Mark Pickavance looks at how the landscape of broadcast TV is being radically changed, even if many in this industry deny it’s happening
Christmas is long behind us, but over the festive people, anyone older than 50 years will probably have been thinking back to a bygone golden era of British TV. In the 1970s, Christmas meant a communal TV experience, where viewing audiences ran into many tens of millions for a selection of festive TV treats.
Almost everyone with a TV watched the Morecombe & Wise Christmas show, and the annual showing of The Great Escape usually nabbed a substantial audience.
At the time, it was difficult to imagine how Christmas would be different and how our relationship with TV would change. But it has, and the changes we’ve seen since then are likely to be dwarfed by those that are coming.
The Era Of Network TV
I’m not old enough to remember the original BBC broadcasts, but they went out to less than 1,000 TV sets. Shortly after they began, Adolf Hitler had them unceremoniously curtailed, the blighter.
TV didn’t come back to this country until 1946, and we didn’t get a second channel (ITV) until 1955. While ITV was eventually joined by Channel 4 and 5, the BBC was the dominant force in British TV broadcasting until Rupert Murdoch’s Sky network arrived in 1989 with its extensive satellite service.
The British public went from a handful of channels with relatively little on to hundreds, and the balance of power began to shift away from the traditional TV portals.
In terms of funding, the BBC had the licence fee to spend on its shows, whereas the commercial networks used TV advertising for revenue. While the BBC’s motivation always seemed less predictable, the commercial networks needed high viewing figures to justify their high advertising rates. They commissioned shows with a wide demographic appeal and promoted certain times and days for specific viewer engagement.
USA TV networks were much less orientated towards public service broadcasting, and there was massive advertising, product placement and sponsorship from the outset.
How much they got for an ad-break was entirely based on the viewing numbers, supplied by viewing analysts Nielsen. Shows that underperformed were soon axed, even in mid-season.
Famously, some shows never actually made it to a second episode because the networks could be so utterly ruthless. Even seminal classics like the original Star Trek were axed when they failed to deliver the millions of viewers the networks demanded for ‘prime time’ broadcast slots.
Episodes were made and never broadcast, the characters on shows disappeared without reference, and actors changed seemingly without those around them noticing. If Hollywood was la-la land, TV world was freakishly surreal.
Such was the power of the networks that entirely surreal things happened, like the infamous Bobby Ewing shower sequence in Dallas.
To recap: in the season eight finale of this show a main character, Bobby, played by actor Patrick Duffy is hit by a car and subsequently dies of his injuries.
A year later in the final episode of season nine, his ex-wife Pam, now remarried, wakes and walks into the bathroom to discover her previously dead ex-husband having a shower. The explanation, only presented in season ten, was that the whole of season nine (and bits of season eight) was a dream that Pam had. Even more bizarre, Dallas had a spin-off series called Knots Landing, where these events weren’t undone, and Bobby was still officially dead when that show ended years later.
The networks’ disdain for their viewers and those who created the shows was legend, and they entirely dictated the direction that broadcast TV took until the arrival of the specialist cable channels, like HBO and Showtime.
These, along with sporting sources like ESPN, drove the concept of a whole new income model, where the audience would pay specifically for shows they wanted to see. These shows generally weren’t segmented with advertising and didn’t adhere to rules about sex and violence that severely limited network broadcasters.
In what might be described as the second era of network TV, it was the cable networks that became the new powerbase, and the traditional TV networks became less influential.
NBC (NBCUniversal) was bought by cable operation Comcast in 2009, ABC is now owned by Disney, and CBS is controlled by National Amusements, which also owns Viacom and Paramount.
But while the range of content increased with the explosion of cable services, and in many respects better served the audience, it wasn’t all good news.
Unleash The Dingo
Due to the geographical scale of the United States, outside of major cities there isn’t much broadcast TV to talk about. If you want a good selection of stations, then there is only one choice: cable TV.
And when I said ‘only one choice’, I wasn’t kidding, because the way that cable companies operate in that country is to essentially divide up the population like a cake, where they all get one enormous slice. By not competing with each other, they avoid any silly price cutting malarkey and present most of the population with a Hobson’s choice of cable TV providers.
Statistically, the numbers are that 96% of US cable TV companies have a choice of two providers or less, demonstrating that competition in that sector doesn’t practically exist.
Unsurprisingly, this has led to cost rises in excess of inflation, dire customer services and massive lobbying of the US political system by those involved to make sure this golden goose keeps on laying.
Those thinking that I’m over-egging that connection need to realise that Thomas Wheeler, current chairman of the FCC (Federal Communications Commission) was prior to this role a lobbyist for the cable and wireless industry, and was president of the National Cable & Telecommunications Association (NCTA) and CEO of the Cellular Telecommunications & Internet Association (CTIA).
Most Americans were gloriously unaware of this, until British comedian John Oliver did an excellent expose on net neutrality on his US show and described Wheeler as like a ‘dingo’. As in, ‘Needing a babysitter, and hiring a dingo’.
