Tags : newspapers, radio, television
Television will be the first traditional media medium to fall
The move away from traditional, or mainstream media is currently accelerating as more and more people switch to the internet for their information and entertainment. Sales of newspapers are declining, radio advertising is down, and television viewers are switching off in record numbers.
It’s popular in the blogopshere to argue that newspapers will eventually fall, and radio is hardly popular. However, given the current marketplace, television will be the first traditional media medium to completely fail, where as radio has some life left in it yet. Newspapers will survive, but the newspaper of tomorrow will be markedly different.
The great Television switch off
The television switch off is real. In the United States, 2.5 million viewers switched off in the spring on 2008 compared to the same time in 2006. Statistically this is only a small percentage of the overall viewing audience, but among those still watching television, the amount of television they watch each day is declining.
The decline in television viewing is stronger among younger statistical groups. In Europe, a 2005 study from the European Interactive Advertising Association found almost half of 15- to 24-year-olds are watching less TV in favor of browsing the web. A study reported in The Guardian in 2007 headlined with “Young networkers turn off TV and log on to the web.” The television switch off in the United States among younger people has seen the average age of a TV viewer increase to 50.
Tip of the iceberg
The remarkable thing in the decline of television is that we are yet to see broadscale adoption of a logical successor. Newspapers and magazines offer content driven websites, radio is being replaced by services such as Last.fm, but there is no clear alternative online to television. Previous television viewers seem happy to consume content from a large variety of online services, and although many are watching online video, few do so via the television screen. The experience of television isn’t being replaced online, where as print media and radio is being substituted in familiar formats.
Netflix and Apple are two companies offering set top boxes that bring digital content to the television screen, but neither has caught the public’s imagination. Consider that in the television switch off so far, the simplicity of television, as an entertainment and relaxation device has not truly been replaced.
We are however, at the tip of the iceberg. The convergence between online content and the television screen as an easy to use conduit for that content has begun.
Sony announced internet enabled television sets at CES in 2007, and is now offering the option across its Bravia product line. The startup ffwd is said to be in discussions with cable companies and other device makers to bring personalized online content delivery to the lounge room, and will soon be available on the Wii. TiVo now supports YouTube videos, as the Apple TV has for some time, along with Podcasts on demand.
When enough devices offer internet content, including television sets, the switch off from television will accelerate across more age groups. Ease of use and ease of access will change the viewing habits of billions globally in the next 10 years.
Why television will be the first to fall (and not newspapers or radio)
The television industry is already at the start of a slow, agonizing death spiral. As television viewers have switched off, networks spend less on creating content, switching to reality television and other cheap to make genres, causing even more people to switch off.
The New York Times, in an article on Harvard professor emeritus Richard E. Caves book “Switching Channels: Organization and Change in TV Broadcasting” explains it this way:
He points out that such incentives depend on the size of the potential market. The programming is a fixed cost — networks pay for the programs even if nobody watches. If paying an extra $1 million to get a star onto a show, for example, raises every customer’s love of the show by the equivalent of $1, the investment more than pays off if there are 10 million potential viewers. But the $1 million investment would be a terrible flop if there were 10,000 potential viewers….
So the increase in reality programming is not just a matter of broadcasters wanting to save money. It’s that a shrinking potential market gives the networks less incentive to spend money. They can’t recoup it with enough viewers.
The problem with this pattern is that it’s cyclical. Viewers decline, networks spend less, content quality is reduced, viewers decline…. It’s a slow death spiral that ultimately can only result, eventually, in no audience as well
Newspapers will survive
In stark contrast to the television industry, the newspaper industry is best suited to last well into the foreseeable future. That newspapers are in decline is a fact, but what is often ignored is another important statistic: readership to newspapers online is increasing, and according to one source has resulted in a net increase in newspaper readership. The Newspaper Association of America notes record numbers for newspaper sites in 2007.
The switch to online newspapers is not even across all newspaper sites, so we will still see the sector shrink greatly in size from where it is today, however at the end of this decline, significant numbers of newspapers will remain, perhaps in 10 or 20 years time as online services only, without a print edition.
