Changing TV consumption a good thing: pundits react to IBM global study

Anheuser-Busch is using this Super Bowl weekend as the launch pad of 'The Bud Screen,' a new direct-to-consumer channel that offers viewers ads, programming and branded content downloadable to computers and iPods. CBS just announced the availability of Survivor on CBS.com for $1.99 per download. This would seem to support the findings of an IBM study recently released, The End of Television As We Know It.

Anheuser-Busch is using this Super Bowl weekend as the launch pad of ‘The Bud Screen,’ a new direct-to-consumer channel that offers viewers ads, programming and branded content downloadable to computers and iPods. CBS just announced the availability of Survivor on CBS.com for $1.99 per download. This would seem to support the findings of an IBM study recently released, The End of Television As We Know It.

The study is a global report on viewers’ shifting consumption habits from traditional TV box to short- and long-form content downloaded to wireless devices and PCs. Pundits’ reactions on this side of the border? Bring it on. And though its title may hint that the sky is falling, experts say the study is in fact, quite optimistic. A changing media landscape, they say, will ultimately pave the way for greater innovation, offering more opportunities for producers and broadcasters alike. And it’s the nets, content producers and agencies willing to take the risk and experiment now that will retain the audience later.

The global study involved interviews with Europe, Asia and North American-based C-level execs from the cable, broadcast and Pay TV nets, direct broadcast satellite providers and new entrant video telecom companies. Key findings include:

* Analysts predict TV usage will grow by an average of 1.7% per year through 2008

* Some users are moving from a niche orientation to individualized services; viewers are becoming audiences of one, with individual power to determine specifically when, how and what they watch

* Ad skipping is expected to lead to losses of 6% in U.S. TV annual ad revenues in 2009

* Network execs polled say their most significant competitive challenges will come from nontraditional threats like Internet portals (Google, Yahoo! and AOL) and content owners going direct

‘The title seems so dire yet the report is actually optimistic,’ confirms Cynthia Fleming, EVP at Toronto-based Carat Canada. ‘The whole industry just needs to step up. The big thing not addressed? Who’s going to own the content?’

The 27-page report finds that the global TV industry is shifting in such a way that as viewers are able to take greater control of their content environment, accessing at will their CSI or CNN via mobile TV or PC, traditional Canuck broadcasters currently protected by CRTC regs may potentially be left holding the proverbial bag. Nets may be passed over should content seekers go direct to the net or mobiTV, losing ad revenue that has thus far come from domestic ads running during American shows picked up here. The upside? Canuck nets may be forced to rely more heavily on Canuck productions. The downside? Will they be able to compete?

Fred Forster, president of Toronto-based PHD Canada says this could eventually be a good thing. ‘They have to be able to compete. They’ve been very protected by the CRTC and the reality now is that the CRTC won’t be able to control content.’

In a move announced earlier this week, however, the CRTC has requested that the three private broadcasters here should spend almost double what they spend (currently 3.3% of annual revenues) on original, Canadian dramas. Over the next five years, that spending will have to grow to 6%, while meeting ratings targets for home-grown shows.

For the nets and their content, Fleming warns: ‘They have to learn from the music experience. Consumers will find the content themselves unless you set up [the system] for them.’

Fleming also agrees with the report that the current traditional TV model (and the ads within it) has to be reworked for nets to survive. ‘I think at this point, they should be doing a lot of testing.’ She cites etc.tv, an application allowing for on-demand ads (see MIC Sept. 13, 2005), as a smart way to look ahead.

Forster echoes this, saying that as media consumers will control their content, they will control their ad consumption as well. ‘The new content delivery mechanism needs to look at whether people will pay for content with no ads. Or will they pay less for content with ads? If enough people are getting content from other sources, how can ads support that model? Traditional TV is threatened because targeting at the same CPM will be problematic.’

For Roma Khanna, SVP of content at CHUM, the upshot to all this debate is that ‘there are no platforms that matter. Only content matters.’ Khanna believes that as long as producers create compelling content, the eyeballs, and ultimately the ad revenue, will follow.

‘Compelling content isn’t compelling content because there’s nothing else on. There’s always something else on. And how do advertisers work into the mix? The key today is experimentation,’ she says.

To that end, CHUM is experimenting with short form content available via PC and mobile, as well as product sponsors riding on properties such as their VJ Search series and the upcoming Canada’s Next Top Model. Within the shifting landscape, Khanna believes that CHUM’s value to its audience is the relationship it’s continually building with it. ‘We are tastemakers. There needs to be someone to help you program. The sky is only falling if you want to keep doing business the way you’ve been doing it for the last 50 years.’

IBM’s research recommends the following six priority actions for execs:

* Segment: Invest in divergent strategies and supply chains to satisfy different consumer types

* Innovate: Create business models, pricing, windows, distribution and packaging by creating and not resisting wider consumer choice

* Experiment: Develop, trial, refine, roll-out. Repeat. And find new metrics systems as you go

* Mobilize: Create seamless content mobility for users on-the-go

* Open: Drive open and standards-based content delivery platforms to optimize content and revenue exploitation

* Reorganize: Reassess business composition against future needs

The full report is available at:

http://www-1.ibm.com/services/us/imc/pdf/ge510-6248-end-of-tv-full.pdf