Outside of the prime time, it is amazing just how much of what is being broadcast is repeats. In fact, more than 50 per cent of programmes on BBC channels are now repeats and it was reported last week that viewers are deserting BBC2 following the decision to broadcast more repeats and less new content.
This must be because television companies do not want to spend the money on new television programmes, and so just trot out old, cheap reruns, right? In part, this is probably true as, for broadcasters who produce their own content, reruns are effectively free – though we must bear in mind that the actors’ royalty fees if a drama series is aired on one of the major digital channels can often cost more than producing a new programme. But what is actually true, in many situations, is that broadcasters are paying high sums of money for shows that have aired countless times before.
I was reminded of this today when I read about the ongoing syndication revenues from Seinfeld – a show that has passed me by – but, which having made $3.2bn (£2.1bn) in revenues post its 1998 end of production, must almost single-handedly destroy the notion that repeats are always the cheap option for broadcasters.
But the implications of this are actually far more substantial than providing an argument in favour of the sea of television repeats – after all, if they cost that much, they must be demanded by a sizeable end audience because otherwise they would not command this sort of value. Why it matters, more than anything, is because when broadcasters are prepared to pay large up-front fees to be able to show a television programme, even after countless previous broadcasts, it damages the pay-per-view or pay-per-rental model used by companies such as Apple with its iTunes service. And even for Netflix and the like who provide content for a monthly subscription, there must be a limited number of shows for which they can pay a premium price before they dent their profitability.
The problem is that, however much we all might embrace technology and enjoy on-demand streaming, when we get home in the evening, many of us just switch the television on and watch what is actually on at that moment. Part of this, as psychologists have already observed, is the desire for social interaction after having seen a television show – the conversation in the office the following morning that begins “last night did you watch” cannot be easily replaced with something like “Did you happen to download, from the millions of programmes available...”.
However, with the trend to ‘second screening’ among the younger generation – programmes are discussed through mobile or tablets while still on air – this traditional method of interaction is itself under threat with knock-on effects for traditional broadcasters. This reduces the time devoted to watching TV and the attention paid when doing so – given that 16- to 24-year-olds are one of the most valued target audiences for advertisers. Why would they pay high revenues to broadcasters when their key target demographic is distracted by, and actively engaging with, other media? Broadcasters could be forced to share their advertising revenues with social media providers such as Twitter.
Whatever the detractors might claim, traditional broadcast television might have the last laugh after all.Internet-connected smart TVs are growing in popularity with 5 per cent of households now owning one – allowing consumers to “Turf” – watch TV and surf the web. Despite the growth in online catch-up TV through PCs and mobiles, the main TV set remains the dominant device for consuming audiovisual content with just 29 per cent of adults watching online compared to 97 per cent who watch through a TV, and there is some evidence that the growth in catch-up TV usage is slowing.
But it is not all social convention – part of the reality of life is the paradox of choice, and this is, in part, why in UK the main terrestrial broadcasters retain such a large share of the viewing market – it is easy to find something that is okay on a channel you know, so you will watch it, even if there might well be something better if you devoted the time to looking.
So what does this mean for the new generation of internet-distributed television broadcaster replacements? It is not a problem, but there needs to be a recognition that despite the technology, we are a long way from that brave new world in which the traditional broadcasters are no more. UK TV industry revenues overall continue to grow, and advertising revenues have bounced back post- financial crisis.
It is clear that the industry is changing and the revenue opportunities are evolving, but it is less clear that traditional broadcasters will be losers in this new world. Perhaps, whatever the detractors might claim, traditional broadcast television might have the last laugh after all.
James Bateman is head of multi-manager and multi-asset portfolio management for Fidelity Worldwide Investment
