Cable TV on Life Support; How Will Marketers Respond?

Your first thought may be to laugh, brush this suggestion off and say it will never happen. But, didn’t people who grew up listening to radio as a primary form of entertainment also think life as they had always known it would never change? Although radio is still around, most people are more likely to listen to it on a daily commute or as a secondary source of news and music. The days of Mom, Dad and kids gathering around the table after dinner to listen to a presidential Fireside Chat are long gone.

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Now, let’s examine TV. What is its purpose? TV has long been a source of news, information about products (through commercials and infomercials), and entertainment in the form of programs, movies and music. But, in each of these categories, the Web, has an alternate–often preferred– solution, especially in the opinions of millennials, or individuals born after 1984.

With the advent of mobile devices, people are now using mobile for the following functions, according to our graduate school lesson this week. I have put asterisks beside the functions on this list that Cable TV used to fulfill:

  • Using search engines to find information.
  • Sending and receiving text messages or e-mail.
  • Using GPS apps, Google Maps or the like for driving directions.
  • Many are looking for health/medical information.
  • Consumers look for information online about a service or product they are thinking of buying, with many actually doing a price comparison while inside a store before they buy. *
  • Following the news *
  • Buying products *
  • Shooting and sharing video and pictures *
  • Watching videos or streaming video *
  • Connecting to social networking sites like Facebook, LinkedIn, Instagram, Pinterest, Vine, etc. *
  • Downloading music and/or playing music, including listening to streaming services such as Pandora *
  • Rating products and services.

If people are now looking online for products, news and entertainment, including those same programs and movies that TV has except without the commercials, why subscribe to Cable? Many don’t.

For the first time, the country’s largest cable provider, which also owns NBCUniversal, has more Internet subscribers than cable subscribers, Comcast said in May. The advent of streaming TV is reshaping the cable industry. Meanwhile, costs are rising for the TV, movies and sports that cable companies transmit.

Additionally, Nielsen’s most recent study indicates that Americans aged 18-24 watched a weekly average of about 18 hours of traditional TV during Q1 2015.

Nielsen-Traditional-TV-Weekly-Viewing-Trends-Among-18-24-Q12011-Q12015-Jun2015

We see a substantial year-over-year decline of 3 hours and 45 minutes per week. In other words, 18-24-year-olds as a group have gone from watching about 3-and-a-quarter-hours per day during the first quarter (of 2014) to a little more than 2-and-half hours per day (this year). That show they watched last year on TV? They probably streamed it this year.

In the space of 4 years, almost one-third of this age group’s traditional TV viewing time has migrated to other activities. Read more here.

Many Milennials today have never subscribed to Cable and may never subscribe to the service for their own households. Here are the numbers comparing Gen Xers and Boomers with Millennials in regards to TV watching habits in a typical month. While broadcast TV is still the most popular method for Gen Xers, broadcast decreased significantly for Millenials.

screen shot 2015-01-26 at 12.19.53 pm

CBSN recently did a report on the growing popularity of streaming services such as Netflix, Crackle, etc. and the effect these services are having on Cable TV.

Jerry Seinfeld says, “Cable TV is dead.” However, I would argue it is not dead YET, but it is on life support. As mentioned in the video, most of us are not cutting the cord entirely because we still want our live sports and/or nightly news, but how long until Netflix or another streaming service has a solution to that need as well? For example, I personally get almost all of my news online these days, and through social media, such as Facebook. My husband is the only one in our house who watches Cable on a consistent basis to watch live games, but he also has apps which keep him updated on scores and play-by-play updates wherever we are. I see it as a very real possibility that someone will make sports mobile, and soon. The other issue, which is yet to be addressed, is lack of universal broadband access. A recent study by Nielsen shows that 24.5% of American households have no broadband connection. When I discussed this very concept with a friend, she pointed out that in rural Alabama, connection to high speed Internet can be a huge issue; in some homes, people still cannot connect to the Internet at all. This challenge may keep Cable TV on life support for a while longer.

Now, let’s look at pricing. For example, I live in Alabama, and the price of a monthly cable subscription here is $65.99 for Basic Cable. If you want Preferred Cable to include HBO, Showtime, etc. you are looking at $89.10 per month. Our basic package cost us $792/year. Meanwhile, an annual subscription to Netflix, is $108 per year, Hulu Plus is $96 per year, and Amazon Prime is $100 per year. I could buy all three for less than half of what I am paying for Cable!

But, Cable knows this. And now, they’re getting smart when it comes to ensuring they don’t lose out completely. Cable providers are savvy enough to not let cord-cutting slice into their bottom line and are pricing high-speed Internet accordingly. On average, broadband speeds capable of supporting a streaming package — Netflix, Hulu, HBO Now, etc. — will cost the consumer $60 a month plus equipment fees. Read more here. Sony Vue and Apple TV are potential savings options for consumers to look into. Dish also offers a streaming television service called Sling TV that requires no cable or satellite subscription and costs $20 a month. You watch live TV via an app, not a cable box. There’s no contract and no equipment to install.

