Is 2012 the end of the world…for TV as we know it?

I remember several years ago discussing with a friend what projects we were working on. At the time, I was trying to get a music project off the ground and working on writing a play. My friend told me he was totally focused on creating a web series. Web series?

That was the first time I had heard the two words put together. I understood the concept and how with the increasing availability of broadband and the improved video streaming technology it could become a viable art form. Mind you, this was before YouTube was popular, and watching videos on the internet was not ubiquitous. It wasn’t a no brainer at the time. It seemed like an interesting idea, but was there any real potential behind it? Admittedly, it was hard for me to latch on to. How do you gain recognition? How do you make money? My friend didn’t have all the answers but assured me it was the future of where everything was going. He told me it was going to take over TV, eventually. Honestly, I laughed inside.

Fast forward several years to the present. Despite TV ownership dropping from 115.9 million homes with a TV to around 114.7 million, television viewing is healthier than ever. 2011 recorded a record high average amount of viewing time per household of 58 hours and 28 minutes per week. Internet video has not taken over or replaced TV. It has, however, grown by leaps and bounds and become a formidable threat to the conventional television broadcast and distribution model.

It’s not all about YouTube, but YouTube has gone berserk. What started as a simple video sharing website consisting of cat videos and candid capturings of children saying inappropriate things, has become an industry unto itself. In October, YouTube announced its plan to launch more than 100 new video channels:

YouTube is shelling out $100 million to producers, according to people familiar with the matter, who spoke on condition of anonymity. The money is an advance on advertising money the videos will bring in, and Google will recoup its portion first before splitting the proceeds. Advances are as high as $5 million per channel, said another person familiar with the arrangement, also speaking on condition of anonymity.

Participants include Madonna, former NBA star Shaquille O’Neal, comedian Amy Poehler, actor Ashton Kutcher, “Office” star Rainn Wilson, spiritual doctor Deepak Chopra and “Modern Family” actress Sofia Vergara. Most are creating channels through their production companies. Madonna is a partner with the dance channel DanceOn, while O’Neal plans the Comedy Shaq Network.

-yahoo news

It’s a bold step forward for the burgeoning video sharing website. This is all made possible by YouTube’s terrific success in gathering an online ad viewing audience:

One of the biggest numbers to come out the latest installment of comScore’s US online video rankings is the number of minutes denizens of America spent watching online video ads in November. It was 3.08 billion. That’s over 5,707 years(!) worth of online video ads viewed in a single 30-day period, which is a crazy statistic, but not so crazy when you take those minutes and divide them by the 183,160,000 monthly US internet users. Then the number equals out to just under 16 minutes and 49 seconds worth of online video advertising viewed per person, which is about one minute and 11 seconds shy of the amount of commercials and promotional spots you watch in one hour of television.

Wedsneday night, at the YouTube Brandcast, YouTube’s Global Head of Content Robert Kyncl announced to advertisers and brand representatives that YouTube will spend more than $200 million to market its original channels to consumers.

Netflix and Hulu are also jumping on the original content bandwagon. Just one month after YouTube’s announcement, Netflix revealed their intent to produce original programming exclusive to the online video platform. Netflix will be producing new episodes of Arrested Development, much to the delight of the show’s doting fan-base. Netflix expects the number of their DVD subscribers to “decline steadily every quarter forever.” Wall Street Journal. According to Netlfix’s Chief Content Officer:

Netflix entered the original content business because it saw the prime programming that drove its streaming service becoming less available. The company was faced with a DVD market in decline and fewer serialized TV shows being made by traditional producers because they are tough to sell in the syndication aftermarket.

In January, Hulu followed suit by announcing a plan to “invest approximately half a billion in content in 2012 on behalf of our users.”

Hulu is adding to its expanding list of original programming, which currently includes the drama Battleground, Morgan Spurlock‘s A Day in the Life, and Up to Speed. Four of their new series are:

  • The Awesomes, an animated series about comically flawed superheroes, from Saturday Night Live star Seth Meyers and Late Night with Jimmy Fallon producer Michael Shoemaker
  • Don’t Quit Your Daydream, a series about struggling musicians, from Entourage star Adrian Grenier
  • We Got Next, a comedy based on friendships made on the basketball court from Kenya Barris from Are We There Yet?, Hale Rothstein from Everybody Hates Chris, and Danny Leiner from The Office
  •  Flow, a fantasy series from video game industry star Michael Wendschuh based around the urban sport of parkour.

And that’s not all. In February, the Wall Street Journal reported that Verizon and Redbox will be joining forces “to start offering national subscription service later this year that would offer internet access to a selection of movies and other content.” Major players like Comcast, Disney and others will be adding web shows for their subscribers.