Tom Wheeler has since stated for the record in Congress that ‘I am not a dingo’, but the impression is that those in the business of shafting the American consumer have their own predatory quadruped in this particular hen-house.
Supporting that analysis are proposals by the FCC that would create a twotier internet, where US cable companies like Comcast and Verizon would be able to bill the likes of NetFlix and Amazon for delivering their content fast (i.e. watchable), and everyone else who didn’t or wouldn’t pay would end up in a digital slow lane.
This breaks a basic tenant of the internet since its inception, and goes to the very heart of Net neutrality.
Net Neutrality
For those reading this who from the outset wondered what it had to do with computers, your perseverance is at last to be rewarded.
How the future of network TV across the world is tied to net neutrality is yet another disheartening story of the bad things that big companies do when their existing business model is threatened.
What’s first critical to understand is what net neutrality is, because most of the public is generally under the delusion that it has to do with who runs the internet. It isn’t. It’s about George Orwell’s classic 1945 allegorical novel Animal Farm. Please stick with me; it will all make sense eventually, I promise.
In animal farm, Orwell represented the rise of the Soviet system in Russia using the establishment of independence by farm animals. Initially the idea of a society where the elite (the farmer) no longer controls the lower order was enthusiastically greeted by the abused majority. They write a series of slogans on the barn, among them the critical commandment “All animals are equal.”
However, the greed of some animals – unsurprisingly the pigs – causes them to adjust the status quo in their favour. The commandment is eventually rewritten in protest as, “All animals are equal, but some animals are more equal than others.”
Orwell was pointing out in his fable, if it was really needed, that the Russian people had essentially swapped the Tsar for Stalin and weren’t actually any better off than they had been. Its Vladimir Putin’s favourite book, I’m sure.
The idea of net neutrality is the communist ideal in my story, where all data packets are created equally. Therefore, when I go to access a website or a streamed TV service, the data I get or send is treated the same as my neighbour’s, who is Skyping a relative on the other side of the world.
While I’m not a massive socialist politically, that seems a fair solution.
Even if it might fit most consumer ideals, those who control the bandwidth don’t care for it at all. In their perfect world, they would like to (and do) throttle the streams of companies they consider to be competing with, for a business advantage.
This is one of the critical reasons that net neutrality matters, because without it bandwidth will become the weapon of choice for the cable networks to stifle their competitors, however big or small.
If you think this wouldn’t happen, then you need to consider what happened to NetFlix recently when it was negotiating with Comcast to traverse its network.
Magically, as the talks went on, the speed of NetFlix for Comcast customers declined markedly, only to jump back to previous levels when the deal was done. So blatant was this action that many in the communication industry warned that should this sort of ‘shakedown’ be allowed to continue, it would effectively ruin it as a content marketplace.
Those who think this is an American problem should look at how BT is expanding into TV and now mobile services in this country. As some point, it will control both the means of delivery through the internet backbones, and it will also be providing services over that system. If there is a bandwidth shortfall, will it share the pain evenly or direct most of that to those who aren’t directly its customers?
What the ISPs are doing is working both ends of the deal, where they charge the broadband/cable customers for a high speed link and then charge the content providers when those already paying customers use it.
So desperate are the ISPs to remodel the internet to their business plans that Verizon actually sued the US government to get legislation changes, opening up the door to killing net neutrality.
And its major competitor Comcast spent more than $18m in lobbying Capitol Hill in 2013, seconded only by weapon systems maker Northrop Grumman in its splashing of cash.
Another dimension to this is that while all of this is going on, the TV networks have been denying for some time that any problem exists with the current business model for TV distribution.
In Denial
When US TV viewing audiences started to decline originally in the 1980s, the argument was made that the people weren’t watching less, they just had more channels to divide their viewing habit over. But this wasn’t the case, and however the networks sliced and diced the numbers, new shows never seemed to get the collective audience the older ones once did.
Those in TV advertising also made the interesting assertion that while fragmented, these audiences were actually more valuable for advertisers. How? Well, if you’ve a fishing channel and 1,000 people are watching it, then a good number of those are likely customers for those who sell fishing equipment. It’s the notion of focused selling, and the economics are better for those wishing to only reach their core audience.
Ironically, this has led to the rate of price growth for advertising to increase at an even greater speed than viewing audiences have declined. Advertisers get less for their money, then pass it on to the consumer in their pricing, and the world turns.
Another curio of the viewing decline was how those who track these statistics denied the existence of ‘cord cutting’ as it was described. The term refers to those people who decided to live without TV and decided either not to replace them or buy one in the first place. But it’s also a title adhered to those who watch very selectively or not through conventional methods (e.g. online).
Logically, if fewer people are watching, then presumably some of them cut the cord? No, that’s ridiculous. According to viewing statistics company Nielsen, they didn’t do that and saying so is preposterous. As recently as 2010, Nielsen described the idea of cord cutting as a “busted myth”, for which there was no validating data. The snag to that assertion was that Nielsen wasn’t actually assessing how much online viewing was going on, as it deemed this information too challenging to obtain.
