The Death of Broadcast TV

Source: Roku Inc.
Pay TV has been losing subscribers at a pretty fast pace for the past few years. And the disease has spread to broadcast TV, where prime-time commercial ratings for the month of February posted a drop of 12% compared with February 2014. Commercial ratings for cable TV slipped 11% in February.

February marks the fifth consecutive year-over-year monthly decline in what are called the “C3 ratings” that measure average commercial viewership in shows up to three days after the original air date (think DVR playback). The data were reported by media research Michael Nathanson of MoffettNathanson Research and cited in the New York Post.

Some of the ratings declines have been attributed to changes in Nielsen’s methodology, but Nathanson said, “[W]e believe these terrible ratings trends are also indicative of changing viewership habits.”

Nielsen has reported that at the end of last year about 40% of U.S. households subscribed a streaming video on-demand service like Netflix, Hulu or Amazon Prime. If these viewers are not watching the shows during prime-time broadcast hours, the C3 rating for the show goes down.

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And they are not watching. In another report at MediaPost, the 11% dip among 18 to 49 year olds in February’s C3 ratings for cable networks was the result of a double-digit drop in the general entertainment programming category which includes popular TV shows like “Law & Order” (down 15%), “NCIS” (down 53%) and “The Big Bang Theory” (down 11%). Popular non-fiction shows also posted huge declines: “Storage Wars” dropped 46% and “Duck Dynasty” dropped 50%. Even sports programming was down 5%.

Nathanson’s report goes on to say that new technology like DVRs, video on-demand and streaming video on-demand are “disrupting view consumption of linear network programming.”

Nielsen is under fire for not measuring viewer numbers accurately because the company’s ratings don’t count viewers who watch video on smartphones, tablets or other devices. However, the data we are talking about here do not apply to the content itself, but to the advertising. And that is where the money is.

According to MediaPost:

In viewing all cable network programming, MoffettNathanson Research calculates that total day C3 data among 18-49 viewers was off 9% in 2014 versus the previous year — a sharp drop from a 3% decline in 2013, a 2% decline in 2012, and a 1% slip in 201[1].

While Nathanson acknowledges that there may be some measurement issues involved, that seems unlikely to account for a tripling in the rate of decline. Broadcast TV is not going to disappear overnight, but it is showing more signs of declining health. And whining about how Nielsen measures viewer numbers is not the solution. If commercials are not where the money is any more, then the networks need to figure out where it is and go there.

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