US TV prepares for $2bn ad shortfall (Dinosaur Media DeathWatch™)

Financial Times ^ | June 28, 2009 | Matthew Garrahan

[abb]

The US television industry faces a $2bn slump in advertising revenues during the next four years as advertisers turn away from broadcast and cable networks, according to a new report.

Digital video recorders that allow viewers to skip through commercials have knocked confidence in broadcast and cable advertising while younger, tech-savvy audiences are deserting their TV sets to spend more time online.

The Global Media Intelligence report by Screen Digest, the media research firm, says some of the decline will be clawed back by US TV networks by online video advertising, which it expects to triple during the next four years.

But with online video advertising representing only 2.2 per cent of all TV advertising, this will not be enough to offset the slump, exacerbated by the recession.

Screen Digest forecasts US broadcast and cable advertising revenues will fall from $69bn in 2008 to $67bn by 2013.

“We’re at an inflection point in the TV business model,” Arash Amel, one of the report’s authors, told the Financial Times. “Online video is not mature enough and won’t mature quickly enough to fill the gap left by the decline of traditional TV advertising.”

However, he said online video advertising was growing “exponentially” – with the big four US networks dominating the nascent market at the expense of sites such as YouTube.

“Sites marketed and sites directly supported by the [important] content owners have gained a [substantial] lead over third-party sites like YouTube and Joost,” he wrote in the report.

Online video has boomed in the three years since ABC became the first network to start streaming full episodes of its shows online. Since then, every other network has followed suit, with CBS, NBC and Fox each promoting its web service to its TV audience.

In the UK, the BBC has quickly built an online audience with its iPlayer. ITV and Five have also put programming online.

In the US, News Corporation and NBC Universal own Hulu, a free streaming service that operates as an online hub for their TV content. The site is only available in the US, but there are plans to launch it worldwide.

Walt Disney, which owns ABC, recently joined Hulu as an equity partner.

The success of Hulu and the sites operated by ABC, CBS, NBC and Fox has given the big US networks a dominant position in online video advertising.

They account for more than half of the $448m ad-supported online TV market in the US in 2008. Screen Digest expects the market to be worth $1.45bn by 2013.

In making their content available for free online, Mr Amel said the networks had ensured they would avoid the fate of the music industry, which failed to respond to the threat posed by the internet.

Younger viewers are watching more TV online and using services such as Hulu, with many ditching their cable subscriptions in favour of internet viewing.

The next challenge for the networks is to capitalise on this shift, according to Mr Amel, by running more ads per show.

Programmes streamed on the web typically contain five or six commercials per hour – compared to more than 20 that run in each hour of broadcast TV.

“There’s no reason why online video won’t make up the shortfall [in TV advertising] within five years,” said Mr Amel.

“But the question is how aggressive the networks in the US and the rest of the world are prepared to be.”

[abb]

"By the end of this decade or shortly thereafter, television networks as we know them today will cease to exist. They will be just another url on the world wide web competing against millions of others."

"Network evening newscasts will go dark after the '08 elections and their news divisions disbanded."

Walter Abbott, (b. 1950), Media observer and commentator

[abb]

ping

[abb]

http://adage.com/mediaworks/article?article_id=137628
Why the New York Times Co. Will Be in Business Until at Least 2012

http://paidcontent.co.uk/article/419-moreover-may-sue-newspaper-biz-over-online-copying-levy
Moreover May Sue Newspaper Biz Over Online Copying Levy

http://www.salon.com/mwt/col/tenn/2009/06/29/journalism/
I studied print journalism: Now what?

http://www.forbes.com/2009/06/28/anschutz-weekly-standard-business-media-examiner.html
The Stealth Media Mogul

http://www.nytimes.com/2009/06/29/business/media/29coverage.html?_r=1&ref=media
Journalism Rules Are Bent in News Coverage From Iran

[rockinqsranch]

“.....while younger, tech-savvy audiences are deserting their TV sets to spend more time online.”

I know many, I mean many in their 80’s bangin’ away quite effectively on their keyboards. It’s not just the young that are tech-savvy.

