Commentary

Boomers Driving New Wave Of Cord-Cutting

1. Michael Mongelluzzo from Captivate, June 7, 2018 at 1:26 p.m.

   Sorry Ed

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Ed Papazian from Media Dynamics Inc, June 7, 2018 at 2:40 p.m.
Nothing to be sorry about, Michael.

First off, OTT and especially Netflix was never only about millennials. Anyone who looked at the data will tell you that the 35-49 segment ---which had the money and could afford it---was the prime supporter of Netflix with millennials coming in a close second and older folks third. As regards the supposed "crisis" that TV is in, Netflix accounts for only 7% of all viewing time and its primary competitive impact has been against the broadcast TV network's primetime entertainment shows which garner only about a tenth of all viewing time. Netflix has also done some damage to broadly programmed cable channels---mainly those that rely excessively on "off-network" fare---- but otherwise Netflix subs are pretty big cable viewers as they want not only to watch what they want when they want it but also, they want more interesting programming not just standard broadcast TV pap.

The basic limitation on OTT is that its original  program content is much too heavily oriented towrds prime time sitcoms and dramas which are not by any means all that an average viewer needs. Until OTT offers a wide variety of news, sports, documentaries, game shows, talk shows, cooking shows, reality shows, big time special events, etc. etc. it will compete mainly with TV dramas and sitcoms---about 25% of all TV viewing. To totally "disrupt" TV it must provide much more and varied content. Also, OTT is mostly a non-advertising option which means that until this changes---and, so far, movement is slow in this direction---OTT can only compete for a limited amount of TV ad revenue---no matter what  targeting mechanisms it offers.

So, as I said, there is nothing to be sorry for. OTT gives good value and is on the upswing in terms of penetration and usage. In addition, ROKU and some others present advertisers with interesting ways to enhance and extend their "linear TV" buys by focusing more audience weight on selective target groups. But labelling the situation as a "crises", with OTT "disrupting poor old TV which dwarfs it in reach and viewing tonnage, is what I object to. It's just hype.
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Michael Mongelluzzo from Captivate, June 7, 2018 at 3:30 p.m.
Netflix has a ton of content apart from the typical prime time fare (HGTV, HIstory, Food, Documentaries etc), as does Amazon Prime so there is plenty to watch.

My contention is that people don't want ads anymore when watching tv in any form.  If our most vaulable asset (aside from health) is time, imagine if you could have all the time back that you spent watching commercials over the years?  In a sense, now you can!  I pay a ton to my cable service AND I still get ads....and I don't want them anymore because I want my time back, they can't have it both ways.  True, most people watch Netflix during the primetime daypart which is also a network/stations most valuable inventory so that hurts tv no?.  ANd when a company like Disney announces their OTT version to compete withh Netflix, won't a gapping hole will be left in their Broadcast inventory as they will likely need content from ABC to fill their OTT coffers?  The programming will likely be better in the OTT form as they won't have to stick to the campy formulaic broadcast format.  So what happens to a broadcast network like ABC then?  My natural inclination (and many others it seems), is to watch "tv" on my own terms without the forced interruption.  Having the "largest reach" doesn't mean anything if people aren't as receptive to commercials anymore as there is a bit of desperation in forcing this upon people who truly have had enough of their time stolen from them.  And just because you can do something (like force feed mostly irrelevant ads to people while they may be watching) doesn't mean you should.  Or is it just a numbers game Ed? 
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Ed Papazian from Media Dynamics Inc, June 7, 2018 at 4:21 p.m.
No Mario, it's not just a "numbers game". But it can be illuminating to look at numbers once in a while and moderate or refine one's views based on the findings. For example, you claim that people don't want to watch commercials and that's why they are migrating to Netflix and other non-linear platforms. Ok. And there's no doubt that given a choice of watching anything one wants---The World Series, The Olympics, the nightly news, a game show, a primetime sitcom, etc, that most if not all viewers would like to do so without any interruption. At the same time most viewers also recognize that without ads such content would not be available, hence their main complaint is not so much about commercials on TV but the overly cluttered breaks.

