Reed Hastings pronouncement that the age of free-to-air broadcast TV will last just 14 more years on the face of it sounds crazy. After all, according to Nielsen and BARB, US and UK viewers still spend over 4 hours a day watching live television, with large amount of the viewing going to the top 4 broadcasters in each market. However, there are already signs that cracks are appearing in the pillars supporting broadcast TV. Here are 4 pressure points stressing the broadcast TV model.
Pressure Point 1: A generation raised without broadcast television
Today, children are growing up without the restrictions of a broadcast schedule. Consider that 44% of 3-12 year olds in the UK own a tablet and 76% of US teens have mobile Internet access. On average, television viewing for the 0-8 year-olds in the US decreased 17% between 2011 and 2013, while mobile device usage increased 200%.
TV channel providers have noticed the change. Apps like Watch Disney allow kids to connect with and watch their shows whenever they want. Netflix has a kids zone which does the same thing. All those kids with tablets and smartphones likely never encounter traditional broadcast TV at all.
In 14 years, this younger generation will be adults. Anyone believing that they will suddenly transform into broadcast television viewers in the process is fooling themselves.
Pressure Point 2: Personalization
Broadcast channels, by their very nature, cater to the mass market. In a world of tablets and smartphones providing the ultimate in personalization the broadcast approach just seems like old world thinking. Media services increasingly rely on data about the viewer to provide a customized experience. You don’t have to look very far to find the power in that approach. Pandora, the online music service which allows users to create customized channels, has 250 million registered users, 76.5 million active users and accounts for over 9% of all radio listening in the US. SVOD providers are already beginning to follow this approach with video.
Pressure Point 3: Syndication model changing
If there is one area that Netflix and Amazon have influenced the most it is syndication. The companies have helped increase the value of shows in syndication, particular as they battle for exclusive licenses. They also make all episodes of a show available without advertising to subscribers.
Library shows are the lifeblood of many local broadcast stations. SVOD providers are making it more expensive to license shows, and some of the best aren’t available as SVOD providers snap them up in exclusive deals. And who wouldn’t chose to watch ad-free in an SVOD library rather than on broadcast television?
Pressure point 4: Affiliate model under pressure
Broadcasters are working hard to support the affiliate model in the online world. Apps like Watch ABC and CBS All Access transfer a viewer to their local affiliate to watch live television. However, at the same time they are licensing even first run content like Under the Dome and Extant for as much as $1M an episode to the big SVOD libraries to be available immediately after broadcast. As viewers increasingly look for the convenience of on-demand viewing, will any bother to watch a live broadcast stream online when they can watch the shows they want immediately in SVOD libraries?
Why it matters
Broadcast TV dead by 2030? This is the prediction by Netflix’ CEO Reed Hastings.
Four major pressure points show that the broadcast model is already under serious pressure.
Whether that results in broadcast television’s extinction by 2030, there is no doubt it will undergo great change over the next decade or so.