Both Advertisers And Viewers Look For Media Efficiency


Media waste is something TV advertisers talk about it when it comes to their media buys, especially these days. But what about consumers who are increasing looking improve their media efficiency -- in other words, paying for programming and channels they actually watch?

This doesn't get much play. But it is part of a bigger financial issue that cable and broadcast networks are slowly starting to grumble about -- namely, demanding higher subscription fees from their video distribution partners, be they cable operators, satellite companies or telcos.

AMC says it wants to double the fees it currently gets -- to around 75 cents a subscriber -- because of all the quality shows it delivers to consumers, such as "Mad Men," "Breaking Bad," "The Killing" and "The Walking Dead."



At the same time, IAC/InterActiveCorp. chairman and longtime TV executive Barry Diller says to expect broadcast networks to look for double the money they currently get from retransmission. Many who are getting 50 cents to $1 a subscriber could ask for a dollar, two dollars, or more in future years -- especially considering the number of viewers broadcasters pull in versus the cable networks.

To complicate the picture even more, another report suggests that up to 20% or more of the cable/satellite/telco industry's existing subscriber base could depart in future years -- to such companies as Netflix, Amazon Prime, Hulu Plus, Apple TV, or Google TV -- because of price.

Now you know why cable networks have been moving so quickly to digital platforms and mobile apps. And think about this: Some people believe a future wave of mobile tablets may only cost $30 to $50. What would mean for the traditional cable business?

All networks will demand more -- but not all will get it. Cable operators will have to make a tough decision to let go of some networks in future years. This will go one while many consumers abandon older subscriber TV models.

A la carte efforts? When that was the topic du jour a couple of years ago, cable networks said a la carte would crush their business model - that consumer prices would actually rise. And the topic then seemed to go away.

But as the confluence of business factors squeeze the industry, cable operators might have no choice - bringing in a la carte networks whether the operators like it or not. That means smaller, mid-size networks can only hope the new digital and mobile platforms - or, again, the likes of Netflix, Amazon and Apple TV -- can replace the cable/satellite/telco distribution system that has previously worked fairly well.

Even with all the talk about better-quality cable TV content -- dramas, unscripted shows, news andsports -- there is the long-time sentiment that a lot of waste is going on in TV. Some continue to have the complaint: While there are 500 or 1,000 channels, there seems to be nothing to watch.

Cable advertising sellers and media buyers understand media buying waste. But how much do they understand consumer media waste - the programming they pay for but don't watch? Successful new digital video services will answer this very green question.

1 comment about "Both Advertisers And Viewers Look For Media Efficiency ".
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  1. Douglas Ferguson from College of Charleston, September 19, 2011 at 7:18 p.m.

    Everyone THINKS they want a la carte, until they see what happens to prices. Every cable home, every little old lady on a fixed income, pays $4.50 per month for ESPN, actually a little higher than that according to Kagan. You know many of those homes NEVER watch ESPN, but they pay for it. With a la carte, every red-blooded male sports fan will stop being subsidized by Granny. Yes, it'd be more "fair" but at what cost to the average Joe?

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