Tuesday, August 16, 2011

TV Habits Changing?

TVFLUXTV networks and studios face a business problem very similar to that faced by large telcos confronting VoIP services. Market demand is changing, but providers make so much money from the legacy services that any transition to newer services has to be managed carefully.

TV networks and studios face a similar problem, namely, how to balance support for the growing online market for shows with support for traditional distribution partners that still  account for the lion's share of revenues.

Many larger telcos have concluded they are better off to lose some market share rather than shift immediately to VoIP services that might mean lower across the board prices. In fact, the "lose some share" philosophy even holds for telco VoIP services whose cost remains at the high end of market offerings.

Both telcos and video entertainment providers also are dealing with products that arguably have passed the peak of their product lifecycles. For many users, voice means "mobile" devices and services. Likewise, though the trend is far less developed, for some younger users, multi-channel TV subscriptions likewise are just a product whose value is low.

Viewing declines among younger viewers accelerated this year. At any given time of day, about 11.5 million people between 18 and 34 years old watched TV on traditional sets between last September and the end of last month, down two percent from a year earlier and 3.4 percent from two seasons ago, according to the Nielsen Company.

Among the bigger issues is the question of whether online delivery will produce as much revenue as cable TV and other distribution channels have done. Up to this point, no legacy industry has found that new digital replacement products produce as much revenue as the legacy products being replaced.

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