So, have we reached the tipping point? Is this the year that it all changes? Will we be tossing out our television sets, cancelling our cable subscriptions and reaching for our iPads? (Which, according to Variety, have become the preferred device over smartphones and PCs for watching movies and TV episodes, but still a distant second to the television set which commands approximately two-thirds of total time spent).

Mark Suster discusses the future of television in his article 10 Signs Internet TV is Ready to Disrupt the Industry. Suster believes the “right factors are finally in place” to ignite a massive change in television in 2012, several of which are technology driven. Massive decrease in costs of capturing and processing video, significant penetration in broadband, increases in Wi-Fi, and huge advances in compression all benefit the widespread growth of online video content. Suster calls YouTube the new Comcast:

 It [YouTube] is the new distributor of video. Yes, it’s lower quality than network, primetime television. But many network shows cost up to $100,000 PER MINUTE to produce. Maker Studios costs about $500 per minute. Guess who has a huge advantage in the future of the medium.

Suster predicts that we’ll soon be seeing some of the signs of television following the music industry. He compares cable and satellite bundles to music albums, and believes “given [the] choice consumers prefer singles or to make their own bundles.” He points out that while “91% of all US households pay for television bundles,” that most people are “paying for content they don’t watch.” In the past, this wasn’t a problem, because there were no other options, but now, “the internet changes all of that.”

A recent study found that 92% of over 1,000 respondents are interested in an a la carte TV offering that would cost them far less than the $84 they pay for access to at least 91 channels on average. According to SNL Kagan, ESPN is the most expensive basic-cable channel in the U.S., reaping an average of $4.69 per household per month from cable operators, before adding in the monthly cost of sister ESPN channels and online services. It sucks that people who aren’t interested in sports have to pay almost 5 dollars for channels they will never watch. On the other hand, I know many sports lovers who only pay for cable or satellite solely because of sports and complain about having to pay for the other channels that they don’t watch. That is already slowly changing as more and more live sport events are becoming available streaming online. A friend of mine recently purchased a subscription that allows him to watch every single Major League Baseball game on his iPad.

Perhaps the most most important sign Suster points out is the fact that “mass adoption of internet video has already taken place”. The numbers don’t lie:

86% of all Internet consumers in the US now watch online videos… In fact, 108 million people will watch 1.3 billion videos. TODAY. (according to Comscore). In August of this year 185 million people watched 42 billion videos for 17 hours. That’s 228 videos PER PERSON.

Brian Lowry at Variety agrees that “the stampede of video content to the web appears to have moved past the ‘hedging our bets’ stage to the ‘maybe there’s really a business here’ phase.” The question is, according to Lowry, “whether the media world has evolved to the stage where online content’s would-be prophets can prove they’re not just blowing smoke — starting by actually turning a profit.” The factors are in place, but whether or not web video turns profits for big executives, artists and entertainers are finding success online.

Louis CK, who claimed he never saw royalty checks for the sales of his comedy specials from outlets like DVD and iTunes, decided to take matters into his own hands when he produced his own special, sold it online directly to fans for $5, and made a million bucks. In just 10 days.

Time will tell if this is the year it all changes. Regardless, there couldn’t be a better time to be creating content as distribution outlets continue to grow. Thanks to DVR, online streaming services and the general public’s ability to watch video wherever they want on their mobile devices, people are consuming more content quicker than they’ve ever been able to before. The demand is there, and that alone should be exciting for media artists and content creators of all kinds, as well viewing audiences world wide.

7 thoughts on “Is 2012 the end of the world…for TV as we know it?

  1. If television networks are afraid of the internet they will just get lapped like the music industry did. “Biggest Screen Available” is clearly the dictator of the trend. That is why the paradigm of progressively smaller viewing technology was superseded by larger smart phones and most recently by tablets. Production Value is always the great equalizer for big budget networks, This is why audiences make allowances to sit down and watch HBO Shows on Sundays and still go out to movies. Regardless of that, It is an interesting time and their is clearly a window for the independent’s that may be closer to the pulse of the audience to have a chance to battle it out with the big guns.

  2. Rumors are swirling that Hulu, foolishly, may require you to have a cable agreement to use their services in the future. If so, they’re probably just going to get left in the dust behind YouTube’s original content and pirating websites.

  3. Very insightful, good work…web content vs. TV content will soon be interchangeable for advertisers some may say it’s already there now because viewership or potential consumers are high enough in those mediums. Ads are what fuel both mediums as we know.

    New technologies i.e Go Pros, Canon camera’s, allows anyone to document stories and then facilitate it no matter how good or bad it is, but as is the case with anything the better is the enemy of the good or bad in this case…it will still come down to any potential content makers to be able to grasp viewers with strong provocative stories.

    As Alan Kay once said the only way to predict the future is to invent it, we are seeing that being expressed more and more, will this be the end of TV? Probably not, as long as TV or the web continue to re-invent itself naturally.

    What all this means is a lot of competition

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