‘TV Everywhere’: The Third Era of TV Has Arrived
As part of a Throwback Thursday series of articles, DirectAvenue will be publishing articles from the archive of the agency’s CMO and SVP Client Services that still have relevance today. The following originally appeared as a “Dish” column in Electronic Retailer magazine in November 2017.
A recent article in Barron’s entitled “TV’s Sports Problem” contained this startling forecast: that by 2020, Google and YouTube parent Alphabet, Facebook, and Amazon could have $100 billion in free cash flow in their coffers on a combined basis, compared to $30 billion for broadcasters ABC, CBS, NBC, and Fox. That means the online marketers will have more than three times the amount of money to bid for sports rights due for renewal in the coming years, and to create original programming to compete with conventional television channels. It brought to mind the days when cable television was in its infancy and your author was selling a lowly .01 national rating on a financial markets network. Back in those days – circa 1988 – the big three networks dominated ratings and Fox was in its infancy. The first era of TV, the broadcast era, was slowly ceding territory to the second wave of TV viewing, the cable era. Nonetheless, the Big Three networks’ overwhelming command of the airwaves and eyeballs stoked a prevailing wisdom that cable was a stepchild and was never going to be a real threat. Then things began to change. Audiences began to diffuse as more and more niche channels launched, and in 1994 Fox attained genuine legitimacy by airing NFL Sunday, competing with and eventually beating the Big Three at their own game. Then, in 2002 cable viewership reached a tipping point when, on a combined basis, ratings for cable surpassed the big four networks. So much for not amounting to much.
Flash forward to today and it feels very much like the dawn of cable; the beginning of the TV everywhere age. There are many trends which support this notion, including cord cutting, changes in viewing habits by device, the explosion of Netflix and its 100 million plus subscribers (which has now surpassed cable subscribers), and on and on. Recently, Disney announced that it would not be renewing contracts with Netflix in favor of launching two new streaming services of their own: an ESPN-themed sports service and one geared toward family entertainment and the Disney canon which includes content as cultural phenomenon purveyors Lucas Film (Star Wars), Marvel, and Pixar. Meanwhile, Amazon has paid $50 million for the rights to stream 10 Thursday Night Football NFL games this upcoming season, surely a preview of what is to come.
So, what does all this mean? That consumers are likely to look at what they are spending for cable and realize that they will increasingly be able to select the product that is meaningful to them on an a la carte basis and save money in the bargain. That average monthly cable figure was slightly north of $103 at the end of last year. It also means that the aforementioned online giants are going to be enormous players in this new era, and that audiences are going to become even more dispersed. It means that once live sports programming gets decoupled from its traditional broadcast network home, it may very well be game over for conventional broadcast networks unless they change their business models. That the competition to create the next water cooler sensation – think Game of Thrones or The Walking Dead – will be fierce. That audiences are going to watch what they want, when they want, and on the device of their choosing, and that there is no turning back to the golden days where the TV acted like a hearth the family gathered around. No, it is no longer a hearth, but a beating heart-like organ, held in the hand of the individual as if it were an extension of one’s very body.
One only need look at the inability of conventional newspapers and their plodding inability to change their business models quickly enough for a parallel cautionary tale. The way with which consumers assimilate news in real time on their mobile phones and other devices has all but made printed dallies obsolete. In my hometown, it has been like watching death by a thousand cuts. When the local dominant movie chain pulled its daily advertising from the paper of record, The Oregonian, in the wake of similar information available at your fingertips on the likes of Fandango, I knew we had reached a tipping point. Then the paper cut home delivery to four days a week – an obvious attempt to ween me off of my morning habit of sitting down to read the sports section with a steaming cup of coffee. If their desire was to push me online, they succeeded – I cancelled my subscription. Now, by the time their print version hits the stands, I’ve already read everything through other online sources and my Facebook feed. As for web-based news sources, I pick and choose my sources on an a la carte basis, and The Oregonian hasn’t just taken a back seat – it is largely roadkill in my rearview mirror. Call it un-planned obsolence.
Thankfully for advertisers reliant on TV advertising, Alphabet and Facebook, and in a different manner, Amazon – all rely on advertising-based models for revenues – so “TV” advertising isn’t going away per se. But, like the programming it piggy-backs off of, such adverts will also have to be everywhere. This reality is a wake-up call to all media planning and buying agencies – but especially to those that traffic solely in television advertising as we knew it – that they had better get busy diversifying their capabilities lest they go the way of the rabbit ears of yore. The notion of a ‘second screen’ presupposes that the television set remains the primary screen of choice, but one only need examine generational media usage habits, and their own kids viewing preferences as Exhibit A, and it is clear they make no such distinctions between screens. Say goodbye to “Must See TV” and hello to “Must Stream TV.” It isn’t something that is looming on the horizon. It has arrived. It is here. Right now. Your audience is changing channels. Are you?
Author: Rick Petry is the CMO/EVP Client Services of DirectAvenue and a seasoned direct marketing professional and thought leader with experience spanning three decades. He has had a hand in campaigns generating over $1 billion in sales and is conversant in all facets of performance-based marketing including off-line and on-line media planning and buying, research, analytics, creative, production, and back-end management, Rick is the author of over 200 articles on direct marketing best practices, and is a past Chairman of the Board of the Electronic Retailing Association (ERA) and a recipient of ERA’s Volunteer of the Year award, as well as the Direct Response Marketing Alliance’ Member of the Year award as voted by his peers.