIFI mobility and you have the ultimate slamdunk! Loved this article Bob! Dan Auito COO at www.ncs.tv
  2. Douglas Ferguson from College of Charleston
    commented on: May 29, 2012 at 11:29 a.m.
    Security-cam videos! Brilliant idea! Where can I watch? Seriously, it's like Clay Shirky's "Failure For Free chapter in Here Comes Everybody. That is, if the networks can re-edit the tapes, snipping out hours of recorded video that fail to entertain, they may have a real hit on their hands! America's Most Edited Convenience Store Videos. Super low-cost and guaranteed excitement. Didn't Mike Judge predict all this in his 2006 movie Idiocracy? Ow, My Body Part!
  3. Mark Gleason from DMD
    commented on: May 29, 2012 at 1:10 p.m.
    Declining, out-of-date businesses always deny the inevitability of their demise. Just ask the newspaper and magazine publishers, the yellow pages, radio (Pandora now has ratings), record companies, book & textbook publishers. All have been way behind the paradigm shift and the new media creators are not the old. They have either had new intermediaries dominating the media model or just plain faded into the media graveyard. Too big to fail -- as of when?? 1983 or 2013? Guess they are not seeing the stats of that new Interweb thing!!
  4. Michael Kaplan from Blue Sky Creative
    commented on: May 29, 2012 at 2:04 p.m.
    Wondering what, if anything, Apple has to add to this conversation. The long-rumored Apple television may or may not be the final nail in the coffin for networks, but considering how they've shaken up the music, telephone and computer industries in the past 10 years, I can't wait. Personally, I look forward to the days when there are no senior TV gatekeepers deciding for me what I can and can't watch. I spent a decade at the networks, and way too many great programs were canceled before their time (or never made it to air) by the folks in the big offices. Maybe television needs a little anarchy to separate the stuff that works from the stuff that just fills air...
  5. Michael Kaplan from Blue Sky Creative
    commented on: May 29, 2012 at 2:06 p.m.
    By the way, it's no longer the Big 5. If you're going to consider the CW a major network, you need to consider Univision as well, since it generally gets a larger weekly audience.
  6. Theresa M. Moore from Antellus
    commented on: May 29, 2012 at 2:40 p.m.
    I think you're getting it. However, the problem with "ubiquitous low budget" programming like singing and dancing shows is that they are sucking up the best hours in Primetime. Also, one of the reasons that viewers are deserting the networks is those shows and also the increasing length of time for commercials. If the networks had adapted to public television's model - the commercials inserted between programs and complete programs shown without interruption - they would attract a greater market share. People are bored with endless repetition of the same commercials during the programs, too. Many are simply abandoning the television to watch their favorite shows on the net because they have control over the viewing time and they can watch uninterrupted. Until network advertising is brought under control people will be leaving broadcast television by the thousands.
  7. Doug Garnett from Atomic Direct
    commented on: May 29, 2012 at 8:11 p.m.
    I won't comment on Bob's post - he tends to be apocalyptic on this issue which, fortunately, in TV is far different from print. But the hype shown in this comment thread about change? There was a minuscule (read very, very tiny) shift this last year. It could be the harbinger of future chaos. Or, it could show that a small number of the people who ignore ads anyway (about a third of the population and holding steady for 40 years) think its so important to themselves that they'll fight the really difficult battle to get reasonable entertainment from the chaos and fragmentation of the web. So let's take a deep breath. The web sucks for. Advertisers - its highly ineffective at reaching people in any meaningful way. Most likey, traditional TV (the polar opposite of effectiveness) will survive in a highly usable form.
  8. Doug Garnett from Atomic Direct
    commented on: May 30, 2012 at 11:35 p.m.
    Apologies for the iPad typos. What I'd intended to say about traditional TV is it's the opposite (when used well) of INEFFECTIVENESS. Nothing drives business with the power that TV can - with the right types of ads in a TV situation.

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