I wasn't surprised to see the following quotation in an article on changing television viewing habits in the New York Times.
“We watched (The Walking Dead) live,” he said. “It was not nearly as good. The commercials broke the tension. We had watched the other episodes (on Netflix) with blankets over our heads. I hate to say this to the AMC executives and everybody else in the business, but I will never watch ‘Walking Dead’ live again.”
What did surprise me is that it was from Jeff Gaspin, who until last year was the Chairman of NBC/Universal Television Entertainment.
Fewer and fewer people are watching shows at their original scheduled broadcast times. DVRs, Netflix, On Demand and other streaming services are making it easier to see your favorite shows when it's convenient for you. This also means you can watch them without watching the advertising that pays the shows' production cost.
This has real human consequences. After all, who's going to pay Ryan Seacrest's $15 million annual salary if Coca Cola, Ford and AT&T stop sponsoring American Idol because no one's watching the ads?
Currently the typical hour on NBC, CBS, ABC or Fox runs 15 to 18 minutes of commercials. On cable that increases to 20 to 22 minutes. A 30 second network primetime ad will sell for anywhere from $50,000 to $225,000 depending on the show's popularity. So that means the networks generate on average about $55 million dollars per day.
Not a small sum.
As viewers skip more and more ads, advertisers become understandably less willing to pay for them, and the networks will have look elsewhere for their $55 million.
It's not going to come from product placement. There's not enough revenue there.
It's not going to come through increased cable fees. People are too used to getting their information, entertainment and escapism for free.
I'm not saying that television is dead. I'm just saying it's going to take a new deal, a new model between networks, advertisers, producers and performers to create a system that is sustainable.
If I'm a major advertiser or a network executive, I'm trying to reinvent the system now. Not five years from now when the pressure is really on.