According to Matthew Garrahan of Financial Times, the number of people subscribing to US cable television services has suffered its biggest decline in 30 years as younger, tech-savvy viewers lead an exodus to web-based operations, such as Hulu and Netflix.
I’m not sure the implications of this are staggering, because (a) we saw it coming, and (b) the diversification of advertising to different mediums is already underway. Let’s start with the first point – the music industry was the guinea pig that suffered the digital experiment first. When online music hit, it fundamentally changed the music industry. Gone were albums – gone were mega labels that could do no wrong – and gone was the power of Billboard charts to drive ancillary parts of the industry (like radio). My personal opinion is that it was the mp3 player – not online music – that changed everything. When the player itself became small and cool looking (and easy to operate), then people really embraced online music. Sure, the tech savvy people had already made the switch – but not my Mom and Dad. Now my Mom (who has NO sense of technology) uses an iPod.
So when I read that the total number of subscribers to TV services provided by cable, satellite and telco operators fell by 119,000 in the third quarter, compared with a gain of 346,000 in the third quarter of 2009, I’m not surprised. Not because I think people are huddling around their computers – Hulu and other services like it have been around for awhile – I think it’s because people now have abetter hardware option for utilizing these services (think iPad). I’m a tech guy – but I never saw any benefit to watching TV shows on my laptop. I would DVR everything – skip commercials and watch at my convenience. Now that I have an iPad, I have to really stop and think of the last time I watched TV. It’s the hardware that made me change – not the availability of service. I’ll know that the cable world is over when my Mom switches to Google TV – that will be proof that cable is dead.
Garrahan continued the article by noting that the data suggest that the growth of Hulu and Netflix has become problematic for cable operators. He also noted that research from The Diffusion Group, a technology research company, found that more than a third of iPad users were likely to cancel their pay-TV subscriptions in the next six months. This leads me to a review of the second point, which is that advertising agencies have already been working to move messaging and brand awareness to different mediums. If you’ve watched a program on iPad (say, through the ABC Player app), then you know that the commercials are short and usually for 1 brand. That’s how I expect to watch TV now – I don’t watch commercials on my DVR – I don’t want to watch them on my iPad. However, I am willing to accept “X” amount of advertising in return for “Y” (the delivery of content to me in a more convenient manner).
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