The conventional wisdom in the media industry these days is that Covid 19 delivered the knock out blow to traditional television. For almost 20 years prognosticators have been predicting that the Internet revolution would ultimately disinter-mediate broadcast and cable television just as it did newspapers and magazines. Television held on longer because of the complex nature of the business structure and the enduring strength of firmly entrenched, deep pocketed networks, studios, sports leagues and distributors. But the pandemic changed everything. Traditional TV finally succumbed to the inevitable in 2020.
The evidence is overwhelming: record cord cutting, precipitous ratings drops in linear viewing across the board (with the notable exception of live news) and the massive growth in SVOD (Netflix, HBO Max, Amazon Prime Video, etc) and AVOD (Pluto, Tubi, Local Now, etc) streaming viewing. Not to mention the acceleration of the 15 year trend of television’s declining ability to reach young audiences.
The networks themselves seem to have conceded that people don’t watch linear TV anymore. Recent reports indicate that networks are allocating anywhere from 25% to 80% of their on air promotion inventory to promote their streaming services, which means they’re hardly trying to get people to watch linear airings. It’s stunning when you think about it.
Yet those television executives who accept the conventional wisdom that traditional TV is dead and the future lies entirely in streaming are making a mistake in my view. This approach erroneously concedes what I believe is traditional television’s biggest competitive advantage: there is no better platform for reaching and engaging consumers aged 55 and above.
For some reason advertisers lose interest in consumers when they age out of the traditional 25-54 TV buying demo. The reality is 55+ households are the fast growing demo in the country and account for $3.5 trillion in annual consumer spending. They also are highly receptive to television advertising, showing twice the average recall rate for brand messages than other demos.
Traditional TV will remain for many years the best way to reach this group. Cord cutting obviously will continue but it will bottom out eventually. And it won’t be at zero, not in this decade. There are millions of 55+ households who aren’t interested in cutting the cord. They aren’t price sensitive, which is the #1 reason people abandon traditional pay TV. They subscribe to the major streaming services too, and many spend the majority of their viewing time on those services. But they grew up with traditional TV and research shows they remain wedded to its ease of use, superior access to live sports and news and the old school experience of leaning back with the remote and channel surfing.
Even if the traditional pay TV universe drops another 40% from where it is today, which would be huge, there still would be 45mm+ households in the system. The vast majority of the viewers will be 55+, a demo that TV doesn’t like to talk about because of the over emphasis on marketing to young people. It’s ageism, pure and simple.
Much has been written about the existential dependency traditional TV has on live sports and news. This is undeniably true. But what’s also true is that despite their massive financial war chests, none of the streaming players are making a significant move into either genre. Sure, some are nibbling around the edges. But the fact remains that it’s much easier and cost efficient to secure exclusivities with entertainment content (Netflix/The Crown, Disney+/The Mandalorian, etc) than with live sports or news. The NFL will never sell all its games to a single distributor. Exclusivity is virtually impossible with the NBA and MLB as well due to multi-tier rights structures between teams and leagues. If Apple or Netflix bought CNN tomorrow for their OTT platforms, it would be financial suicide to remove it from the cable bundle. For these reasons I think traditional TV still has a long runway, albeit a much narrower one.
Therefore it seems to me that television has a simple, compelling value proposition for advertisers: access to the largest, wealthiest segment of American consumers, a platform that is 100% brand safe and secure with no risk of fraud, the most compelling live content, and an unmatched ability to deliver brand building messages that engage and resonate at scale.
Yet instead many networks contort themselves to craft narratives for advertisers that prove that their audiences really aren’t that old. “It’s a myth that young people don’t watch TV,” they say. Perhaps one can argue that young people watch more TV than the media reports, but there is no denying that it is not nearly the most effective way to reach that group. So why bother to convince people otherwise? The Buccaneers didn’t sign Tom Brady and try to turn him into a running quarterback. They won the Super Bowl because they understood what the 43 year old quarterback could still do better than anyone. TV should lead with its strength – the audience is gray, wealthy and advertising friendly.
Obviously traditional TV has changed a lot, especially in the past year. It’s not, and never will be, what it once was. But if networks are willing to embrace older audiences, as some are doing, and deploy the industry’s considerable marketing prowess to convince advertisers that the 55+ demo is worth significant investment, the future of TV can be bright once again.