3rd Week Changing the channel

[qua 11]

A special report on television

Changing the channel

Television is adapting better to technological change than any other media business, says Joel Budd (interviewed here)

Apr 29th 2010

ONE evening last year Steve Purdham noticed something odd. The flow of data into and out of We7, a British music-streaming website he runs, had abruptly slowed. An hour later it returned to normal. Such a sharp fluctuation usually means a server is malfunctioning—a potentially ruinous problem. But when engineers checked the computer system they found nothing wrong. So what could have happened between 8pm and 9pm on a Saturday night to cause such a sudden drop in use? Suddenly it dawned on Mr Purdham: “Britain’s Got Talent” was on television.

At its peak that show drew 68% of all British TV viewers and notched up the biggest audience for any programme since 2004, when the English football team played Portugal in the European championship. It also turned Susan Boyle, a middle-aged Scot, into an international star. Video of Miss Boyle singing “I Dreamed a Dream” ricocheted around the internet and caught the attention of news outlets. The singer became a fixture of talk shows and tabloid newspapers, which dubbed her “SuBo”. Her first album sold more quickly in America than any other by a female artist since Nielsen Soundscan began tracking music sales in 1991.

When it comes to mobilising a mass audience, nothing can touch television. On February 7th this year 106m Americans watched the New Orleans Saints defeat the more favoured Indianapolis Colts in the Super Bowl. The nation spent more time glued to that one match than it spent on YouTube, the most popular video-streaming website, during the entire month, according to ComScore. Remarkably, television can deliver these huge audiences even though it provides more choice than ever.

In 1992 Bruce Springsteen, a rocker from New Jersey, released a song called “57 Channels (and Nothin’ On)”. There are now hundreds of channels. A quick channel-surf through a basic cable-TV package in America turns up a weighty history of the civil war, a South Korean melodrama, a college basketball game, a Hispanic talent show, a congressional hearing, a zombie film, European football, an evangelical sermon and a documentary about a “half-ton teen”. Many more options are available on demand with a few clicks of the remote control. The offerings are decidedly mixed, but there is always something on.

“There are not many genres that are not addressed any more,” says Philippe Dauman, CEO of Viacom, a media conglomerate. “We try to think of new ones all the time.” And where America has led, others have followed, often much more quickly. Until the early 1990s India had two state-run television channels, Doordarshan 1 and Doordarshan 2, which were best known for their amateurish dramatisations of Hindu epics. It now has more than 600. In Britain the proportion of homes that receive multi-channel television has risen from 31% to 89% in the past ten years.

The box that delivers all this stuff has evolved, too. Televisions used to be squat cubes. Gradually they have flattened and turned into panels, and their screens have become sharper and brighter. They have spread to bedrooms, kitchens and even bathrooms (with heated screens to ward off condensation). The latest devices from Samsung and Sony are as thin as laptop computers. Television has gone online and become mobile. This year it will expand into the third dimension.

Predictions of TV’s imminent demise have come and gone like fast-forwarded advertising breaks. In 1990 George Gilder, an American writer, claimed that by the end of the 20th century traditional television would be extinct because technology would enable consumers to track down programmes that catered to their particular interests. Bass fishermen would watch endless shows about bass fishing. Even the technological futurists found it hard to imagine the explosion of websites, social networking and mobile phones that was to come. Yet these things have not displaced television. Rather, they have squeezed around it.

More of everything

Look at Japan, a country that leads many technological trends. Last year Tokyo residents spent an average of 60 minutes a day at home consuming media on the internet or a mobile phone, up from just six minutes in 2000. But they also spent more time in front of the television: an average of 216 minutes, up from 206 minutes. Among young women, the group that advertisers most want to reach, television-watching went up more steeply. Admittedly their attention was not always fixed on the box. Many teenage girls send text messages on their mobile phones while watching television. “In Japan we like to do two things at the same time,” explains Ritsuya Oku of Dentsu, an advertising agency.

