Tuesday, May 15, 2012
Dishing without commercials
Those who hate commercials (most of America) think this is a good thing. Those who understand that nothing in life is free (about 10 people) wonder who's going to pay for commercial-free entertainment.
We all know the old model for TV unsustainable. Yes, advertisers are expected to spend upwards of $70 billion this year on commercial time across all broadcast and cable platforms. Yet for the most part ads are seen as an annoyance by viewers and with today's technology they're very easy to avoid.
Programming that doesn't have to be watched in real time, which is just about everything except live sports, can be found on Netflix, Hulu Plus and other distribution platforms without commercials days or at worst weeks after their initial air dates. Current DVR technology allows anyone to zoom through spots in seconds. Does anyone doubt that it won't be long until auto skipping is common on all DVRs and all channels?
Neither the networks nor production companies are looking forward to this future. Advertising has been a consistent and very profitable source of revenue for both.
Advertisers, though they grumble about the cost, love all the attention their products get when they interrupt your favorite show and won't be happy to see this model disappear either.
So what's the alternative? Pay-per-view programming where you get nicked a couple of bucks an episode or $20 a season for shows like Mad Men, Two and a Half Men or 60 Minutes? While that might have incredible social benefits by lowering the amount of TV watched in most households, it wouldn't make anyone happy.
The networks lose revenue, production companies lose funding, advertisers lose their biggest platform to make people aware of their products, and viewers have to think about whether what they're watching is actually worth their time and money.
Ultimately, what may happen is that the networks themselves may become obsolete. They served a purpose providing a way to bring shows and advertisers together. Their programming and development staffs nurtured shows like Cheers and Seinfeld that needed time to find their voice and grow and audience. But in today's world of infinite choice and non-stop channel surfing, people create their own "networks" choosing which shows to watch and when to watch them.
Given the incredible data gathering capabilities of cable and mobile devices, fewer and more relevant ads could be inserted at fewer points in the programs. This should in theory cut down on waste and make each ad unit more valuable.
Blowing up a 64 year old industry and starting over is never easy, but in the case of network television and advertising industries it's going to happen. The only question is who's going to do it? Those who control the system now or an outside player who isn't encumbered by billions of dollars of infrastructure and decades of organizational inertia.
My guess is the latter.