Peak TV: Does the Evolving Media Landscape Create Peril or Profit?
Some say America has officially entered the era of peak TV — “the production of far more television than people have time to watch.” Interestingly, however, consumers are no longer watching traditional TV. Reliable internet in conjunction with an endemic of “bingeable” TV culture has led to traditional media outlets continually losing audience members.
The rise of cord-cutting behaviors and the ever-increasing availability of over-the-top (OTT) content has been causing a massive evolution in the media industry for years. People consume more video content across multiple screens than ever before, interacting on social networks like Twitter and Facebook and playing games on their phones while simultaneously watching TV. In fact, according to an Accenture survey, almost 90 percent of consumers use more than one device at a time.
Companies that want to thrive during these volatile evolving media market conditions must maintain a strong understanding of the disruption to traditional TV and be ready to embrace innovative solutions to these challenges.
Traditional media models have metamorphosed into a plethora of OTT options and cable bundles with hundreds of channels, which, interestingly, consumers don’t typically watch. According to Nielsen, out of around 200 available channels, viewers only watch on average about 10 percent — that’s only 20 channels. Cable consumers pay for a lot more than they utilize. A recent eMarketer report predicted that by 2025, half of U.S. consumers between the ages of 18–31 won’t even buy a cable package.
Subscription Video on Demand (SVOD) companies like Netflix, Amazon, Hulu (and, more recently, HBO, Showtime, Starz and more after partnering with Amazon) are incredibly popular, and with good reason; they provide a wide variety of choice TV and movies to watch with zero breaks for commercials or other forms of advertising. Dish, Sony and AT&T have even jumped on the TV-and-video-streaming-services bandwagon with Sling TV, Playstation Vue and DirectTV Now.
SVOD channels also produce successful original shows, which Netflix piloted in 2013. Although there are no official ratings for Netflix original content, the shows have repeatedly been renewed, demonstrating popularity and viewership. Netflix actually monitored and analyzed the interest of its customers prior to producing proprietary content, then developed original shows based on this data. This was new and unfounded territory, which was not only lucrative, but significantly changed the VOD industry.
The rise of OTT platforms, other nontraditional TV options and digital advertising spending has led to some unintended, albeit significant, results. One of the biggest consequences of the evolving media landscape is that media outlets have to pay much more now than in the past to remain even remotely competitive. Decreased syndication sale values, wider distribution of advertising dollars and the spike in TV talent salaries has led to increased revenue pressures. Audiences can also watch old shows on OTT platforms, subsequently decreasing the value of TV rebroadcasts.
Netflix in particular has led the expensive TV revolution by changing the “leasing” business model that had traditionally been used in the TV production business. Netflix pays 120–150 percent of a show’s budget directly upfront and buys the global rights for multiple years ahead of time, mitigating many of the risks typically facing production studios. That means other media outlets have to fall in line with Netflix’s precedent or they lose any forms of competitive advantage they may have once had.
Gaps in Skills
Between quick technological advancements, significant transformation in consumption trends and changing advertising allocations, the nature of TV is dramatically different than it was just a decade ago. With all of these changes, media executives are being pulled in various directions. It’s no wonder why they’re concerned about accessing the adequate skills and appropriate resources needed to adapt and respond to all the industry changes — they lack the expertise they need.
With an evolved approach to talent acquisition, however, media companies can leverage on-demand networks, tap into fresh perspectives and engage an underutilized talent pool of experienced leaders, who know the industry better than anyone. Businesses that access and deploy key skills from external experts and resources have a unique competitive advantage, as they are better equipped to tackle problems, effectively capitalize on new technologies, adapt to changing consumer preferences and quickly execute important and unique initiatives.
To thrive and stay competitive in the evolving media landscape, traditional media companies must acknowledge the palpable disruptions and the fundamental changes in content distribution. They must understand the changes in delivery and respond to the acute need to drive innovation through adopting new solutions. With a commitment to the creative process, and a bit of market savviness, traditional media players can get ahead of the competition, create new avenues of revenue and find success in the evolving and sometimes tumultuous media industry.
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