Or take American teenagers. In 2004 the Kaiser Family Foundation reported that the average person aged 8-18 was spending almost six-and-a-half hours a day taking in some kind of media—television, films, music, video games and so on. By multitasking, they were able to cram eight-and-a-half hours of media consumption into that time. The researchers concluded that young people were “filled to the bursting point” with media. Whatever, responded their subjects. When the study was repeated in 2009, young Americans were spending more than seven-and-a-half hours with media each day, an hour more than they had done five years earlier (see chart 1). Into that space they packed an astonishing 10 hours and 45 minutes of consumption. Among other things, they were watching more television.

“Report: 90% of waking hours spent staring at glowing rectangles,” read a headline in the Onion, a satirical newspaper, last year. The joke contains a profound truth. Distinctions between glowing and rectangular television sets, computers and mobile phones are gradually disappearing. Televisions have long doubled as monitors for video-game consoles. More recently they became digital radios. Now they are turning into gateways to the internet. People who buy high-end televisions this year will discover that their new toys can obtain all sorts of things, from stock quotes to weather forecasts.

At the same time TV is moving beyond the living room. Many programmes can be viewed on computers, mobile phones and tablet devices like Apple’s iPad. Video-streaming websites are becoming more professional, meaning they are both better designed and contain more proper television. Services like iPlayer, which carries BBC television shows, and Hulu, which distributes programmes from America’s ABC, Fox and NBC, have grown in popularity. At first this success delighted people who earn their living from TV. Gradually they have become more alarmed.

Every media business that the internet has touched so far has come off badly. Recorded music sales have fallen steeply in value since Napster, a file-sharing website, appeared in 1999. The internet has drawn classified advertising away from local and regional newspapers, turning once highly profitable businesses into basket cases. Book publishers have watched helplessly as online retailers and e-readers have driven down prices.

The internet tends to disaggregate media products, breaking music albums into tracks and splitting magazines into their constituent articles. It also disintermediates by bringing content directly to consumers, sometimes by means of piracy. Online, people can pick and choose the content that interests them without paying much for it. One of the most harmful things about the internet as it has evolved in the past few years, says Jeff Bewkes, the boss of Time Warner, one of the world’s biggest media firms, is the assumption that charging for content is hostile to the consumer. As the saying goes, content wants to be free—or, at least, paid for only by advertising. “We already tried that,” says Mr Bewkes. “It was known as the wasteland.”

In 1961 Newton Minow, chairman of the Federal Communications Commission, told a room full of television executives that they had created a “vast wasteland” of uninspired shows. At that time America had three broadcast networks, which operated on the principle that the least objectionable shows would draw the biggest audiences and the most advertising revenue. As Minow predicted, competition improved matters. In the 1970s cable and satellite television began to spread. New subscription channels like HBO, which had to please viewers rather than advertisers, were able to take risks. Broadcasters raised their game in response.

The result, beginning in the late 1990s and continuing today, has been a golden age for television. It can be argued that Hollywood makes less impressive films these days than it did in the 1970s (or the 1930s), but that is not true of television. Modern TV shows like “The Sopranos”, “The West Wing”, “Mad Men” and “Modern Family” are so superior to what went before—so much better written, better acted and better shot—that they almost seem to belong to a different medium.

Sir Howard Stringer, Sony’s boss, fears television will return to the wasteland. The danger is not lack of choice, as Minow found, but a surfeit of choice. So much content will be available on so many digital platforms that audiences will become too small to pay for good programmes. The internet already competes strongly for advertising. In Britain more money is now spent online than on television (see chart 2), although some of this can be blamed on artificial restrictions on TV advertising rates.

Even so, this special report will argue that television’s encounter with technology is turning out quite differently from the experience of other media businesses. Although growing choice and the profusion of platforms is indeed crushing smaller shows, it is helping the biggest ones thrive. Televised sport is stronger than ever. Viewers have embraced some innovations but roundly rejected efforts to transform the living-room set, puzzling and frustrating some of Silicon Valley’s best minds.

Television is not about to suffer the fate of music or newspapers, yet the next few years will be dangerous nonetheless. A handful of upstart websites, with audiences smaller than many channels at the bottom of the programme guides, have already rattled the giant TV industry.