Friday, April 22, 2005

Network TV: On the blink, on the brink

Television broadcasters need to diversify -- or prepare to die. So says Igal Brightman, the worldwide chief of the media and technology practice of Deloitte Touche Tomatsu, the audit and consulting firm.

"The global broadcast television industry is undergoing fundamental, unstoppable change that is steadily rendering the traditional network business model obsolete," says Igal in a new white paper. "The age of a few dominant channels, funded by advertising, has long been disappearing and may soon be turned off for good."

One measure of the decline is illustrated in the chart below, which shows the combined audience for network evening news has fallen 44.7% since 1980 in the United States. The story is the same around the world for both news and entertainment programming.

The reason, of course, is that people, thanks to cable, satellite, digital video recorders, DVD players, the Internet and mobile phones, have tons of choice in what they watch and when they view it. Fully 90% of the 109 million U.S. households with televisions subscribe to either cable or satellite TV. More than 48% of the TV households have either a DVD player or TiVo-like digital recorder. DVRs have the additional appeal of letting the user fast-forward through commercials.

Broadcast TV competes not just against other video-delivery media, but also against such other attractions as the radio, the Internet, audio, games and -- dare I mention it? -- print. As previously reported here, high-income adults spend a bit less than a third of their media time with TV. As noted here, kids under the age of 18 spend about 30% of their media time with TV (often while doing something else like working at their computer or doing their homework).

Consumers "are drowning in choice," says Igal, and "consumer spending will be spread across -- and fractured by -- a wide range of options, as fragmentation tightens its grip." Because viewership will continue to erode "for the foreseeable future," he continues, broadcasters need to "offset the fragmentation of their audiences, and generate income from entirely new activities."

Like our other favorite legacy medium, the newspaper, TV broadcasters may be able to save themselves by leveraging such powerful assets as their unique content, semi-monopolistic franchises and strong customer relationships. But they have to get busy.

A key success factor will be the ability of networks to extend the life cycle of their branded content beyond the 30 or 60 minutes of fame typically accorded a program now, says Igal. He recommends stepped-up efforts to syndicate content and to sell it via both hard media and through on-demand services on cable TV, satellite, the Internet and -- soon -- call phone. Igal also urges the aggressive development of interactive segments involving audience participation, voting, purchasing, games, webcasts and mobile phone downloads.

Above all, he argues for innovation. Agile broadcasters and content providers who can redefine the scope, shape and scale of their network will thrive. "Those that remain chained to the past," he concludes, "will not."


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