Will Half of TV Melt Away?

Television shows have always worked as a binding agent in American culture since they exploded onto the scene in the 1950’s.  Gathering around the tube to witness a live event or a popular show on the night when a new episode appeared helped to unify our society then and still captures our imagination today.

In the past few years the Internet has created a new set of consumer behaviors that is quite different than the mass media behaviors we take for granted.  Moreover, these behaviors seem poised to radically disrupt television. 

Analysts tend to believe that one such behavior referred to as “cord cutting”, helps us understand where TV is headed.  They follow the numbers closely to see how many people are giving up their cable or satellite subscriptions and use them as a proxy for understanding the next phase in TV.  This approach presupposes that as more people cut the cord, the more TV is doomed and conversely, the more people that keep their subscriptions, the more TV will keep its dominance.  Though mildly interesting as a parlor game, does it really tell us what we need to know?

Tim Wu, in a recent article titled Netflix’ s War on Mass Culture gives us a much better handle on the shifts in our vast media ecosystem.

He writes, (with bold emphasis from me);

“Netflix’s gambit…is to replace the traditional TV model with one dictated by the behaviors and values of the Internet generation. Instead of feeding a collective identity with broadly appealing content, the streamers imagine a culture united by shared tastes rather than arbitrary time slots….

Online, people are far more loyal to their interests and obsessions than an externally imposed schedule. While they may end up seeing the same stuff as other viewers, it happens incrementally, through recommendation algorithms and personal endorsements relayed over Twitter feeds, Facebook posts, and e-mails. New content is like snowfall, some of it melting away, some of it sticking and gradually accumulating.”

This is why Netflix is not concerned about releasing all the episodes of a TV series simultaneously.  If a customer is interested in the new Ricky Gervais series on Netflix she will see it on her own schedule, determining the time she watches as well as the number of episodes.  They are either interested in Rick Gervais or they are not and they become interested in his show because they have seen his work or because someone within their social graph has said they must see this show. So the show either melts away or sticks and accumulates.

How does Netflix predict whether or not a new show will “stick and accumulate”?   

As Wu points out, they are a tech company that collects massive amounts of data from their customers.  Based on prior viewing history, they can see how many might like a Rick Gervais show. Netflix, in its short history, has a much clearer sense of its customers and their “interests and obsessions” than all the broadcast and cable networks have gained during their entire existence. Mass media networks simply do not “know” their customers as well as Netflix, as they exist on pre-Internet platforms and know their viewers only as a mass–not as a collection of individuals with particular tastes.

Netflix can discover the many different fan configurations that exist within their large subscriber base. It does not matter if most Netflix subscribers hate or are indifferent to Rick Gervais, as long as there is a large enough number who love him to justify a financial bet on his series.  In other words, the series does not have to please the masses to be financially successful.

So Netflix can ignore the masses and concentrate solely on the fans. Does this mean that each show they put on will be successful?  Probably not, but it certainly increases the odds, especially when you factor in that Netflix makes it easy for consumers to get the show whenever they want, on any screen they want—at a very low cost—and need I add, without those pesky things called commercials.

Television networks do not have that luxury. For their programming they are forced to appeal to the masses and continue a pre—Internet model of entertainment at a time when the “behaviors and values of the Internet generation” are dictating a new model.  And I would argue that the “Internet generation” is now becoming almost everyone from under 5 years to over 70 years in age.

Wu’s argument suggests that TV will eventually be split in half.  One half will be live events, (sports, award shows, breaking news, talent shows) and the other will be scripted or reality series that are shot and edited long before they air.

The live shows will continue to attract large audiences by appealing to the masses and will continue to attract very high ad rates from big brands that want to reach many people at once.  In other words, television as we classically know it.

A different future potentially awaits scripted series. No doubt, scripted series will continue to exist on TV for some period of time.  However, as each year passes, fewer people will watch a series when it airs (if at all) and will instead record it on their DVR’s to watch on their own time—thus skipping the commercials. As a result, the ad rates for these shows will plummet.  As they fall, the economic model that supports their creation will collapse. Appointment television for scripted series will wither and die.

In this future scenario the networks will grapple with both an existential and financial crisis that will cut to the core of their identity.

They might ask a few questions. Do we keep only live event programming on our linear channels and dump our scripted programming all together?  Do we split off scripted programming from our linear channels and provide them just as Netflix does today—streaming them all at once? Do we become just like Netflix and start a subscription service for our scripted shows?  Or are we too late to become like Netflix and should we just produce series for Netflix to distribute?

None of these questions are easily answered. 

But they will not go away as the great TV meltdown unfolds.

 

About Chris Dorr

I consult with companies on digital media strategy and business development. Clients include Samsung, MTV Networks, Tribeca Film Festival, Shaw Media and Canadian Film Center. I created the Future of Film blog for Tribeca. I have worked in the movie business for Disney Studios, Universal Pictures, Scott Free and in the digital media business for Intertainer, Sony and Nokia. Contact me at chris@digitaldorr.com or follow me at @chrisdorr
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  • Steven Lyle Jordan

    We’ve already seen the “bottom-banner commercial” becoming popular on many networks, running while the program is on, and often even obscuring what is happening on-screen. Commercial sales may change, but they may not exactly plummet; we may be looking at the slow but steady evolution of the TV ad to primarily bottom-banner content.

    • chrisdorr

      Hi Steve, Thanks for your comment, yes, this very likely for a lot of programming. Whether it will work for “premium” scripted programming is unclear. Consumers may just balk at it.

      • Steven Lyle Jordan

        It’s hard to say. Consumers rail at a lot of things at first; but if it persists, they often acquiesce, or just meekly stop complaining about it. Banner ads (web and TV) are a perfect example of something people screamed bloody murder over at first, but now they either dismiss or grumble about them, but take no action.

        I imagine banner ads will reach an “accepted” level, with only occasional overly-obnoxious ads getting singled out for censure. And we’ll see more of the embedded ads that run on Hulu and the networks, ads that won’t allow you to see the next segment until you’ve sat through the ads.

        And I’m sure they will come up with more ad delivery methods. Ad people are devious that way.

        • chrisdorr

          And the interesting question will be, do these ads have any value? For example the click thru rates for banner ads online are so low, they are very cheap to buy–they are so ineffective. So the key is how to advertise effectively and keep ad rates at a level that makes sense for distributors.

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  • Joe Wilson

    Great read! Thank YOU!

    Part of the problem for the entertainment industrial complex is to create new business models to address the new viewing behaviors while still generating revenue from a dying business model.

    • chrisdorr

      Hi Joe, You are right, that is the tightrope that all media companies have to walk.

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