The Electronic Retailing Association

Article: Television is Dead! Long Live Television!

by Richard Burrell

137-richard-burrell-era-2016-200px
Richard Burrell

Best known for his recent role as VP for Corporate Development EMEA at QVC, Richard Burrell has over 20 years’ experience in TV and digital retail in 6 markets across the world. Most recently he was the project Director for QVC’s start up in France.

Prior to joining QVC, Richard's career has spanned the BBC, Thames Television and various television news organisations. Originally an engineer by training, he has also served as a council member of the Digital Television Group (DTG).

Linear, schedule driven television has been the lifeblood of the TV Shopping industry from the very beginning, providing access to viewership and a steady stream of new and loyal customers since the industry started in the USA in the mid 1980’s; and it continues to deliver across the world today.

But with the advent of digital television, video on demand technologies, portable devices and ubiquitous high-speed internet connections things are changing. It is now possible to watch whatever programme you want when you want it, almost anywhere. Some of the sages of the media world have looked at this gathering media technology storm and are predicting doom and despondency for those of us making a living from this stream of customers. “The end of (linear) Television is nigh” they say!

But are the prophets of doom right? Do the numbers match the rhetoric? Is the linear TV gravy train about to reach the end of the line? And if so, what should we be doing about it?

A review of the BARB viewing statistics for the UK over the past few years by Farid El Husseini of FEH Media Insight shows a steady decline in consolidated linear viewing of up to 3.6% a year even if the use of catch up TV is included:

“Although year-on-year schedule-based UK television viewing, as measured by BARB’s consolidated Total TV audience, has been in decline since 2012, it was beginning to show signs of levelling off with a very notable slowing in the downward trajectory between 2015 and 2016. However, now that the final figures for 2017 are in, there has been a renewed acceleration in the rate of decline. Between 2012 and 2015 the annual average Individuals (aged) 4+ Total TV audience fell steadily at around 3% per annum (from 9.59 million to 8.75 million), but only declined by 0.6% between 2015 and 2016 (to 8.70 million), to then accelerate again in 2017 with a notable drop of 3.6% (to 8.39 million):”

Farid El Husseini of FEH Media Insight

However, if we look a little closer and review the behaviours of the different age groups the situation is far more complex, and it is interesting to see where the decline is most and least marked.

“….there is a growing dichotomy between the viewing habits of older and younger viewers. Since 2012 the Average Daily Minutes of Live + 7-days catch-up TV watched by Adults aged 55+ has hardly changed, which is in stark contrast to what has happened with younger viewers, where the declines in schedule-based TV viewing levels over the last 5 years have not only been significant, but are also more pronounced the younger the age-group”

Farid El Husseini of FEH Media Insight

The same trend is evident in most major European markets although the speed of decline varies widely. The UK, France and Spain are making the most rapid transition amongst younger viewers, while in Italy, Germany and Austria the change is slower. The common factor in all markets is that the decline in linear TV viewership of the 55+ age group is the slowest, with the new technologies used more as an adjunct to linear viewing than as an alternative.

So, it seems the stream of new customers for the larger TV Shopping operators with older customer bases is secure for now at least, although those with younger, more male target customers will start to see a decline in the productivity of their airtime much sooner.

Complacency in a comfortable revenue stream and the “do nothing” option will lead only to sharp decline in years to come

Studies across Europe suggest that, in most markets, the industry has a period of “grace” in which to learn about and adapt to the new media landscape and understand how to sell to and attract customers in a mixed linear/on demand media economy while the revenues from linear TV are still strong enough to support the transition. Complacency in a comfortable revenue stream and the “do nothing” option will lead only to sharp decline in years to come.

Exactly how long this grace period will be is almost impossible to predict and it will vary by market. Historically, changes in the UK TV ecosystem have started fast and then taken several years to take full effect. Colour TV was introduced in 1968 but it wasn’t until 14 years later that the monochrome transmissions were finally switched off (by which time nobody was watching them!). Digital Terrestrial TV arrived in 1998 but it took until 2012 before the analogue transmissions ceased, releasing swathes of radio spectrum for other uses. But there is nothing magical about the period of 14 years! Sky Digital in the UK was launched in late 1998 and by the end of 2001, just 3 years later, the analogue service was gone with cataclysmic effects on new customer generation for the TV shopping industry. It is also clear that adoption cycles for new technologies have accelerated considerably in the digital age. Based on this, a working estimate of 5 to 7 years, to the point where the decline in linear viewing has a major impact, seems sensible.

...simply reproducing existing linear shopping content en-masse in the VOD world will not produce good results. New material will have to be made and edited. New selling skills will have to be learned.

The TV advertising industry has been grappling with the problem of adapting selling messages to the on-demand world for some time and there are some useful learnings for the home shopping industry in their experience. Various studies across Europe and the USA have looked at the psychological drivers associated with different types of viewing environment. Viewing on demand is a very deliberate response to a desire for a particular type of content, usually entertainment or drama. This means that on demand viewing is less about “passing trade” while zapping and more about seeking a particular show or series. VOD is therefore a different selling prospect to the linear TV world because the viewer is much more focussed on what they have chosen.

Advertisers have also shown that there is a clear difference in behaviour between pre-roll and mid-roll advertising. Average attention span (and viewing time) for a product presentation in a VOD advertising environment is much shorter, with a maximum of around 2 minutes. Within that 2-minute maximum the placing of the main call to action is all-important and very different to the linear world. All of this suggests that simply reproducing existing linear shopping content en-masse in the VOD world will not produce good results. New material will have to be made and edited. New selling skills will have to be learned.

...the TV world is changing, and the customers of the future, young or old, will come from a different, more hybrid TV ecology than in the past and behave differently within it.

In the social media video world, the difference is even more pronounced with a maximum ad viewing time of around 20 seconds. In this environment the life cycle of a brand or product video before it goes “stale” is very short. Also, most of this material is viewed on a small mobile or tablet screen rather than the conventional living room TV, so the conventional TV graphics, much loved by TV shopping producers, are illegible. The material previously shown on the graphic has to be sent as a web page and associated metadata. Companies like Vidsy (http://vidsy.co/ ) have emerged to service this market using completely new production techniques and values.

Linear TV is far from dead; particularly amongst older viewers it will be around for years to come, and the world has not given up on watching television for information and entertainment. Far from it: There is more TV material available to watch across all platforms in 2018 than there ever was. But the TV world is changing, and the customers of the future, young or old, will come from a different, more hybrid TV ecology than in the past and behave differently within it. In a changing world, standing still is the same as going backwards, so there is much to learn in the next 5 years or so if our industry is not to be slowly and painfully written into the history of TV rather than its future.