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Don’t Mean To Be Alarmist, But The TV Business May Be Starting To Collapse

By Ian |
This graph from Business Insider of what happened to newspaper advertising revenues in the US over the last few years is pretty terrifying. It gives us an insight into the conversations that have likely been occurring in the boardrooms of Fairfax and New Limited in recent weeks. The entire article is fascinating and well worth reading. What it goes on to cover is that television is already starting to go through a similar change. What’s this going to mean for the future of TVC advertising? I suspect that it’s going to lead to even more dramatic changes than we’ve already seen very soon. Advertisers are going to need to create engaging conversations with their audiences but the days of the 30 second screamers are over. It doesn’t mean that creating content for the screen is finished, just that the approach needs to be rethought. Creative agencies need to engage with directors who are storytellers not just executors. Excellent graphic design and animation is going to become even more prevalent as it works well on both large and small screens. Sticking a Mac in the corner of a room with Final Cut on it doesn’t automatically mean that you’ve got a post company. Nor does buying a 5D and getting the Production Co Ordinator to shoot some Vox Pops work very well. These are all wonderful tools and there prevalence is leading to the development of a whole new way of communicating. However just because you own a pen doesn’t make you a novelist. In time advertisers and creative agencies will realise that they need to spend more money on creating content that tells a story and engages the audience otherwise what they produce will simply disappear in the endless sea of 24 hour media noise. Watching our politicians at the moment is the perfect illustration of how just talking doesn’t mean that anyone is going to listen.
Newspaper Ad Spending

“What is the shift in user behavior likely to do to the TV business?

  • The traditional “network” model is likely to break down and be replaced with far larger “libraries” of content and far more efficient content production, acquisition, and distribution. Some of the content produced by networks will still be consumed (and, therefore, produced), but the idea of getting “affiliate fees” and selling advertising for each of dozens of branded networks seems absurd. This change is already occurring, of course: Traditional networks are being replaced by Netflix, iTunes, and uber-networks like “NBC Universal” and “Time Warner.” There is so much money in the network business right now that, initially, this shift won’t mean much. Over time, however, it will. Unprofitable networks will be merged with profitable ones. Unprofitable shows and overpaid talent will be cut. Overpaid managers will get fired. Production costs, on aggregate, will drop. Sets, crews, newsgathering, etc. will be consolidated. The fat will get squeezed out of the system.
  • The cost of traditional pay TV will have to drop–users will have to get more for less, or they’ll stop paying for much at all. I might value the TV content we get through our cable company at $20 a month–about 1/5th of what we pay for it. Eventually, as soon as I can figure out ways to get the few sports I watch another way, we’ll stop paying the $100.
  • Ultimately, the distinction between “TV” and other forms of video content will disappear. We’ll pay some distributors for bundles of that content, we’ll buy some of it directly, and we’ll get some of it for free. But a lot of the money that is currently being wasted by us and to reach us will be spent much more efficiently.”

 

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