EMMYS: Looking Far Into The Future of TV

There’s one thing we can say with absolute confidence about the Emmy awards a decade or so from now: Apple, Google, Netflix or possibly some other broadband and digital technology companies will be part of the ceremony after having wreaked havoc with the TV business. What’s less clear is how big a role current media powers will play as the TV community moves to an on-demand world where few companies may find it worth their while to spend $3 million to produce an hour-long show. Many executives are terrified as they look at what’s ahead for television. The industry consists of an ecosystem of companies that Needham & Co analyst Laura Martin estimated last year had a market value of $345 billion. All of that is in jeopardy as advertisers and consumers reassess what they want from television, and how much they’re willing to pay for it. Here are some of the potential changes they face.

Broadcast networks. As a former CBS executive, Discovery Communications’ ad sales president Joe Abruzzese spoke with the authority of a convert when he explained to buyers at his company’s recent upfront presentation why they should spend more on cable channels like his – and less at ABC, CBS, Fox, and NBC. “They’re still raising prices,” he said as he noted that broadcast ratings declined in the season that just ended and the vast majority of their new shows flopped. That hit a nerve with advertisers even though the industry’s herd mentality and infatuation with the Big Four networks’ mystique should enable the broadcasters to score the higher prices they want this year as the economy slowly recovers. It won’t be long, though, before advertisers grow tired of paying top dollar for time on broadcasters’ primetime shows when there are so many new, growing, and less expensive alternatives in cable and new media platforms. Many buyers also are anxious about the growing number of people – especially among the wealthy — who watch TV shows on DVRs, where users typically zap about half of the commercials. About 40% of all viewers now have a DVR, and that will grow to 48% in 2014, research firm SNL Kagan forecasts. With all of that uncertainty, it’s easy to see why advertisers find it so appealing when cable and Internet services offer precise data from set top boxes and user clicks to show how audiences respond to ads while the broadcasters still largely depend on Nielsen’s surveys.

As you’d expect, broadcasters say the threats to their dominant role in the ad market are overblown. For example, the impact of DVRs and ad-skipping “is slowing down,” says David Poltrack, CBS’ chief researcher. Surveys of people who don’t already have one show that “they don’t feel that they need a DVR.” Ad viewing might even increase, he says, if networks can entice people who want to watch shows at their leisure to switch from DVRs to VOD — especially if networks can also persuade all cable VOD providers to disable ad zapping. On Web sites including CBS.com, people who stream shows “don’t have the ability to fast-forward through the ads,” he says.  He’s also optimistic that digital media will help TV ad sales. Cable operators are rolling out technologies that make it possible to target ads to different consumers. Viewers also increasingly will be able to use their remote controls to ask for additional information or coupons – or possibly buy items on impulse. He’s more intrigued by the possibility that TV networks will be able to sync their shows with ads that viewers can access on their smartphones or iPads. “That’s what people tell us they want,” Poltrack says. “They’re not interested in turning the television into a big computer monitor that also shows video.” In the end, he says, broadcasters will be able to satisfy advertisers by blending precise measurements showing who’s watching and responding to their spots with survey data showing what consumers liked or hated about the sales pitch.

Still, his company and other broadcast networks plead poverty in Washington as they ask lawmakers not to limit their ability to negotiate cash payments from cable and satellite companies that want to retransmit their shows. “In a digital world of increasing fragmentation where advertisers have ever-expanding choices, it is simply unrealistic to believe broadcasters can compete with cable channels without a dual revenue stream,” News Corp. COO Chase Carey told the U.S. Senate Subcommittee on Communications last year.  Broadcast networks likely will collect $3.6 billion billion in retransmission payments from cable and satellite companies in 2017, up from $1.1 billion last year,  SNL Kagan forecasts.

Cable channels. Will cable and satellite television soon become as anachronistic as wireline telephones appear to be to millions of people? It’s possible, and that’s a terrifying prospect for many cable network executives. More than half of the revenue for basic cable channels such as ESPN, CNN, and Comedy Central comes from the monthly payments consumers make to their cable and satellite providers. That cash could start to dry up if lots of subscribers discover that they can save money and still be satisfied by cutting the cord and watching programs they find on free, over-the-air broadcasts and inexpensive Internet streaming services such as Netflix. (more…)

This article was printed from https://deadline.com/2011/06/emmys-looking-at-the-future-of-television-136523/