Broadcast TV – The end is nigh

Users are not waiting. The move away from broadcast has begun.

• The TV broadcast industry remains in denial but the figures are beginning to show that the days of subscribing to broadcast packages are numbered.
• Nielsen has released the latest version of its cross platform report and for the first time it properly recognises and analyses the growing “zero-TV” households in the US market.
• In its commentary it has sugar coated the awful truth in order not to frighten its key customers, but the reality is that the broadcast TV executive is going to become an endangered species.
• “Zero-TV” households are those that do not subscribe to a broadcast package and they have grown in number from 2% of all households in 2007 to 5% in 2012.
• These are still tiny numbers and the TV execs will shrug this off as noise but this is the beginning of a grass roots revolution.
• 95% of the US market still subscribes and so revenues are not going to disappear overnight but being in denial will ensure that the broadcast industry will fiddle while their businesses burn.
• This 5% are still watching television and they are doing it in ways that cuts the broadcaster out completely.
• The days of paying $100+ for a subscription for a 100 channels of which one only wants a few of will soon be gone and woe betide anyone who tries to replicate this model over the internet.
• There is a reason why Game of Thrones was the most pirated television show last year and the TV broadcast industry needs to take notice.
• It is losing control of distribution and there is nothing it can do about it.
• At the forefront of this change are Apple, Google, Netflix, Amazon, Samsung, LGD, Cisco and the like and it is they that I see becoming the major beneficiaries of this trend.
• The content creators such as HBO are likely to fare reasonably as there is still very strong demand for their content, its just they need to sell it in a different way.
• The result is likely to be lower prices and margins as pricing is going to be much more transparent to the user.
• Furthermore, I suspect that the long tail of TV channels that get bundled into a premium subscription is going to come under real pressure.
• This is because they have been benefiting from the halo effect of being bundled in with the channels that everyone wants and now they will need to stand on their own two feet.
• I very much doubt that the TV broadcast industry has the depth of foresight or the humility to admit that it is in trouble which will leave the field open for the “new media” companies to come in and hoover up all the subscribers.
• It has started slowly, but once subscribers get the hang of it, I see rapid acceleration as users abandon subscription and only pay for the content they actually want.
• The beneficiaries are the “new media” companies, those that make the enabling hardware such as Samsung and LGD and the network equipment companies such as Cisco.
• This move will cause a huge spike in traffic and so there will need to be substantial expansion in network capacity in order to support the 95% who end up following the brave 5% who have already taken the plunge.