The 2% Or The 50% Rule: What's More Important For TV Executives?
For TV executives, looking for an extra 2% in the short term might mean sacrificing 50% in the long term. Right now, says Needham & Co.’s Laura Martin, networks are "fighting over the 0-2% viewing growth pie rather than the 50% viewing growth pie." Instead of continuing to spend money on traditional TV half-hour, hour and two-hour programming, perhaps, she says, networks should devote 10% of their money to shorter digital video programming.
We all know digital video stuff can't get the big advertising dollars. But as the population ages, those younger viewers who have incorporated a lot of snackable video bites may be increasingly important to future TV-video marketers looking to find ways for new delivery of commercial messages. The question is whether traditional TV networks will be left behind if that happens.
Martin's warning may not be that far-fetched. Increasingly higher sports programming fees for cable operators, satellite TV services, and telco companies could be hitting the breaking point. Cablevision Systems just recently instituted a surcharge to consumers for certain sports programming networks. DirecTV, Verizon, and others made similar adjustments. Could other TV categories be next -- leading to perhaps a business formula for a la carte pricing?
You can actually go one step further when considering the wrong percentage goals. Two or three percent is also the difference between current C3 and C7 ratings. C3 ratings -- average commercial ratings plus three days of time shifted viewing -- are how national TV networks get paid from TV advertisers these days.
In the short term, C7 ratings are where TV networks want to go. But is that a direction they should be going? Are there other rules to consider?