us watch_us watch 26/02/2015 10:20 Page 1
Rewriting the rulebook
According to Larry Gerbrandt, the habits of 'millennial'
viewers in the US are causing broadcasters to re-evaluate
business models.
he viewing data has
been piling up for
months, but has
turned into a potentially
apocalyptic trend line:
according to Nielsen viewing
data, traditional TV viewing
has dropped 10.6% between
September and January
among the 18-34
demographic so highly
coveted by advertisers.
This isn’t a short-term trend
either. The drop-off in viewing of
traditional TV among these
viewers has been going on since
2012 and tracks with the growth
of SVoD services such as Netflix
and Amazon Prime along with an
intense focus on episodic TV
series by premium channels HBO,
Showtime and Starz.
The shift in viewing is visible
among both broadcast and basic
cable networks. It also presents a
real conundrum that touches
every quadrant of the TV
business. The conundrum is that
millennial viewers are flocking to
alternatives that don’t carry
advertising and they also program
shows in ways fundamentally
different than linear channels.
Netflix, for instance, offers the
entire 'season' of a series on the
T
Viewers are
flocking to
alternatives that
don’t carry
advertising
première night, which promotes
the increasingly popular practice
of binge viewing. The
millennials, raised in homes with
DVRs and set-top boxes that
could access VoD offerings by
networks such as HBO and
Showtime, had already
developed a taste for the guilty
pleasure of watching an entire
28 EUROMEDIA
season of show over a long
weekend and doing so largely
without commercial
interruptions.
Herein lies the conundrum.
Millennials are not watching less
television—indeed the data
suggests overall television usage
is up significantly—but are
increasingly shifting it from adsupported platforms to
commercial-free subscription
supported services beyond the
reach of traditional advertising
messaging. For the ad-supported
networks, faced with increasingly
higher programming costs, the
alternatives are not particularly
palatable to either viewer or
advertising.
One is to increase advertising
inventory. Through the use of
editing and time compression,
some cable networks are now up
to more than 17 minutes of
commercials per hour, a trend
which encourages viewers to
record programmes to DVRs and
fast-forward commercials later
on. Ad-skipping is doubly
injurious because it not only
makes sponsor messages less
effective but it also negatively
impacts the ability of a network to
promotes its own new
programmes.
The other is to raise cost-perthousand ad rates to offset the
viewer erosion. Advertisers are
reacting by shifting a greater
portion of their budgets to the
emerging platforms, especially
YouTube and Facebook or to a
growing number of OTT channels
(over 1,500 are now available on
platforms such as Roku, Google’s
Chromecast and Amazon’s
Firestick).
US broadcasters operate under
federal licenses with fairly
stringent content restrictions
regarding
Larry Gerbrandt
[email protected] has been a
media analyst for more than 25 years with
companies such as Kagan and Nielsen. He
is a principal at Media Valuation Partners,
which provides strategic consulting, research, valuation and
expert witness services and is a managing director of Janas
Consulting, which provides management consulting, valuation
and investment banking services.
language, sex and violence. Adsupported cable channels,
especially those carried on basic
tiers, often adhere to fairly
conservative self-imposed
restrictions, especially during
early evening hours.
Premium channels such as
HBO and Showtime and the OTT
offerings from Netflix and Amazon
don’t suffer from the same
handicap and for a millennial
generation exposed to graphic
Internet porn and to increasingly
violent video games, the
broadcast