Author Topic: The way people view television...  (Read 180 times)

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Re: The way people view television...
« on: March 29, 2015, 03:23:16 pm »
Killing cable (cont)

Another change in programming is segmentation, since many viewers of content online and with mobile devices are watching in short bursts here and there throughout their day, or switching between content on different devices. So a program might be broken up into segments that can be watched and then paused or stopped until later, then picked up again for the next segment continuing the story. In this case, a given episode isnít quite so important as the individual segments that comprise it, and a viewer binge-watching but skipping between segments through the day is less aware of a given single episode because they are consuming the program in small bites and view it only as small bites out of a single larger whole that is the entire series.

But regardless of viewership, the bottom line is always the actual bottom line ó money talks, and content survives only if it is profitable. For now, the most profitable content, Deloitte tells me, is still regular olí traditionally formatted television programming. And content trends that feed viewer trends but ignore the need to generate revenue will simply not survive. Case in point, Deloitte says, is how advertising revenue can be disrupted by things like the threats to cable, or how streaming or TiVo allow skipping of commercials in some situations.

On the one hand, providers have to get closer to consumers, and that proximity allows greater chances to use consumer data to better market to those viewers and reach them all day long on mobile devices and engaging them via social media. But on the other hand, as consumers have more control and as providers and distributors work to meet those consumersí demands, thereís an obvious trend toward viewers attempting to bypass advertising in the traditional sense. Sharing of consumer data, better targeting of particular demographics, and reaching them directly where they are at a given time are some of the challenges that advertisers will face, and as the generators of much of the revenue stream, that means the success of the advertisers should be very important to the content creators and distributors.

Deloitte identified for me four future scenarios based on these trends, which they note could co-exist among Millennials, Generation Xers, Baby Boomers, and the over-66 consumers, since each scenario has a variety of forces at work and industry leaders who would dominate any particular scenario:

In turn, and as noted above, they say any and all of these would in turn impact advertising, which would already be changing and adjusting to the trends that bring about any and all of these scenarios. And regardless of any particular outcome, film and series content will have to adapt itself to compete with other entertainment and media uses among consumers, such as social media (which is still evolving), gaming apps, and emerging new forms of entertainment and mobile interactions. Advances in consumer electronics, too, will create new trends as consumer behavior changes to match those new technological advances and as the devices deliver new content in new ways.

Itís not hard to imagine some huge event to happen at any given time that might create a major disruption with outcomes hard to even begin to predict. For an outrageous but significant example, what if Apple bought Netflix? What would it look like to have an Apple streaming service that merges iTunes and Netflix into a brand new streaming model for content production and distribution? That would go beyond the streaming disruption and raise the specter of a content creator and provider also creating and providing exclusive hardware on which to watch all of their content.

The only remaining question in that scenario becomes whether their best option is to deal with the cable Internet providers to stream the content, to find some other route to deliver Internet access themselves, or to convince the government to create public Internet access through wireless towers and expanded wi-fi access at businesses and apartment complexes and government buildings. Might it make sense for Apple to push for some long-term plan that creates free public Internet in the U.S.? Would the benefits be worth the effort?

Itís interesting to contemplate, even though itís obviously an unlikely scenario any time soon. But this is the sort of ďwhat ifĒ that companies should be considering, because as wild as it sounds, it wouldnít really be that hard in the long-term to create free public Internet that would end the need for having cables pipe it into our homes. And there are without a doubt some companies and industries who would stand to benefit enormously should that come to pass.

The entertainment climate is shifting rapidly, and that creates both risks and opportunities for content creators and distributors. Adapting and surviving will depend on identifying the trends not only when they are happening, but more importantly before they start. That sounds like a tall order, but itís not necessarily as difficult as it seems, if they pay attention to the data and make the right choices.

As much uncertainty as exists, and as significant are the changes taking place in content creation, distribution, and consumption trends, I believe a few things are obvious. The viewing habits of everyone are increasingly toward watching more content on more devices, and consuming that content in the easiest and fastest way possible. But the rate of use of more devices for viewing content has increased much more among younger consumers than older ones, and is most pronounced among the 14-24 year old crowd. Their trio usage went from 11% in 2011 to 51% in 2013, while the average change for all ages (again, excepting the 13-and-under age range) in that same period was from 10% to $37%. Looking to the future, thereís no reason to doubt that the trend for everyone will continue to be greater usage of multiple devices to view content. Which, in turn, means the era of traditional cable service is eventually going to end ó not by falling off a cliff, but through simple, slow obsolescence.

Alongside that, we can also see that the trend for Netflix for example is, quite simply, growth. The company is expected to have as many as 100 million subscribers worldwide by 2020. Their catalog of content is massive, and they produce their own content for televised viewing and theatrical releases. Their stock was at about $54 per share in August of 2012 is at $428 today. That $54 per share price was after a huge drop in value caused by angry subscribers who did their best to try to sink the company for splitting its DVD and streaming services and daring to charge about $7 for each separately per month. But despite their best efforts and all of the wild predictions that Netflix would fold, of course it didnít happen because itís a huge valuable company with far too many subscribers and a popular brand name around the world and too much content to ignore. So looking to the future, thereís no reason to doubt that the trend will continue to be Netflix expansion and strength, and a dominant position in the aftermath of the continued decline of traditional cable service.

What I feel those two sets of trends should clearly demonstrate is, the future is one of multiple devices used for viewing in a variety of streaming and online content. The more mobile the device, the more fractured and segmented the content being viewed, and the more home-bound the device, the more the content will be streamed film or binge-viewed series that competes for attention with the other mobile devices the consumers are using to interact online. The primary questions are, who will control the means of distribution for content, of delivering the Internet access? Cable companies are in the best position to retain that control for now, and how well they position themselves to strengthen their hold will determine how long they last as the trends render regular cable service obsolete.

Thanks to Deloitte for agreeing to speak with me about these topics, for supplying me with their survey data relevant to the topic, and for permission to include a chart from their survey!

All box office figures and tallies based on data via Box Office Mojo and TheNumbers.
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