Henry Blodget: TV Industry Set For Collapse

written by: Richard Kastelein

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Henry Blodget, CEO and Editor-in-Chief of Business Insider,  rattled a few cages last week with a highly provocative editorial forecasting the death of TV as we know it today. Finding a parallel in the print industries' implosion due to the Internet, as I have done as well (along with the music industry), Blodget hammers at the value chain with a number of insights.

From Business Insider:

In our household, as in many households, television consumption has changed massively over the past decade, especially over the past 5 years.
  • We almost never watch television shows when they are broadcast anymore  (with the very notable exception of live sports)
  • We rarely watch shows with ads, even on a DVR
  • We watch a lot of TV and movie content, but always on demand and almost never with ads (We're now so used to watching shows via Netflix or iTunes or HBO that ads now seem like bizarre intrusions)
  • We get our news from the Internet, article by article, clip by clip. The only time we watch TV news live is when there's a crisis or huge event happening somewhere. (You still can't beat TV for that, but soon, news networks will also be streamed).
  • We watch TV and movie content on 4 different screens, depending on which is convenient (TV, laptops, phones, iPad)

If not for live sports, which are consumed by exactly one member of our household (me), there is no way we would be paying for cable TV or any other kind of traditional pay TV anymore. And even as a sports fan, I'm starting to find the fragmented multi-channel coverage of the few sports I watch--like tennis (Grand Slams), baseball (Yankees), and football (Jets/Giants)--so annoying that I may soon investigate just getting those via direct subscriptions.

In other words, in our household, and in many other households like ours, the same thing has happened to the TV business that has happened to the newspaper business:

The user behavior that supported the traditional all-in-one TV "packages"--networks and cable/satellite distributors--has changed.

We still consume some TV content, but we consume it when and where we want it, and we consume it deliberately: In other words, we don't settle down in front of the TV and watch "what's on." And, again with the exception of live sports, we've gotten so used to watching shows and series without ads that ads now seem extraordinarily intrusive and annoying. Our kids see TV ads so rarely that they're actually curious about and confused by them: "What is that? A commercial?"

Aside from his own household, he also muses on the industry in general:

What is the shift in user behavior likely to do to the TV business?

  • The traditional "network" model is likely to break down and be replaced with far larger "libraries" of content and far more efficient content production, acquisition, and distribution. Some of the content produced by networks will still be consumed (and, therefore, produced), but the idea of getting "affiliate fees" and selling advertising for each of dozens of branded networks seems absurd. This change is already occurring, of course: Traditional networks are being replaced by Netflix, iTunes, and uber-networks like "NBC Universal" and "Time Warner." There is so much money in the network business right now that, initially, this shift won't mean much. Over time, however, it will. Unprofitable networks will be merged with profitable ones. Unprofitable shows and overpaid talent will be cut. Overpaid managers will get fired. Production costs, on aggregate, will drop. Sets, crews, newsgathering, etc. will be consolidated. The fat will get squeezed out of the system.
  • The cost of traditional pay TV will have to drop--users will have to get more for less, or they'll stop paying for much at all. I might value the TV content we get through our cable company at $20 a month--about 1/5th of what we pay for it. Eventually, as soon as I can figure out ways to get the few sports I watch another way, we'll stop paying the $100.
  • Ultimately, the distinction between "TV" and other forms of video content will disappear. We'll pay some distributors for bundles of that content, we'll buy some of it directly, and we'll get some of it for free. But a lot of the money that is currently being wasted by us and to reach us will be spent much more efficiently.

Bottom line, as it has in newspapers, the TV business is going to have to get radically more efficient. It won't disappear--newspapers haven't disappeared--but the fat and happy days will have to end.

As for the other question, "when," the answer may be "now."

 

Read full article here.

 

 


 

About the Author

Richard Kastelein
Founder of The Hackfest, publisher of TV App Market and global expert on Media & TV innovation, Kastelein is an award winning publisher and futurist. He has guest lectured at MIT Media Lab, University of Cologne, sat on media convergence panel at 2nd EU Digital Assembly in Brussels, and worked with broadcasters such as the BBC, NPO, RTL (DE and NL), Eurosport, NBCU, C4, ITV, Seven Network and others on media convergence strategy - Social TV, OTT, DLNA and 2nd Screen etc.

He is a Fellow of the UK Royal Society of Arts (RSA) and UK Royal Television Society (RTS) member.

Kastelein has spoken (& speaking) on the future of media & TV in Amsterdam, Belfast, Berlin, Brussels, Brighton, Copenhagen, Cannes, Cologne, Curacao, Frankfurt, Hollywood, Hilversum, Geneva, Groningen (TEDx), Kuala Lumpur, London, Las Vegas, Leipzig, Madrid, Melbourne, NYC, Rio, Sheffield, San Francisco, San Jose, Sydney, Tallinn, Vienna, Zurich...

He's been on advisory boards of TEDx Istanbul, SMWF UK, Apps World, and judged & AIB awards, Social TV Awards Hollywood, TV Connect & IPTV Awards.

A versatilist & autodidact, his leadership ability, divergent and synthetic thinking skills evolved from sailing the world 24000 miles+ offshore in his 20′s on sailboats under 12m.

He spent 10 years in the Caribbean media & boating industry as a professional sailor before returning to Europe, to Holland.

A Creative Technologist and Canadian (Dutch/Irish/English/Metis) his career began in the Canadian Native Press and is now a columnist for The Association for International Broadcasting and writes for Wired, The Guardian & Virgin. His writings have been translated into Polish, German and French. 

One of Kastelein's TV formats was optioned by Sony Pictures Television in 2012. 

Currently involved in a number of startups including publishing TV App Market online, The Hackfest and Tripsearch TV. As CSO for Worldticketshop he helped build a $100m company.

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