Thursday, June 7, 2012

What Might TV Business Look Like "After" the Collapse?

It is hard to ignore the potential danger to the traditional TV distribution business posed by Internet distribution. It is much harder to predict when Internet distribution will begin to disrupt existing business models, as the Internet has disrupted virtually every other form of media. As significant as the hurdles are, one probably would not bet that change can be forestalled forever.


Henry Blodget  apparently believes a change is imminent. "We still consume some TV content, but we consume it when and where we want it, and we consume it deliberately. In other words, we don't settle down in front of the TV and watch "what's on," Blodget says. 


Blodget isn't alone Consumer behavior has changed. Nor is Blodget alone in thinking something like a "wholesale collapse" of behavior already has occurred. What hasn't yet followed is a decisive change in content distribution business.


Earlier in 2012, for example, Accenture presented results from a new survey of consumer behavior indicating that that traditional television viewership is experiencing a "wholesale collapse."

The number of consumers who watch broadcast or cable television in a typical week dropped to 48 percent in 2011 from 71 percent in 2009, for example. Viewing on mobile devices are a major contributor.


In a typical week, 33 percent of consumers now watch shows, movies or videos on their
PCs, and 10 percent are watching such programs on their smart phones, Accenture found.


Blodget believes those changes will break the existing TV business. The prediction would not be unusual. That he believes a break is imminent is the news. At risk: affiliate fees paid by distributors to networks, network advertising, and revenue earned by just about everybody involved in creating content.

Also, "networks" will change. Netflix and iTunes will become virtual networks, displacing entirely many smaller specialty networks.

The cost of traditional subscription TV also will have to drop, he insists.



Users will have to get more for less, or they'll stop paying for much at all. The eventual price points aren't so clear. But a drop of half to 80 percent is not inconceivable.

Ultimately, the distinction between "TV" and other forms of video content will disappear, he argues. As other content industries already have found, that will wring all sorts of overhead out of the TV business. People in the business won't like it, but consumers likely will.











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