Predicting TV's Future

Dave Morgan
Thursday, September 17, 2009

Television is undergoing an enormous technology-driven transformation. This fact is well known to all in the industry -- and is even obvious to all those who watch TV. Yesterday, I spoke about some of the effects of this transformation at the Collaborative Alliance, an important television industry group focused on "advanced TV" issues. The Alliance was created and run by Mitch Oscar of MPG (a regular contributor to MediaPost's TV Board).
Here are some of the points that I made, based upon nine months of intensive analysis by my team at Simulmedia of anonymous, second-by-second set-top-box viewing data, representing millions of U.S. viewing households:
TV has a "discovery" problem. The explosion of choices in new channels, programs, platforms and viewing modes, coupled with obsolete discovery and navigation tools, make it impossible for viewers to know about all of the programs that they might enjoy. Today, the number of new programming choices is growing five times more than the amount of time people allocate to TV viewing.
Program loyalty is dying; everyone is tasting and sampling. Viewers are loyal to television, but they are no longer very loyal to individual programs, in spite of media buzz to the contrary. Sixty percent of viewers of all shows last year watched only one episode. Of those viewers, 40% had their televisions turned on during that show's time slot for at least one-half of the show, but they were watching other programs as well.
Loyalty to genre and time slots is strong, and viewership is very predictable. Loyalty to specific programs is very poor, but loyalty to types of programming and specific days and time-slots is very strong, and very predictable. Our analysis reveals that 70% of a person's viewing habits can be predicted with 99% accuracy based upon one year of historical viewing data. Thus, while audiences may be fragmenting at an extraordinary rate, where they are fragmenting to is quite predictable.
"On-air" program promos are critical to driving viewership. If someone has not seen an "on-air" program promotion, they will not see the show. That statement can be made with 99.3% accuracy. Further, if promos are delivered to viewers who have watched programming of a similar genre in the past, the promos are 62% more effective on average at driving actual viewership than promos that aregenerally targeted. Those that are delivered the day of a show are 200-300% more effective than those delivered a day or two before the show airs.
What does all of this mean?
To me, the numbers above make it clear that television networks and programmers are having a major problem maintaining their "lifeblood": their viewers. Audience fragmentation is clearly a very serious problem, particularly since the premium pricing in television's ad-driven model is built upon TV's ability to deliver massively scaled audiences on a per-program basis.
However, all is not lost. It's also clear that the fragmentation can be predicted, and even reversed, with a better understanding of how to find receptive audiences and deliver more relevant program promotions.
Like those in online media have learned over the past 15 years, the user is now in charge. What do you think?