According to Nielsen, nearly half of all homes with a TV set have a DVR. That’s over 50 million households. While DVR penetration is slowing, usage is increasing substantially. Something is going on and it’s not good for advertisers or the broadcasters. But it is good for consumers and that’s what matters.
The arguments that the TV marketplace is robust are many. But I wonder if they’re just spin. Those who sell TV time and produce TV shows will be quick to point out that Americans are watching more TV, the average price for a 30-second commercial remains high and the upfronts continue to rake in billions of dollars. Clearly advertisers must feel good about TV or we wouldn’t be spending so much money in the medium.
But that’s not true. We’re not happy and we’re looking for the whole marketplace to come crashing down. It’s just a matter of time before what happened to print will happen to TV. There are just too many things wrong with the TV marketplace.
Once consumers were given control of whether they wanted to see commercials they voted and they voted commercials “off the island”. They don’t like being interrupted. As a result of so much time shifting, networks are trying to convince us to buy C7 ratings (commercial ratings plus seven days of time-shifted programming), which won’t happen. If TV is suppose to help drive retail traffic and instantaneous awareness, why would we be interested in buying viewership that spans a week from the time the commercial aired? We want a medium that can drive immediate actions. The C7 currency is an admission that TV has lost the ability to drive immediate action. In fact, in many cases networks are reporting that as much as 60 percent of a show’s viewership comes over a week. These viewing behaviors should have every TV advertiser rethinking TV’s role and how much they’re willing to pay for a 30-second commercial.
The Media Kitchen already has a number of clients who target Millennials, those Americans in their 20’s and 30’s, and we’re talking to a lot more clients interested in that group. All of those clients are very digital-centric and all of them ask us whether we should even bother using TV to reach this group. All the data shows that Millennials are heavy users of digital media, over-index against smartphone ownership and multi-task like crazy. The research also shows that Millennials are very light TV viewers. Millennials are the biggest demographic group since the Boomer generation and how goes the Millennials so goes the world, at least the media world. And TV isn’t a big part of their world.
We imagine a TV world that’s app driven, where you can buy channels one at a time and great content isn’t expensive to make. We also imagine a world that’s entirely on-demand and time-shifted. We also don’t think that great programming will be the domain of a few studios. We think that sport shows and other big awards shows will remain very expensive and important social events. But the way we watch and buy dramas and comedies will change. We think TV’s ability to drive huge reach week after week will go away. We’re betting on Twitter, iOS and Android to do that.
The TV marketplace is broken and the networks won’t reinvent it. We think it will be reinvented by up-and-coming mobile platforms–and the Millennials will be driving the change.