Even so, commercial recall studies and, more important, observational studies using "camera" technology do not support your assumption. Typically, an average 30-second TV commercial gets a 35% or so aided recall score and about two thirds of these viewers can play back the basic story line and ID the brand, while top scorers often double these norms. As for the "camera" studies, they show that on average---about 40% of the audience has its eyes on the screen while an average commercial is aired compared to 50-60% when program content is on. Again, high scorers---ads and shows--- easily exceed these norms.

So, yep, there is inherently less interest in commercials than program content---this has always been the case----but if you are correct why aren't all TV commercials playing to empty rooms? And why aren't 100% of them electronically "zapped? And how is it possible for the "camera" studies to find anyone with their eyes on the screen during commercials?Last but not least how stupid do you think advertisers are to continue using TV when nobody watches their commercials?How are they able to sell their products if their main communications platform has zero advertising impact?

What we are seeing is a gradual evolution of "TV" into many forms and varying business models---not a violent revolution and total "disruption" of television as we have known it. Many viewers are perfectly OK with TV as it has been; others are more into newer types of content, freedom of choice, alternative ways to access content, etc. As these currents ebb and flow, the various parties---including the TV networks---are adjusting and adapting, sometimes by trial and error , but always with fairly sensible business goals in mind. OTT is not killing TV, its a growing part of TV. Netflix is not TV's enemy, its part of TV and will now have to contend with new challengers as well as an aroused TV/Movie Establishment which is going to try its hand at the subscription game. Meanwhile, advertisers will continue to use TV in its emerging forms---often in new combinations and formats---but trying to scare them into panicky decisions based on hype isn't going to cut it. Most of them are too smart for that.
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Michael Mongelluzzo from Captivate replied, June 7, 2018 at 4:32 p.m.
The commercial clutter IS ridiculous, you are correct so more and more are being zapped or disregarded.  The electronic device attached to vierwers hands is also something that draws a significant amount of attention away from the ad break whihc increases waste. Ok, so advertisers should then pay 60% less for their cpm's because viewers are watching commercials 40% of the time?  
Ed Papazian from Media Dynamics Inc, June 7, 2018 at 5:18 p.m.
Mario, it's not the function of the TV networks or, for that matter, any seller of media time or space to guarantee that 100% of the "audience" must pay attention to every ad. They garner audiences and offer advertisers an opportunity to expose them to ads---that's all. Many ads, by definition are about subjects that the viewer doesn't care about. Others are ads that the audience may have seen many times before and serve more as reminders, not brand new experiences. Still others are for new products that the audience doesn't even know about and might find interesting. Also, some ads are poorly crafted while others use humor and other devices to catch attention. None of this is under the control of the TV network so why should the TV network ---or any media seller---take the responsibility for making audiences interested---or not interested---in what every single advertiser has to say. That's not a reasonable proposition and no advertisers really expects that. One final point. With TV an advertiser has an opportunity---with 100% ad visibility_---to reach consumers for a few pennies per viewer. In my opinion, that's a great bargain and TV is way underpriced relative to what can be delivered by many other media options. That does not mean that TV in its various evolving forms is the only medium that should be used, but the notion that you and some others keep harping on, namely that TV has "lost it" as an advertising medium is simply not supported by the facts. Sorry.
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Mario Carrasco from ThinkNow, June 7, 2018 at 5:56 p.m.
The comments are longer than my article. Bravo. 
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Michael Mongelluzzo from Captivate replied, June 12, 2018 at 5:12 p.m.
Sorry Ed...TV is simply evolving, from a linear, ad-supported business to a subscription model built around making consumers happy — not advertisers.
Ed Papazian from Media Dynamics Inc, June 12, 2018 at 6:14 p.m.
Sorry Mario, but your dream scenario is only that---a dream. Of course TV is evolving but this is a many faceted medium not a single entity which relies exclusively on ad revenues to make profits. The Tv networks and other content suppliers are getting into the subscription business---which will soon become a very crowded and heavily duplicated playing field. It's not the only way forward---there are many paths and all of these will eventually be tested to see what combinations yield the best results. No single way is the answer.
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