People are watching more TV than ever. They’re just not watching the same TV they were 20 or even 10 years ago.
Here’s advertising analyst Bob Garfield’s take on how TV networks are dying:
"Back in 2005, the major networks’ audience had been shrinking for a decade to a mere 16.5% of TV households in prime time. That’s for all five of the nets put together. Seven years later the aggregate rating is down to an optimistic 13.5% — optimistic because that number includes DVR time-shifters, who skip past commercials. For advertisers, those viewers may as well not exist. Removing them from the ratings, only 11.5% of households are watching network shows live in prime time. The other 88.5% are doing something else."
So how are the Big 5 networks surviving? They’re still making tons of cash, because advertisers are paying more for less every year.
We wonder why.
Of course, television has always been the sexy medium for advertising. Commercials have been compared to mini-movies. Video is a great way to tell a story about a brand. Many people claim to watch the Super Bowl for the commercials. Nobody’s going to say they go online for the ads.
It’s also true that television advertising provides instant credibility. When a 30-second commercial costs tens of thousands of dollars to air — not counting the costs of production — viewers almost unconsciously understand that the advertiser has substance.
But when fewer and fewer people see the commercials, there’s little credibility to be gained.
Soon those advertisers who are still throwing money at the networks will wonder why they’re doing it, too. Then the current networks (or at least a couple of them) will collapse.
We don’t see an alternative — because we can’t think of an industry less inclined to change. While they continue to be profitable, we agree with Garfield. The writing is on the wall.
On the other hand, the demand for quality entertainment still exists and advertisers are willing to spend, so it seems likely that — even if the networks as we now know them crumble — something similar will replace them. We see hints of that with Hulu (which is related to some of the networks) and others who are creating original programming outside of network offerings.
These are the outlets we’ll continue to explore for our clients.