Ah. The death rattle. Right on schedule.
This was published over the weekend, documenting a drop in U.S. broadcast and cable TV revenue in the first quarter of 2015:
Overall TV -- all national TV, syndication, local TV, and cable -- slipped 1% for March and was down 6% for the first quarter of 2015. For the quarter, local TV spot revenues were down 12%, syndication was off 14%, and local cable ad revenues were up 5%.
The 2014 upfront market was down. The 2014 scatter market was down. The 2014 gross ad revenue total was down -- from a 2013 number that was also down. Magna Global predicts a 7% decline in the 2015 upfront. The recession has been over for 4 years. But network viewing erodes year after year, and TV watching overall by the most coveted demographics is plummeting. Viewership is remaining stable only in the leading edge of the Baby Boom generation.
The average viewer of network prime time has been dead since 2007.
I say this news arrives just in time because this week marked the tenth anniversary of the publication in Advertising Age of The Chaos Scenario, which predicted the utter disintegration of the global media-marketing economy. Unsurprisingly, some of its apocalyptic prophesies were received a bit skeptically -- especially by those with a vested interest in the status quo. Such as Timothy Balding, CEO of the World Association of Newspapers.
“The fashion of predicting the death of newspapers should be exposed for what it is -- nothing more than a fashion, based on common assumptions belied by the facts.”
Former CEO of the WAN, that is.
Denial was, as they say, platform-agnostic. Jack Kliger, then CEO of Hachette Filipacchi Media U.S. and the Magazine Publishers Association, asserted, memorably: “We are no longer threatened by digital media.”
Uh-huh. Since then, magazine revenue has dropped every single year and hundreds of titles have vanished from newsstands.
The most tectonic eye rolls, though, were reserved for defenders of the immutability of TV, which was deemed too entrenched, too powerful, indeed, too big to fail. The most accidentally profound of these critics was the venerable CBS research guru David Poltrack, who -- while dismissing the premise as unthinkable -- accurately identified the nub of the problem. If advertisers follow audiences out of broadcast TV, he said, "…then the entire marketing system that perpetuates this economy will be weakened. And this is not a problem for just the broadcast television networks. This is a major problem for everyone who markets a product to the consumers in this country. “
Yeah, that about sums it up.
Now, even back in 2005, it was clear that advertiser defection would lag the audience exodus -- because apart from denial, inertia and self-interest, the shrinking of mass audiences actually made those less massive audiences more valuable, in exactly the way the last gas station before Death Valley exacts a major premium. Hell, CBS’s Les Moonves bragged to investors about raising ad prices even as his ratings were dropping.
Which Chaos stipulated. But it also understood economic reason:
So for the moment, let's assume that there is indeed major trouble ahead, that the law of diminishing returns will eventually kick in, that advertisers who've paid more and more for less and less will not pay indefinitely for nothing. Marketers will begin to abandon network TV. Ad prices will fall. Profitability will disappear. Program development will suffer, leading to more advertiser defection, and so on in a consuming vortex of ruin.
Now if history shows anything about the End Times Prophecy racket, it’s the tendency toward proximity error. Institutions, economies and political systems don’t tend to collapse as quickly as the doomsayers predict. Until they do. I’m thinking of the gold standard. The Soviet Union. Apartheid. 'N Sync. Etc.
For what it’s worth, a decade ago this week, I gave broadcast and cable 15 years. Probably a bit pessimistic. But as Gorbachev and Lance Bass can corroborate, when the end finally comes, it can happen very fast.
THe Cabletelevision Advertising Bureau publishes a media planning book called Video Facts. The 2015 edition is now available. This years's book has a glaring omission from the previous years' books: longterm U.S. HH Primetime ratings.THey do publish longterm total TV HH share trends, but I find shares less interesting than ratings. Of course, The CAB doesn't want to show a negative picture of cable, and I suspect that they can no longer show cable ratings in a favorable light, owing to cord cutting, and other ratings ceiling issues. I state this in order to support your doomsday picture. TV ratings, whether from the over-the-air kind, or from cable, will continue to drop. All media, not just print, have been affected by the Internet.
As it now appears "TV is Everywhere" and that the traditional definition of TV (certainly for young vViewwers) keeps changing, it will be interesting to see which of the Networks and their parents (if/where legally allowed) buy and/or partner with the "non-tradfitionals" to protect share, revenue and profits,.. in the future.
We've already seen several recent content joint ventures in the current "dating" phase...
Anyone wnat to weigh in on who'll "Get Married' ?
First of all, the 1Q 2015 revenue comparisons need to take into account that year ago comparables included the Sochi Olympics. The cited research stated: "Taking out NBC’s Sochi Winter Olympic Games a year ago, TV revenues were 7% higher in broadcast and 4% in cable." That certainly puts the cited revenue decline in perspective as far less precarious than noted. As far as ratings go, it is absolutely clear that average ratings will continue to decline as audience fragmentation increases. However, since cumulative time spent viewing TV content in traditional linear, time-shifted and OTT mode continues to grow, there will also be opportunities to recapture declines in traditional linear TV ad revenue. The transition may not be that smooth given the differences in ad loads, ad viewing, targeting and measurement capabilities, but I suspect that we will get to a new level of profitable overall TV ecosystem balance, while avoiding the chaos scenario.
Surely the next hit reality TV show will bring viewers back to TV en masse and save the industry.
