Television rediscovers its self-belief
Recessions are rarely kind to advertising20. A major part of television's revenues is from commercials. Although the prospects for television in 2009 do not look great, the year ahead could prove to be a year of renaissance for the small screen.
One of the boosts that television is likely to receive is in viewing hours, which tend to be counter-cyclical. Indeed, in the latter half of 2008, average viewing hours were already rising in some major markets as consumers increasingly entertained themselves at home21. Viewing hours may be boosted by digital switchover, one impact of which is to increase the number of channels available to consumers. Overall, in 2009, viewing is likely to rise by 30 minutes per week per viewer.
The status of television in 2009 may also be boosted by its pre-eminent role in two of the major global events of 2008: the Olympic Games and the US Presidential Election. Both events also saw heightened use of a range of other media, from online video to mobile Internet, to distribute news. But television appeared to take the dominant role, from the perspective of viewing figures and revenues22.
Both events demonstrated the unique attributes of television: its ability to inform and influence mass markets of viewers in ways no other medium can yet compete with.
While households in countries affected by recession are expected to pare down spending, premium television may prove resilient, and even enjoy growth23. While a subscription of $60 per month may appear to be a major outlay, it could still be rationalized as good value when compared to the cost of taking a family out to dinner at a mediocre restaurant. Television may offer a refuge from everyday challenges, in a similar way that the movies offered a temporary sanctuary from the Great Depression24.
Counter to some recent forecasts, professionally produced content is reasserting its pre-eminence over user-generated content (UGC), both online as well as broadcast. This should provide a fillip to the television production sector, whose raison d'etre had come under challenge from amateur film makers.
Indeed, it is UGC that may become fundamentally challenged in 2009, as a growing number of sites restrict or decline to host it, given the difficulty in selling advertising adjacent to amateur clips25. For some online UGC, there was also the issue of viewing figures: some content, such as live streaming, is attracting only dozens of viewers - or scores on particularly good days26.
Online sites that had specialized in hosting UGC may increasingly offer viewers regular television programming, as this seems to be more likely to attract advertising27 28.
Bottom line
While advertising is likely to be tough in all countries affected by the downturn in 2009, the television industry should view its situation in context and consider how other media are doing. It may well find that its performance is relatively good. It may be a good time to take advantage of that and the concomitant stronger cash flows to put some distance between itself and other media. Now could be a good time for the strongest players to invest in content, contracts and an updated infrastructure. The current deployment of HDTV by local broadcasters should be slowed as little as possible, as HD further enhances and differentiates the television experience for consumers.
The television sector may also want to push for more freedom on its methods for raising revenues. For example in some markets, product placement is banned, but only selectively. Films with product placement may have been allowed for years, but locally produced programs may not yet be able to use this approach. The underlying economics may provide the opportunity to make a compelling case for the relaxation of such rules in 2009.
The television sector should ensure that its advertising impact is always given credit. The industry should, for example, provide a means to track instances where a consumer has seen a television commercial, then gone to a website to make a purchase. At present, most measurement systems would give all credit for the sale to the website, and television's vital contribution could get overlooked. One simple, but not failsafe approach, could be for the television commercial to cite a unique URL for those guided to the website via the advertising spot.
Television, like all other media, has ceded revenues to online advertising. It may not have been as affected as other media, such as local newspapers, but it still appears to have lost revenues. Online has claimed it is more accountable than other media. But television should counter this claim, where possible. For example it is unusual for advertisements from another country to be broadcast to a television viewer, yet the Internet Protocol address for a PC may be for a different country to that of its user, making some of the statistics on advertisements served irrelevant.
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