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The Third Era of TV Is Here—and Everywhere

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The Third Era of TV Is Here—and Everywhere

A recent article in Barron’s titled “TV’s Sports Problem” contained this startling forecast: By 2020, Google and YouTube parent Alphabet, along with Facebook and Amazon, could have a combined $100 billion in free cash flow, compared to just $30 billion for broadcasters ABC, CBS, NBC, and Fox. That means the online marketers will have more than three times the amount of money to bid for the sports rights due for renewal in the coming years and to create original programming to compete with conventional television channels.

The report brought to mind the days when cable television was in its infancy, and your author was selling a lowly .01 national rating on a financial markets network. Back in those days—circa 1988—the Big Three networks dominated the Nielsen ratings, and Fox was in its infancy. The first era of TV, the broadcast era, was slowly ceding territory to the second, the cable era. Nonetheless, the Big Three networks’ overwhelming command of airwaves and eyeballs stoked a prevailing wisdom that cable was a stepchild that would never amount to much.

Then, things began to change. Audiences began to diffuse as more and more niche channels launched, and in 1994, Fox attained genuine legitimacy by airing NFL Sunday, competing with—and eventually beating—the Big Three at their own game. In 2002, cable viewership reached a tipping point when, on a combined basis, its numbers surpassed the networks’. So much for not amounting to much.

Flash-forward to today, and it feels very much like the dawn of cable. It’s now the beginning of a third era, the “TV Everywhere” age. There are many trends underlying this shift, including cord-cutting, changes in viewing habits by device, the explosion of Netflix and its 100 million-plus subscribers (more than cable and satellite), and so on. Recently, Disney announced that it will not renew contracts with Netflix in favor of launching two new streaming services of its own—one an ESPN-themed sports service, the other geared toward family entertainment and the Disney canon, which includes definitive cultural content from Lucasfilm (Star Wars), Marvel, and Pixar. Meanwhile, Amazon has paid $50 million for the rights to stream 10 NFL Thursday Night Football games this season—surely a preview of what’s to come.

So, what does it mean? Consumers are likely to look at what they are spending for cable and realize that they will increasingly be able to select a product that’s meaningful to them on an à la carte basis, and save money at the same time. (The average monthly cable bill was slightly north of $103 at the end of last year.) It also means that the aforementioned online giants are going to be enormous players in this new era, and that audiences are going to disperse even further.

As live sports programming gets decoupled from its traditional broadcast network home, it may be game over for conventional broadcast networks unless they change their business models. The competition to create the next water-cooler sensation—think Game of Thrones or The Walking Dead—will be fierce. Audiences are going to watch what they want, when they want, and on the device of their choosing, and that means there is no turning back to the golden days when the TV was like a hearth that the family gathered around. Now it is no longer a hearth, but a beating, heart-like organ, held in the hand of the individual as if it were an extension of one’s own body.

There is no turning back to the golden days when the TV was like a hearth that the family gathered around.

One only needs to look at conventional newspapers and their plodding inability to change their business models quickly enough for a parallel cautionary tale. The way consumers assimilate news in real time on their mobile phones and other devices has all but made printed dailies obsolete. In my hometown, it has been a death by a thousand cuts. When the area’s dominant theater chain pulled its daily advertising from The Oregonian, challenged by the near-identical information brought to readers’ fingertips from the likes of Fandango, we had reached a tipping point.

The paper cut home delivery to four days a week in an obvious attempt to wean me off my morning habit of sitting down to read the sports section with a steaming cup of coffee. If its desire was to push me online, it succeeded; I cancelled my subscription. Now, by the time their print version hits the stands, I’ve already read everything through other online sources and my Facebook feed. As for web-based news sources, I pick and choose those on an à la carte basis, and The Oregonian hasn’t just taken a back seat—it is in the rearview mirror. Call it unplanned obsolescence.

Thankfully for advertisers reliant on television advertising, Google, YouTube, Facebook, and, in a different way, Amazon all rely on advertising-based models for revenue, so “TV” advertising isn’t going away per se. But, like the programming on which it piggybacks, such advertisements will also have to be everywhere. This reality is a wake-up call to all media planning and buying agencies, and especially to those that traffic solely in television advertising as we knew it—they had better get busy diversifying, lest they go the way of the rabbit ears of yore.

The notion of a “second screen” presupposes that the television set remains the primary screen of choice. But look at generational media usage habits, and it is clear that younger viewers make no such distinctions between screens when they consume content. Say goodbye to “must-see TV” and hello to “must-stream TV.” It isn’t something that is looming on the horizon. It is here. Now. Your audience is changing channels. Are you?


Rick Petry is a freelance writer who specializes in direct marketing and is a past chairman of ERA. He can be reached at (503) 740-9065, online at rickpetry.com and @thepetrydish on Twitter.