[shove_it]

All that uninterrupted coverage of 0bama every day isn't helping any.

[TomGuy]

Programmes streamed on the web typically contain five or six commercials per hour – compared to more than 20 that run in each hour of broadcast TV.

Overkill is part of the problem. Showing the same ads 4-6 times per hour is ridiculous. Sometimes, the same ad runs twice during the same commercial break period. The content of programs have been reduced over the years to make way for more repetitive commercials.

Content quality is another problem.

[norraad]

Dig it, daddio, I'm old as the hills w/my 50's jive talk and I quit the whore media long ago.

As a matter of fact I was just watchin' Repo Man(produced by Mike Nesmith of the Monkees) on my streamin' Netflix account, when I got bored and dropped in to see "whaaaat's happ'nin'" here.

[caver]

“Showing the same ads 4-6 times per hour is ridiculous. Sometimes, the same ad runs twice during the same commercial break period.”

You are correct. I’m sick of hearing the same old commercials over and over.

[Sig Sauer P220]

Government takeover.

[KevinB]

I know many, I mean many in their 80’s bangin’ away quite effectively

Cool, gives me something to look forward to.

[jmaroneps37]

This is a very nice way to start the week after the cap and tax vote. Thanks for this good news.

[sr4402]

The US television industry faces a $2bn slump in advertising revenues during the next four years as advertisers turn away from broadcast and cable networks, according to a new report.

Advertisers beginning not to feed the dog that bites them.

[abb]

http://www.realtimecannes.com/2009/06/yes-we-cannes-a-week-of-celebration-and-hope-for-an-industry-that-will-never-be-the-same-again.html
Yes We Cannes:
Attendance and award entries were down 40 percent.

http://www.broadcastingcable.com/article/307012-KTTV_KCOP_Brace_for_Layoffs.php
KTTV, KCOP Brace for Layoffs
Fox-owned L.A. stations may cut 95 staffers

[N. Theknow]

I know many, I mean many in their 80’s bangin’ away quite effectively on their keyboards. It’s not just the young that are tech-savvy.

A friend of mine retired and moved to Ft. Myers, FL.

He set up a business out of his home selling computers, software and training to other retirees and is doing quite well.

[bert]

The most interesting part is Hulu. All except CBS are now joined.

What malevolence will result from that conspiracy?

[abb]

http://www.laobserved.com/archive/2009/06/big_layoffs_at_kttv_fox_1.php
Big layoffs at KTTV Fox 11

http://adage.com/mediaworks/article?article_id=137614
AOL Cracks Web Publishing — Sans Time Warner

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/06/27/BU2918EH8L.DTL
News as a social medium

http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=108814
Nielsen: Iran Election ‘Watershed Moment’ For News, Media

[Redbob]

Most of that shortfall shortfalling on ABC, hopefully.

[TomGuy]

You are correct. I’m sick of hearing the same old commercials over and over.

There is a psychological component to that, as well. The mind learns to 'tune out' the repetitive commercials.

Many times I have watched a commercial and pondered: How is that ad going to make me want to rush out and buy that product? Most times, the answer: It isn't.

[abb]

http://weblogs.jomc.unc.edu/talkingbiznews/?p=9866
More than 250 business journalism jobs lost in first six months

http://www.niemanlab.org/2009/06/sports-leagues-as-media-moguls-what-happens-when-the-people-we-cover-start-to-control-the-news/
Sports leagues as media moguls: What happens when the people we cover start to control the news?

http://www.niemanlab.org/2009/06/could-strategic-bankruptcies-be-needed-to-transform-us-newspaper-enterprises/
Could strategic bankruptcies be needed to transform newspapers?

[TomGuy]

I am using Hulu more and more.

Even on cable internet, it is sometimes glitchy. That can be my ISP, which isn’t always stable.

But, I am adjusting and watching more on Hulu.

Similar TV/Movie websites are Veoh.com and Fancast.com. [Fancast is owned by Comcast, IIRC]