There is a very strong reason for why some newspapers will go the distance: There will always be a market for quality journalism. Bloggers and citizen journalists do a fine job, in many sectors, but a hierarchy of value that places leading newspaper titles such as the New York Times as leading sources of quality news will always remain. Couple this with the fact that most smart newspapers have also embraced blogging as well, blurring the lines between tradition and blogging. We can already see at the top of blogging little difference between a blog and newspaper, and that line will become further blended from both directions with time. Put simply, newspapers are changing with the times.
Radio will die, but not quite yet
The death of radio has long been predicted, even way back when television first launched, but it still goes on. Radio has two distinct advantages in lasting longer than television: mass consolidation has already taken place resulting in a low cost base, and car radio.
Consolidation of radio in the United States, lead by ClearChannel is well know. Journalism.org described it in their State of the News Media in 2004 as “the level of consolidation in radio exceeds that of most media,” but failed to nominate the media it didn’t exceed consolidation in. This consolidation of ownership, and content delivers a positive: of all traditional forms of media, radio is best suited to lasting over the short to medium turn due to its economies of scale. Where as television is seeing a downward spiral, radio as already gone through much of the cost cutting other forms of traditional media are experiencing relative to their decline in audience.
Radio also has one advantage in consumption: the car. Depending on which figures you consider, consumption of radio is anywhere from 50-80% in a car. Like television, there is no immediate replacement to radio, as a switch on, not having to think about choice. Many do play CD’s or iPods, consumption is shifting, but people still listen to radio in their cars. The car advantage however is on borrowed time. More and more cars now come with iPod docking as standard, making it easier for people to play their own choice of content. Chrysler in introducing internet access to their cars, delivering all the possibilities access provides, but on the road. In 10-20 years time, the notion of tuning into a radio station, as many do today, will be considered old fashioned, and some where around this time, commercial radio will cease to be.
The content shift
Those arguing for the future of television regularly point out that somebody has to make content, and that television is best suited to create it. There’s also the argument that much of the video consumed online is pirated content, and without television online video would be an empty wasteland. But they’d be wrong.
The internet is altering the distribution methods of content and enabling content creators to go direct to market online without the need for television as a conduit and financier. Many shows produced now for television are made by production companies, not television networks, and the smart ones are already producing exclusive online content.
The television networks are desperately trying to cater for an online audience, but if Google, a company defined by its skill in online advertising struggles to turn a profit from YouTube, what chance do television networks have in trying to compensate for their declining audience by shifting online. With thin margins, the need for a middleman in distributing content declines as content creators seek to profit directly and not share profits with others. This shift is hurting television now, and it will only accelerate with time.
Conclusion
I have some sadness for the death of television. Anyone in Generation X or older would have grown up with the medium, and spent countless hours on the couch watching it, and yet today, people worldwide are switching off. As younger viewers happily switch to their computers, forgoing the experience of a television set altogether, newer, more consumer friendly devices will deliver internet content to the broader population, often via the television screen, and the switch off of television networks will accelerate. By the time my (now 5 year old) son has children of his own, broadcast television will be a thing of the past, replaced instead by an always on society with the internet as a nearly unlimited smorgasbord of choice.
Update: just to clarify one point in this post that some seem to be confusing, and perhaps I wasn’t clear enough. I am not suggesting that the experience of sitting around a large screen TV watching sport or other content is going to fall. It never will, but content delivery via broadcast television (ie television networks, or collectively the television media) will fall. There will always be a place for a television set in many lounge rooms, but that set in the future will be a conduit for digitally delivered, on-demand or custom mixed content, delivered over the internet, from many different providers.
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Come on. I Love Lucy and Gilligan's Island will have to run somewhere.
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I dont think television will be the first to fall...I think that newspapers were the first to fall, even though I still read them daily they are suffering no like other!
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Tom: I think you're right, little buddy.
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I agree with Andrew, I think newspapers will be the first to fail. News websites are already replacing them. I still watch television for two reasons: news and sports. I don't think that's going to change in the future. For anyone. About radio: Am I the only one listening to it for the entertainment and information, and not for the music?
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Andrew, I'm not so sure. I read newspapers daily. The only TV I watch is downloaded or (rarely) streamed. Neither option has many, if any adverts. I think the TV model will have to change before newspapers.