That’s very odd, because it’s all digital and internet connected, so obtaining information about online viewing is relatively easy, especially when compared to widely tested viewing, where the technology is inherently receive-only.
A more accurate statement might be that it’s difficult if you’re not actually interested in finding out, and you’d like to avoid knowing. It appears Nielsen wasn’t remotely interested, and fabled cord cutters were fantastical beasts written only about in works of fiction.
Not long ago, Nielsen finally accepted that perhaps there was a viewing audience out there, and maybe it should include it. What it admitted was that in the critical 18 to 49 demographic, conventional TV viewing dropped a whopping 7% year-on-year from October 2013. And 40% of households now have a subscription to streaming video services, up from 34% nine months ago.
What it didn’t explain was how the subscribers went from 0% level to 34% while remaining totally mythical until now and how this news came as ‘shocking’ to those executives at Nielsen who spent many years intentionally ignoring it.
Historically, Nielsen also spent a good while disregarding deferred viewing on PVRs, until in 2005 it finally started to include that data. In 2006, a total of 15.2 million PVR households existed in the USA, and half that many in 2004. Forgetting more than ten million potential viewers could massively affect what gets cancelled or renewed, but until viewing numbers got very silly indeed they were never counted.
On the basis of the viewing figures that most prime time US shows can reasonably expect these days, 20 years ago they would have all been cancelled mid-season.
Don’t for one minute think that here in the UK things are any better, because instead of Nielsen we have BARB, which uses a ‘tried and tested’ technology almost unchanged from John Logie Baird’s day. According to BARB, our statistics are culled from 5,100 British homes where 12,000 people live. That’s a sample base of one in 5,600 of the population.
According to its website, it apparently has software on computers in 20% of the panel homes (about 1,000), but it hasn’t yet added tablet and smartphone use, watching away from the home, piracy or pub viewing.
The big similarity is that both BARB and Nielsen feel their future is entirely based on pleasing existing network TV players, and BARB is owned by BBC, ITV, Channel 4, Channel 5, BSkyB and the IPA (Institute of Practitioners in Advertising). Therefore it would be unexpected for it to release a report any time soon saying that conventional linear TV is on the rocks, and its paymasters are those in the firing line.
The Future Starts Here
Predicting where the future lies is a foolish exercise, but it’s already obvious that it won’t be where we are now, with network TV doing all the firing and hiring. In fact, what’s really amazing about this, especially in the US, is how they’re being elbowed aside by more agile service providers. Amazon and Netflix are the shock troops of this rebellion and have recently crossed the Rubicon from being purely streamed content distributors to production catalysts.
Netflix has had much success with shows like Orange is the New Black, and just recently Amazon commissioned Ripper Street’s third season.
That last production is very interesting, not least because it was originally a show that the BBC commissioned for two seasons, but which it decided it didn’t want to fund for a third. This despite it being voted the best show of 2013 in a poll the BBC’s own Radio Times TV guide and magazine ran.
In stepped Amazon Prime (formerly known as LOVEFiLM) and backed the production, and it sold on second screening rights to the BBC. This could well become a model for future shows, where the wider distribution model offered by streaming services makes them more affordable and therefore more likely to be made.
The greater problem is where this leaves the likes of the BBC, which doesn’t have a remit to become a global Fox/News Corp conglomerate. Most viewers want to choose their content and not have a publicly funded corporation simply repackage it for a hefty annual fee. What the savvy viewer is ultimately looking for is an entirely tailored service where you can watch only what you want and pay only for that.
On that basis, the BBC doesn’t actually have a future, unless we’re looking to pay for a mandatory service that charges us for its global branding exercise. And if we really want someone to pick our TV, we can find someone cheaper and with a bigger catalogue than the BBC owns.
If it doesn’t make or commission things to a wider plan, then it’s just another streamed service provider – and one with a horrible track record of not understanding big IT infrastructure projects.
In the meantime, those that control the internet backbones are looking to milk the content streaming business by abolishing net neutrality and probably bring their own associated content businesses online once the market has matured.
A potential merger between two of the largest US ISPs, Comcast and Time Warner, is already ringing alarm bells, being that one of them is already a major player in content creation and online gaming.
The similarities between this and what happened to the film industry after WWII are striking. The big Hollywood businesses, like Warner Brothers, engaged in a vertical market where they not only owned the film stars but the studios, the production facilities, the distributors and the cinema chains. This wasn’t good for choice, quality or pricing, and ultimately legislation was enacted to break up these companies.
As for the bigger picture of TV viewing, many in the US are waiting for Nielsen to explain how cord cutting is now real and not a myth, and why they’ve been encouraging US TV networks to cancel shows with a healthy audience for years through tactical misinformation.
So far, that news story hasn’t appeared on any TV – yet.