Eight Developments That Are Disrupting the TV Industry
TV is being disrupted on every front: its main piece of hardware is in danger, its content is set to be delivered through new channels, and its programming quality is only getting better. Jeffrey Cole, director of University of Southern California's Annenberg Center for the Digital Future, detailed the transformation at the IAB Annual Leadership Meeting. Here are the highlights.
The TV set is in danger. The behavior of recent college graduates often indicates the direction of the market, Mr. Cole said. When people reach this phase, they start to eliminate those things they grew up with and are no longer willing to pay for. College graduates first gave up land lines and printed newspapers. Then came cable and satellite. Now, Mr. Cole said, they're giving up on TV sets in favor of other devices.
But recent grads are not giving up on TV. "Their interest in television is greater than any generation we've ever seen," Mr. Cole said. "They just want to watch where they want, what they want and, importantly, they don't want to spend $85 dollars a month."
HBO is fine with users sharing logins. For every legitimate user of of an HBO login, there are four people using it illegitimately, Mr. Cole said. But HBO is fine with this, because it hooks those illegal users on the product, he said. "They're like crack dealers handing out free samples."
Expect HBO streaming to be expensive. HBO has not yet named a price for its impending streaming service but Mr. Cole expects it to cost somewhere between $18 and $20 per month. That price, he said, is far too expensive, telling the crowd $12 per month would be more appropriate. That fee would give HBO $4.50 more than the $7.50 per subscriber it takes home from traditional cable arrangements, he said. A win for everyone.
CBS also costs too much. "CBS, I think has made a colossal mistake going over the top at $6," Mr. Cole said. The channel is free with an antenna, and its streaming version does not include the NFL. A free, ad-supported streaming model would have been a better bet, he said.
Expensive streaming options give cable a chance. "The cable companies, who really had a lot to fear from over the top, now have been given a reprieve," Mr. Cole said. The aggregate price of streaming options will make it easier for the cable bundle to compete with them. "They've been given an opportunity to live," he said.
Nobody watches bad TV anymore. Mr. Cole recalled a time in the 1980s when he would watch terrible television between 4 a.m. and 5 a.m. Now, he said, you can always watch something good. "Content is king-er than it has ever been," he said. "Nobody watches crap anymore." This is partially due to a new desire by top flight actors to work in TV and, of course, on-demand viewing.
Get ready to watch movies at home. The movie industry has long discussed "day-and-date" premieres of movies, which means releasing a movie in theaters and for home viewing on the same day. Mr. Cole said the magic number for selling movies for home viewing is between $46 and $54. That may sound like a lot, but once you add up the damage of $11 dollar tickets, food and a babysitter, the price becomes far more attractive, Mr. Cole said.