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TV media will never fail. Duncan how about.. lets have the NFL supebowl party at my place , we can watch it streaming live to my Computer screen ? I dont think that goes down well with a number main stream viewers. They are MSM viewers because they dont care whats in our echo chamber. What is hurt and really hurting bad is the print shops !
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That's pretty bold. I suspect over-the-air TV is going to take a big hit with digital television. And you're right: newspaper can survive as an online medium.
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Jay, Andrew, Alejandro, read the post. Newspapers will never fall, they are adopting to online by embracing it. Newspapers WILL live on, not in print, but online. Peter, read the post, the internet IS converging with the television set, and there is absolutely no reason why you couldn't be streaming, in full HD, the superbowl or anything else for that matter on your 60" or even bigger screen with the same group of people in 5-10 years. You won't need broadcast tv to watch sport
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in fact, you won't even need cable. You'll be able to get it online, on demand or live, paid or perhaps free. Peter, when every TV set has internet access, and when getting content on demand, or selectively delivered to you Last.fm style is in every lounge room, broadcast television is over. If you read the post you'll see that I made your exact point on MS viewers. We don't have the ease of use/ full substitution available yet. But it's coming
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Duncan, my comments were way too long for a blog or friendfeed comment, so I sent you an e-mail. Though I am definitely aligned w/Peter D as far as the Super Bowl party (and sports, in general really). Chris B. How come the New York Times and Washington Post and LA times and Chi Trib are getting hammered even with their online presence?
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I only watch a couple hours a day max! We're not even watching, it's just on in the background as my wife and I catch up after the kids are in bed.
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Newspapers highest margin revenue business was classified ads -- and that's gone online, and off
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Robert, on sport, we don't have the substitution equation now, but it's coming. High broadband, better tech, to a large screen. You don't need broadcast TV to watch the superbowl is you can obtain the same game online, on a big screen, in HD
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Robert, on newspapers, there's a lot of death in that industry left before it settles, and even newspapers know this. If 5-10% of all newspapers today are in existence in 20 years time I'd be surprised. But don't confuse mass consildation and job losses with death. Smart titles are embracing online, and even making money from it. A substitute for classifieds now? no, but eventually some will be big enough to make it sustainable online.
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need to read this in the morning - early meeting :(
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the line between newspapers and blogging is blurring as well. We know that big blogs make big $ now online, the big paper sites are making good money as well. Think in terms of an online model, quality name, best practice journalism...there's always going to be a market for it. Maybe not in actual print, but a market none the less
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Robert: They're online, but I don't think any of the papers you mention have really made the transition yet. I think we're waiting for a device, too.
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Chris, if the NYT, sold at every starbucks across the country and one of the top news websites seems much better positioned (and are) vs. other newspapers, but financials are still getting hammered. Duncan, I agree with you about consolidation. But then I believe there will always be a video display in our living rooms and that Disney will be around making content for it, just as they are today.
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TV is already dead...been that way for a while. I ditched my TV 3 times in life and the last time (2 yrs ago) it finally stuck cuz it is really that lame.... I can't stand the force-fed programming....Internet based On Demand is where it's at - but not via cable - via internet tubes! newspaper is something you put in the fireplace or the bottom of a bird cage to catch poop!
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For the most part, I dumped TV for the interactive screen 15 year ago. Has Ninja Warrior #20 aired, yet?
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Duncan - Your last comment is telling. It's quality of content that drives demand now and in the future. Ultimately, the means of distribution (by itself) don't matter more than that.
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Susan, as a product, I want what you want, but a.) it doesn't exist, and b.) there's not actually the infrastructure to support it (across everyone) yet.
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Robert: True...it's coming though e.g. Hulu, Revision 3, etc.... please somebody make it happen!
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Robert, I'm not saying there won't be video in your lounge room, nor am I suggesting Disney is about to disappear. Don't mix the end result with the delivery method. Traditional, broadcast television is doomed. The content you see today will be delivered online, not via your CBS affiliate, and you'll get to pick the content or have it custom mashed for you, on demand, live or archived, on your 80" television, phone, computer, car, in HD.
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Duncan - Good point. I would much rather have 5 great channels than my current 32 mediocre choices.
