Monday, January 4, 2010

The New Face Of Television

While everyone was enjoying their champagne and football over the holiday weekend, a cataclysmic event occurred in the world of television. In case you missed it, here's what went down and what it means.

Once upon a time there was a pretty simple deal for television users: you watch our ads and we'll pay for your shows. In the early days of television this worked great when it wasn't unheard of for shows to get ratings of 50 or higher. When Elvis Presley took the stage on the Ed Sullivan Show, 81% of the TVs in the US were on and tuned to his performance. This meant you could get your message out a great percentage of the viewing public by purchasing just one or two shows so the networks had great economies of scale. Today with the proliferation of channels via cable and satellite, a ratings for hit network primetime shows hovers in the mid teens. And ratings of 30 or more are considered blockbusters. Lower ratings mean less money. And less money means the people who own those stations need to look elsewhere to generate revenue.

Enter Rupert Murdoch.

On top of the advertising fees that he gets for selling shows like The Simpsons, House and American Idol, he will now receive payment from Time Warner for the right to carry those shows over their cable system. And while we've always paid fees to subsidize the lower rated cable networks, this new development signifies a major shift that will affect viewers, networks, production companies, and advertisers. Ultimately given our current system where we have very little choice over the networks we receive, it all boils down to how much are we willing to pay for the programs we're NOT watching.

The only thing I watch on Fox are the Packers, Baseball and the occasional Nascar race. Why should I pay for Idol, Bones and Doll House? And that's the next tipping point. As costs continue to rise and become untenable, someone will change the game again. I'm guessing it won't be long before we will be able to a la carte our favorite networks or purchase all programming on demand.

Stay tuned.

1 comment:

  1. The cable networks have defended the bundling of popular channels with less popular ones as providing a cheaper, more complete product. This move will undermine that argument, particularly if, as reported, other content providers will demand a similar deal, resulting in an increase in cable costs.

    It is time to unbundle the content from the delivery. Allow the consumer to choose to buy and individual show or channel and allow them to select how it will be viewed, via cable. satellite or the internet