Wednesday, October 12, 2011

"You watch TV on TV?!?!"

Today, the primacy of broadcast television is being economically challenged by the rise new technologies and viewing methods. The primary revenue stream for broadcast television is, and has been, advertising revenue. Advertisers pay a certain amount of money in order to buy airtime from broadcasters, which gives them a certain amount of time to “sell” their product to viewers during broadcasts. The increasing popularity of the internet and mobile devices threatens this model because these new modes of viewing programming provides viewers with more accessible and less interrupted content, taking their eyes away from television screens and putting them on computer monitors, and hand held devices. Because the price of advertising is directly related to viewership, broadcasters are losing (or not making) the same amount of money selling ad space without these technologies. In order to hemorrhage this lost ad revenue, broadcasters are beginning to provide their programming on their web sites, hulu, itunes, etc. where they can still sell advertising, or sell their programming to viewers. While moderately successful, these strategies are only netting pennies on the dollar when compared to the money that could have been made if viewers were still watching TV on their TV.

This shift in the business model is making broadcast television less profitable, which has resulted in shifts in content. Broadcasters are now more inclined to “play it safe” in terms of their programming, and tailoring their programming to either the most profitable demographics or demographics that still watch TV on TV. If I were a television executive I would aim to adjust my content, and not my business model to retain viewership, and increase profitability. I would target neglected demographics with cheap programming with the hopes of reaching niche groups that would be happy to watch lower quality programming as long as it was tailored to them. I believe this would result in a lower viewership, but the combination of cheaper production, and access to niche audiences would drive profits up.

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