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disney is traditional broadcast television though (ABC). The question will be how the content is paid for. CBS even in the television business is multiple companies. a company that owns stations, has affiliates and a huge content production conglomerate. If two out of three of those go away, you lose the scale to spend mega bucks on content. Where will the good content come from? I'm not arguing this won't happen -- it's just really interesting (to me) stuff to think about.
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"when every TV set has internet access, and when getting content on demand, " - oj thats now a future assumptions. We may not need tVs in the future, our eyeballs will be protected from UV light and have minature screens that fit onto them eyeball. and watch a program whenever I want by adjusting my wristwatch . Of course the media could be wifi or airwaves.. :)-
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Robert, I didn't say it was going to die tomorrow, I simply said it would be the first to die :-) Broadband is still an issue, but delivery methods already exist (Comcast on demand is delivered over IP for memory). The difference between now and 10 years from now is that the tech will be mainstream, embedded into TV's (Sony is already doing this, but it's still very Gen 1), low cost, and eventually everyone will have access. It has to kill broadcast TV, the only question is how long will it take.
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couple this with the change in distribution, particularly given the issues with advertising (hard online, declining in MSM). Production companies are already delivering product direct to internet. broadcast television acts like a middle man in content, but the internet allows you to go direct. As the economics change, more companies will be trying to maximise their profits by cutting out the middleman
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but however long it takes, the media will not go away. the delivey methods may change, the gadgets that we use to watch may change , but the content will still come from CNN , ABC NBC kinda stations, they too will adopt
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to some extent we're seeing the same shift in music, but I'll leave that debate for another day :-)
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Duncan, if you mean over the air, completely agree. But I think we're way far from Internet wins. comcast is ip but it's over their fat pipes between them and my house. the pipe between them and the internet is relatively skinny. I personally don't want comcast and cable cos to win at Internet distribution of video. They're dead set against a la carte bundles.
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Good post and good discussion here. If we accept the premise that broad content distribution platforms will wither, that leaves the question of how high quality content in that context will be financed and produced. Probably a discussion for another day, but an intriguing one.
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A good percentage of my friends are non-computer people. Check their email every few days, maybe chat occassionally, inactive facebook account - they spend their time watching TV. There are more people like that than there are people who don't....
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I suspect all video entertainment will go down the HBO route in the end. People are willing to pay for quality programming and there's always going to be a market for it.
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Charlie at least in the in the US, the data doesn't support the HBO route. Only around 1/3rd of the homes buy premium content (HBO, Showtime, etc). A lot of the other 2/3rd pay for either cable or satellite packages but not for premium content like HBO.
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WRONG WRONG WRONG FAIL for so many reasons.
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Andrew, why? All traditional media is changing, that's a given. The question is how much, and when. Robert, re Disney, yes, they own ABC, but don't mix Disney the content creator with ABC as the delivery agent. Disney will move to where the audience is like any other company. If online/ direct/ on demand is the future, they'll be there as well. Disney isn't JUST a broadcast television company after all.
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I don't mix the content creator with the delivery network. they're synergistic, but opportunistic. Shows produced by ABC production run on NBC, FOX on CBS, etc. But it's the networks that greenlight the production companies and not the other way around. If you say ABC network will be replaced by...Comcast and others, that's still the existing TV model to me. Regardless of the distribution mechanism, it will be transparent to the viewers.
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Robert, they may greenlight new shows, but they don't necessarily own the rights to those shows either. Think of your American Idol's Big Brother, Survivors...all big shows who go to the highest bidder. As TV network revenue continues to decline relative to view numbers (proven fact), the ability to buy those shows, or to be the highest bidder, diminishes. Not tomorrow, or next year, but the economics of supply and demand in video is changing.
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There are growing examples of this as well, although we are still very early in the shift. Funnyordie, John Cleese podcast are two sites that spring to mind. Direct to internet, cuts out the network. This downward cycle will result in cut backs in TV spending...it already is, and as I noted in the post, its a cycle, cuts are made, content is lower quality, less viewers, less revenue, more cuts are made an so on.
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I think the business model will shift. In ten years I think we will have television on demand, and product placement or other integrated advertising methods will be used to pay the production costs. But traditional broadcasting will indeed be very different -- or gone.
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