The first of what will likely prove a series of victory laps for Bob Garfield. I agree a quick collapse is more likely than a slow fade; it's going to be sudden and (maybe) shocking for the "traditional" networks and cable/dish providers, and expect the "mainstream" networks' programming to get worse and worse as they chase the dwindling number of "feebs and dipshits" who don't have the energy or mental acuity to escape the wasteland. <p><p>
My 16 year old daughter and 13 year old son NEVER watch "television." Flat out never. When we watched one World Series game together last year, they were astonished and bored by the number of commercials. They and their peers just aren't going to take it, and they know how to get around it better than I do. <p><p>
Nevertheless, I finally cut the cord about a month ago because I just began to deeply resent how much I was paying for so much cognitively corrosive crap and felt I was propping up a dying, dumbed-down system. It's a bit more work to keep up with everything, but it's also freeing, and, let's face it, if you've got any kind of life at all, it's impossible to keep up with everything anyway; you might as well just pick the stuff you can access for le$$. There SO MUCH to choose from via significantly cheaper options -- Netflix, Hulu, Amazon Prime, Yahoo! and now at last HBO Go/Now -- that to miss out on the few diamonds in a mountain of sh!t now elicits a shrug instead of FOMO angst. <p><p>
So I think Bob should stick to his 15 year timeline. 'Cause if I had to bet over/under on that prognostication, I'd pick under.
Bob likely appreciates all the naysayer comments today because he can save and reprint them in his next told-you-so essay at some point in the not-too-distant future, with attribution I hope.
Bob could be right. Maybe TV viewership, as we know it, will disappear. However, I think some of the decline figures may be somewhat overstated. For years, when asked most people claim to only watch PBS. I also wonder, it TV disapears, (to steal and idea from the Ad Contrarian) what will build brands? I think, companies will need some mass mediium to build brand recognition. I suspect it will be some variation of TV. Content drives interest. If there is no interesting content people will not look at it. The interest in Breaking Bad, Madmen, CSI, Dancing with the Stars, etc was enhanced by social and digital media , but it was the content that drove the interest and customer's attention. It maybe a stream like Netflix, Amazon Prime, Hulu or others. Here is my prediction, at some point those pay-for replacements will start to have more ads and we will have the content peopole seek but we will just have to more for it. I guess we will see.
Bob, I've been a fan since your years at USA Today and Advertising Age. Given the confusing, destructive forces at play, your analyses and conclusions are difficult to refute, and yet, there are a few inconvenient truths I've come to believe over a long career in marketing and media.
1) Competitive brands will always need to present the products they sell to large numbers of consumers with measurable efficiency, control and consistency.
2) Average time spent watching TV is increasing, so people must be finding something to watch.
3) Viewers don't want to interact with TV, in fact, they watch to escape interacting. And most of the time, they do not want to be their own programmers.
4) Quality content costs a lot of money to produce, and someone has to pay with some assurance that they will earn it back, with a reasonable profit, from viewers or advertisers or some combination of the two.
5) TV a la carte from multiple vendors will ultimately cost more for consumers than packages of content from a vendor or two.
6) In a fragmented, competitive, horizontal distribution environment, attracting viewers to new programming will become prohibitively expensive, adding to the difficulty of funding for quality content.
I have no idea what the television distribution landscape will look like once this period of disruption begins to dissipate, and I don't think anyone else does, either.
Oh, TV's now dead, too? That's been such a fun thing to hear about my sandboxes (online ads, email) for the past 10 years.
There's money in death, clearly.
This is a technical footnote, but the Great Recession is widely considered to have begun 1 December, 2007, and run through June 30, 2009... a period of only 18 months. The national economic recovery, on the other hand, has been underway for more than 5 1/2 years (69+ months), considerably longer than "over 4 years." People think it lasted longer because the recovery was so slow and tepid. There are many sources for this info, but this was available quickly: http://en.wikipedia.org/wiki/Great_Recession.
Coming from a millennial standpoint (one that is not highly respected yet, but hey our time will come soon) complete agreement with this article would still not do justice to how I feel. As different streaming services such as Netflix and Hulu grow and grow, network television will shrink. That is an obvious fact everyone seems to accept. How quick will the giants fall? Network TV has been in power for so long, they will not go out without a massive push to either integrate with the new services, or offer things that the other guys cannot offer. Unfortunatly for them, they are not completly in control of the situation. The control rests more in the hands of the marketers. If they continue to fund television then television will be able to strive on, and maybe make it to the next innovation. Yet if marketers decide that their funds will be better put to use by advertising through other means, the fall will be much quicker. It is a great time to be a marketer if one can adapt. On the other hand, those stuck in the same ways will be in for a very unfortunate spiral downwords.
I agree with Tom Siebert. I have two sons - 7 and 11. Of course it's a small representative sample of consumer behavior, but they NEVER watch TV. And that's changed just in their short lives. They now exclusively watch consumer-generated conent on YouTube, and they'll go from one 5 minute video to another for an hour or two.
If TV execs aren't paying attention to consumer viewablity trends of not just streaming video, but consumer-generated content, they're simply crazy and in serious denial.
My kids are watching very crude videos of other people playing video games with running commentary. Personally, I think the videos are boring as watching grass grow, but it's a new generation of media consumers. As Tom said, they are simply not going to tolerate, for a second, sitting around watching a commecial in a live broadcast.
I know, I know, all the arguments and business reasons for advertisements, but there's a yawning chasm between business reasons and consumer video watching behavior.
Dean Fox pats it down. We also hope our great minds will grow because their attention span increased or kaboom.