Archive for January, 2015|Monthly archive page

Traditional media companies reboot

When I was growing up, watching TV was a family affair. We gathered around one cathode set at the same place at the same time to watch the same shows as everybody else. How times have changed. Nowadays adults spend more time online and on mobile devices than they spend watching TV, listening to the radio or reading the printed word.

Yet some things have stayed the same: We’re still watching TV shows. Only now we’re not necessarily watching the same shows, or watching them at the same time, or even watching them on TV. This trend, which shows no signs of abating, has significant implications for traditional TV cable and content providers, says David Purdy, Rogers Communications Inc.’s senior vice-president, content.

“We’re playing in a market now that has a solid mix of traditional cable subscribers, a growing group of ‘cord shavers’ — those who are tuning in less to traditional cable and more to online sources for TV and movies — and ‘cord nevers,’ many of which are Millennials.”

The move toward the digital consumption of television content is spurring a series of watershed developments in the industry, such as:

  • The rise of high-quality original programming exclusively available on streaming services (e.g. Netflix)
  • Increasing competition from vendors that historically haven’t offered professionally produced content (e.g. YouTube)
  • Increased crowd sourcing to determine which shows get produced, cancelled or resurrected (e.g. Amazon)

Traditional media companies and cable providers should be concerned. All of these developments reflect the fact that more consumers have relinquished cable and forgo live programming, opting instead for cheaper online services.

Rogers is transforming its business to address these shifts, says Mr. Purdy. “We recently partnered with Vice Media to bring more compelling content to the Canadian market. We also invested in and launched Shomi, a video-streaming service.”

How will these trends change advertising?

Online video is changing the way people interact with each other and relate to sponsoring brands. As a result, media companies are facing flat — and in many cases reduced — advertising spending, as ad buyers shift their dollars from well understood TV to new (and unproven) digital formats.

In some ways, however, advertising will become more valuable as TV watching becomes more, not less, social. For example, a growing number of people are having real-time conversations on Twitter about the shows they’re watching. Some viewers have even begun purchasing products they find appealing right from a show, with eBay and other sellers offering apps that enable viewers to browse and buy items related to what they’re watching.

But in other ways viewers are becoming less engaged with programming, and thus with ads, as fewer people watch the same shows (with the notable exception of live sports and a few big television productions such as Canadian Idol). This could translate into more complicated ad buys, more fragmented marketing strategies and harder times ahead for traditional broadcast media companies.

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