It’s the End of TV as We Know It (And We Feel Fine): Understanding TV’s New Role in Culture and Marketing

November 2012

Seen any good TV lately?

According to a new report from Nielsen, you may have, but you’ve probably seen 8.5% less than in the past. On the other hand, there’s a very good chance (84% in fact) that you’ve watched online video. According to Nielsen, more people now watch video once a month on their computer screens than on their TVs.

Stunning stuff.

But if you’re in the TV biz, the news is even worse. According to a new report by Citicable ratings have plunged somewhere around 12% between May 2011 and May 2012. At the same time, Cable TV subscribers have decreased by several million over approximately the same time period, though broadband Internet subscriptions through cable providers are going up. As TV loses, the Internet gains.

Of course, it’s not quite that simple. Lots of people still watch broadcast TV. But if you look at the numbers and how things are changing, the shift is away from pre-programmed broadcast and towards on-demand content streamed or downloaded from the Internet.

“But that doesn’t mean TV’s dead,” some may holler. “It’s just those darn kids and their techno-gizmos watching pirated programs on the interwebs!”

Ahem. While that may be true in some cases—in 2011, for example, more people pirated Dexter than watched it on TV… ditto for Game of Thrones—the facts are that cable subscriptions and broadcast TV watching have been declining for a long time now. And as Henry Blodget so eloquently points out in a recent Business Insider article, today’s TV situation is analogous with the situation the newspapers were in during the late 1990’s and early 2000’s. At that time subscriptions were still increasing and pundits were still predicting that newspapers had weathered the Internet Revolution. But the reality, as Blodget points out, was that “newspapers werescrewed. It just took a while for changing user behavior to really hammer the business.” And if you want to know how screwed, all you have to do is take a gander at a few charts that show the decline and precipitous fall of the newspapers over the past several years.

We think Blodget is right: the TV industry is screwed. Changes in user behavior brought about by DVRs (recorders like TiVO), on-demand cable, online streaming video (Hulu and Netflix, for example) and, like it or not, piracy are firmly entrenched and aren’t going away. As pointed out earlier, more and more people are “cutting the cord” and ditching their cable subscriptions for online video once they realize how much money they’re wasting on cable they never watch… especially if they don’t watch sports. More of us are getting used to watching what we want, when we want, and (with the explosion in mobile devices and tablet computers) where we want. The idea of plopping down in front of the TV for an entire evening with the family is now starting to seem as anachronistic as those black and white photos of our parents, grandparents, and great-grandparents all gathered around a big radio console back in the 30’s and 40’s.

For many – especially those under 25 – the very definition of “watching TV” has changed. “TV” now refers to a kind of content, not the device the content’s delivered on. While this might seem weird to those of us old enough to remember when “watching TV” meant actually staring at a box in the living room known as “the TV,” it’s the same exact thing that’s happened to music over the past decade or so. Many of us might still refer to “albums” or “CDs” or “tracks” (or even to “taping” something), but when’s the last time you bought a hunk of vinyl with music on it or had to simultaneously hit the “record” and “play” buttons in order to record audio? The metaphors die harder than the technology.

It’s pretty clear now that TV as we know it is on the way out. But people still want the kind of content that used to be only delivered through TVs. And advertisers want those eyeballs. So what’s next?

The answer seems to be what’s called “connected TV,” televisions that are (not surprisingly) connected to the Internet. Apple, Microsoft, and Google have been duking it out for the past year or so in the new “Battle for the Living Room.” Google’s connected TV came out first to lots of fanfare, but few bought it. Apple has had AppleTV for a while now, but it’s a set-top box with limited content that’s done OK-ish. Microsoft, however, might just be the one to get it right with some new technology just announced during the week of June 5th.

First, Microsoft has the advantage of having sold over 67 million internet-connected Trojan horses…err…Xbox 360’s so far. They’ve got 40 million active “Xbox Live” users connecting to the Internet in order to play games, stream movies on Netflix, or even chat with friends. In the Battle for the Living Room they’re doing pretty well… streaming video consumption has gone up 140 percent per year since 2008.

But some new tech (and a new deal with Comcast) might be what really puts them in the lead and strikes a death knell for TV as we know it.

At the E3 Entertainment Expo this year, Microsoft announced SmartGlass, a new technology platform that links together mobile devices and television through the Xbox 360. By linking the television and the tablet (or phone or other device), they’re firmly in line with the multi-screen trend that’s been growing for years now. By allowing content to stream between the Xbox 360 and the mobile device, they’re also right on track with the trend of people moving away from the “TV” as we all know and love it to watching video content on devices held in their laps. Better yet, they’ve already got a built-in user base of over 40 million folks for whom adding a new service to their Xbox 360 is as easy as pressing a green “X” button on their controllers. Compare this to Apple and it’s “iTV” rumored to cost over $1,000, and it seems that Microsoft has the upper hand when it comes to the future of television.

So what does the future of television hold for advertisers? Again, Microsoft’s SmartGlass technology might provide a glimpse. By linking the television to the mobile device, advertisers all of a sudden gain a huge advantage when it comes to both targeting advertising and measuring its effectiveness. While TVs might be multi-user devices, tablets aren’t… so advertisers whose ads pop up in tablets will know who is using that tablet and can target their ads accordingly. In a similar vein, the tablet-TV link can also allow advertisers to have a direct channel for user response… not so easy when it comes to TV… and know who is responding. The result is a format that might both kill TV as we know it but also save “TV” as we’re yet to know it by combining the best capabilities of both the television and the handheld device.

So, TV isn’t dead… long live TV! It might be the end of TV as we know it, but here at idfive, we think the future looks fine.