Each streaming service has pros and cons. A comprehensive list can be found here, but I personally love that Netflix has no commercials and good video quality. On the other hand, it does not carry the latest season, but Hulu Plus does. Hulu Plus runs the same annoying commercial over and over during an episode, but it is tolerable to stay up to date on my favorite shows at my convenience.

Now, from a marketer’s perspective, a huge medium of traditional advertising is essentially vanishing. Sure, people could skip commercials before by getting up to make a snack or going to the bathroom, but most people at least watched them in the background. Now,consumers can bypass your hard work as quickly as they can click “Skip Ad.” Instead of having 30 or 60 seconds to reach viewers, you may have 5 or 10 seconds instead. How can a brand capture attention that quickly?

This is a challenge that we will have to be prepared to meet. Messages will need to be attention-grabbing, concise, and shorter than ever.

Geico does a good job of meeting these criteria with its series of “Unskippable” ads:

Video is personal, it is emotionally evocative and can be processed by the human brain 60,000 times faster than text! But, if our viewers are skipping our ads, or worse yet “Netflixing” and avoiding them altogether, how can marketers compete?

What ideas do you have, as a marketing professional, for not losing momentum in one of the best forms of advertising? 

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6 thoughts on “Cable TV on Life Support; How Will Marketers Respond?

  1. As a consumer, I have Netlifx, Amazon Prime, and DirectTv with a DVR. I don’t watch commercials if possible. We almost never watch anything live. Even ‘live” TV, we pause it so we can fast forward commercials. I find that many commercials are really sexual or inappropriate for children. Being able to choose the show and control the content that is allowed in my home is paramount to me. I get upset when a perfectly appropriate show has commercials that are inappropriate. As someone in the marketing field occasionally, I think marketing is moving to videos that tell stories, move us emotionally or make us laugh so we want to watch them. We also see using the first 5 seconds to grab attention and get brand noticed. I think cable isn’t dead, but is definitely making changes to adjust to the new web world.

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    • Comcast aims to hedge against cord cutters by enticing millennials to connect and levying higher access charges on heavy internet users.

      In the long term, Comcast faces the risk of becoming a commodity internet access provider if its television services are abandoned by consumers in favor of OTT streamed television, adding television transmission costs to its network without the related TV revenues. The other risk is that Comcast fails to attract large numbers of millennials, who purchase separately branded TV entertainment from commodity internet services to replace aging baby boomers, who bought both services together.

      Comcast will campaign to win over the quintessential cord-cutter class with new TV services designed to entice them into subscribing to its internet access service. Comcast will begin offering a $15-a-month TV service called Stream that includes broadcast networks and HBO for its internet customers. The new service will be available in Boston, Chicago, and Seattle later this year and across the company’s coverage areas in the United States in 2016.

      What’s new is that Comcast’s unlimited plan looks like a hedge against the attrition of its television subscriptions to over-the-top (OTT) streamed television from HBO, Netflix, etc., while placing heavier demand on its internet. And, at the same time, Comcast’s Stream differentiates its commodity internet service and connects millennials to its network, creating future opportunities to sell other types of streamed content to them.

      Do you think Comcast is moving in the right direction?

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      • Thank you for taking the time to comment! Yes, I do think Comcast and other cable providers are becoming innovative in their approach to solving this issue. It’s true that less eyeballs are glued to TV in its traditional sense; therefore, they must become creative while not losing revenue.

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    • “I think marketing is moving to videos that tell stories, move us emotionally or make us laugh so we want to watch them. We also see using the first 5 seconds to grab attention and get brand noticed.” This is all so true! Mobile marketers must find a way to captivate viewers with shorter attention spans in 5 seconds or less–before the Skip Ad button appears.

      Liked by 1 person

  2. Agree that cable isn’t dead yet, but the convenience of the other options is more optimal for our lifestyles now. I would much prefer to be able to start/stop shows at my leisure than have to sit and watch something live!

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    • Thank you for taking the time to comment! Marketers must also adapt their messages to fit our current lifestyles. If people are sitting down to watch Cable TV less, than what are they watching instead or where are they focusing their energy? Online. Therefore, IMC professionals must ensure they are spending enough time/energy on this medium to reach people right where they are. Netflix is largely popular because it does not allow ads/commercials, but Hulu Plus does. Yet, Hulu shows often play the same tired, old commercials time and time again. Marketers should be cognizant of these alternative channels and how they can best showcase their brands.

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