Netflix CEO Reed Hastings said recently that he thinks the era of broadcast TV will last until around 2030 or so. Is that just the trash talk of an internet streaming TV company or is he right?
I think a bit of both. I do think that we are in the beginning stages of a paradigm shift and have said so many times. That doesn’t make me a genius (I am a genius for many other reasons) because it’s obvious that things are changing. How much are they changing? From 2002 to 2012, there was a 50% decline in TV viewership. 50 fricken percent! That is incredible.
Are those people not watching TV shows? No. The kids these days, along with wearing girl jeans and black eye makeup (I’m old), don’t watch TV the same way that we are used to watching it. Just because they are not watching TV in ways that Nielsen can record, it doesn’t mean they are all out there reading books. We can look at test scores to know that’s not happening so where are they? They have gone to streaming TV. So on the one hand Hastings is right. We are seeing the beginning of the end of broadcast TV. That doesn’t mean that they will disappear though.
According to Business Insider, the TV business is financially healthy even though fewer people are watching. How can that be? The answer is that as the audience becomes more fragmented, they also become more lucrative for advertisers and thus more expensive for them to chase with ads. Shows like The Walking Dead seem to be huge but ratings wise, aren’t anything compared to the networks yet advertising space on their show sells for premium dollars. Why? Because they have a very specific market that advertisers know they can reach with the show.
So financially TV is doing ok. The other reason why the big networks aren’t going to go away? They know how to stream too. They are bad at it right now, but they will get it soon enough. Right now if you want to watch any network show on demand, you are going to have to sit through commercials. That pretty much takes away any incentive fans of streaming TV have to watch a network show. No one wants to see those commercials. HBO Go for example, no commercials. CBS on demand though? Commercials and what’s worse is, you can’t fast forward through them like you can if you have their show on the DVR.
The networks will figure it out though. They are not going to just sit by and watch companies like Netflix wipe them out. So on one hand, Reed Hastings is right, but on the other, he’s just talking trash. We are not going to get rid of the networks no matter how much Netflix wishes that were the case.