TV Business May Have to Start Trimming the Fat

TV Business May Have to Start Trimming the Fat

In a recent Nielsen Ratings survey, statistics showed a staggering decline in the number of TV viewers in the year of 2012. With overall audience reduction nearing double digits, it leaves many to wonder what cause and effect such figures could have on the television industry.

It doesn’t take much retrospection to trace the decline in viewership back to the Internet. Prior to television’s hit on ratings, a similar industry, newspaper distributors was rattled by the introduction of the Internet. Speculators predicted in the late 90’s and early 21^st century that the digital world would have a tremendous impact on newspaper user behavior. A shift in readership from paper to digital impacted the advertising industry, commerce, and hundreds of employees worldwide.

As with newspapers, the immediate impact of Internet availability on television usage has been minimal. However, in coming years, the TV business as we know it will be forced to evolve or it will cease to exist. The most visible changes in television consumption over the past six years include:

• Reduction in real-time viewing of television shows
• Simultaneous viewing of content on multiple outputs
• Increase in usage of On Demand and Streaming features

DVR systems are now commonplace in the vast majority of households with television sets. With the demanding schedules of individuals coupled with the convenience of digital video recorders, more and more people are opting to record and view programs at more opportune times. Modern day technology now enables sports enthusiasts and news junkies keep up to date with information using multiple outlets. A viewer may watch football on a laptop, smartphone, and television all at once. In addition to DVR systems, the Internet has also introduced the ability to stream live content directly to smartphones, tablets, and laptops anytime and anywhere with ipad and iphone tv apps.

The modern day consumer can watch exactly what they want while avoiding commercials as a result of the ability to stream content using sources like Hulu, Netflix, and On Demand. Now viewers have the ability to fast forward through ads and become more selective in what they choose to watch. As a result:

• Television networks will lose authority
• Satellite and cable television subscriptions will decrease
• Traditional television prices will fall
• Percentage of people who watch video on a computer will increase

As consumers become more selective in regards to when and what they watch, television networks will begin to break down. We can expect to see an improvement in content production, distribution, and acquisition of material. Plus, traditional networks will become more obsolete, uber-networks will acquire less profitable ones, and affiliate fees will decline. Selective demand will also reduce the amount of overpaid talent and managers which will trickle down to a consolidation of production, crews, and set costs.

In the end, cable and television companies will be forced to reduce their prices and become more efficient with the quality and quantity of material.  As TV viewership declines, advertisements become less relevant, and the only solution is to “trim the fat.”  Although television viewership is expected to fall drastically, but the TV business and related industries will undoubtedly suffer.