The modern economics of TV


I can still remember the days when there were but three TV channels and they didn’t broadcast for large parts of the day. I thought I’d get a nosebleed when Channel 4 arrived and Channel Five just seemed like a luxury. There were rumours that in “that America” there were many more channels interrupted every five minutes by advertising. Why would anyone want that?

Of course Rupert Murdoch, and more latterly Richard Branson, had other ideas. Before we even realised it we had hours and hours of UK TV to fill and cheap imports which the networks could add to the listings at very little cost. While previously we could argue that we didn’t want a subscription there is now Freesat and Freeview and the Government switching off analogue signals. First there was TiVo and equivalents, iPlayer and, latterly, YouView. Not only is there more content but there is also no excuse for missing anything other than good taste, a life, and lack of alternatives.

Let’s not blame the foreigners because where once there was just three trusty part-time channels there are now five BBC channels, Four ITVs and even Channel 4 has a few different flavours. Add on +1s, red buttons and the HDs and there’s a TV full from our old friends never mind anyone else. There’s are inevitable consequences of this transformation.

Firstly, the advertisers have a challenge and an opportunity. In the old days there was just ITV to advertise on. A peak time slot could trigger hundreds of telephone calls with the slots around Coronation Street being the best of the best. TV advertising paid off despite being expensive but was an incredibly blunt instrument. The only brands that could advertise effectively were the big mass-market brands. They also needed to have the infrastructure to be able to deal with hundreds of responding customers in the two minutes available between the ad appearing and the viewer putting the kettle on. With the multichannel, 24-hour world the viewers are being dispersed. Peak viewing figures are down for any one programme but the specialism creates an opportunity for advertisers. Remember, with the exception of the BBC, the only reason these channels exist is to create advertising revenue. Little wonder that the advertising matches the viewership ever closer. All the “no win no fee” and cheap loans advertising could not be effective without a digital TV proposition which attracts the right viewers.

There is also an inevitable reduction in the amount of money which can be spent per half hour. The advertising revenue is having to be shared more thinly and so there is less money to go around on programming. This is why the repeats and the imported series are so attractive – they are cheap. The programmes that are original also share the same traits. Jeremy Kyle, property and food, and reality TV are a cheap format to produce compared to costume dramas but they need to be more and more outrageous to still attract viewers. The same applies to the horrible weight and medical programmes. Outrageous is the cheapest way of attracting an audience but it is a horribly dangerous spiral.

With advertising being limited the TV producers are becoming ever more creative in finding new ways of gaining audiences and revenue. The notorious rise of premium rate competitions in the noughties was just a way of getting extra revenue from the same audience. So is product placement and presenter-branded merchandise such as Richard and Judy’s Book Club. The lines between impartial and sponsored presentation is becoming ever more blurred. Whichever way we look at it, this aspect is not good for us: the viewers.

For some years another approach has been to try and engage the viewers more. As well as generating revenue, competitions are an attempt to engage an audience and build loyalty. All the use of social media hashtags is designed to do the same. So are the little “in next week’s episode” trailers and the adverts for the following programme before the current one has finished. Presenters are chosen to bring an audience with them across different genres – Ant and Dec and Davina could pop up in virtually anything because people like them.

TV has gone from being almost Hollywood-like in status to something which is accessible by us all. It reflects the way we live our lives and our world-view where respect has to be earned rather than taken for granted. TV today is competing for a share of our leisure time and, amongst the younger generations, it has lost the battle. Students don’t watch TV and they certainly don’t watch the adverts if they do. Without advertising TV is nothing. Social media creates its own movie reel of user-generated content which is preferable to the over-rehearsed, cosmetic and advert-riddled traditional content for them.

And me? I still watch TV but my attention is far more limited. It takes a lot for me to sit and concentrate on an hour-long programme. Still less to watch a 12-part series. The obvious viewer-hunting Sunday night pap of Downton Abbey, Call the Midwife and Mr Selfridge is most definitely not for me.

As a foodie, I like the food and drink programmes. The repeats seem to date very quickly and the fashions in food are all too obvious. Watching Keith Floyd is a lesson in why you should never cook too quickly…charming as he was. The Americans have a different take on food of course. The Man vs Food series seems obscene. The host travel the States looking for big eating challenges – and they know how to eat big. Whether it is a steak that spills over the sides of a plate or a gallon of ice cream doesn’t really matter. It’s not good for you and doesn’t constitute anything more than explaining the size of some Americans. One notch down from this is Diners, Drive-ins and Dives which I actually really like. Here the host tours the States (do they share a tour bus?) and visits diners which have been recommended by their clientele. They sample the house specialities and watch the cook prepare a couple of specialities. I wonder what the UK equivalent of the pancakes and meatloaf would be. Very American and fascinating. Alongside this are the occasional programmes about street food – wherever in the world it may be. Another favourite is the Australian version of Masterchef – far more gamified than the UK equivalent and much more of a sport/team game rather than the emphasis on cooking finesse.

My other discovery low down on the channel listings are the Storage programmes. I think the idea of breaking open a locker and bidding on the contents without properly examining them is the American equivalent of Antiques Roadshow. It’s clearly staged as each locker contains junk in boxes (as you would expect most of them to contain) but the ones on the show have a Ford Mustang or a Harley Davidson hidden at the back. The formula is pretty similar with every lot – you have as much chance of guessing the value as winning on 3-2-1 with Ted Rogers. The clues are deliberately misleading. Somehow it seems every lot promises a small profit. Contrast this with the more aggressive Storage Hunters where it is much more about the characters bidding and occasionally threatening each other.

The final common genre is about real-life situations – driving dangerously, driving in icy conditions, caught on CCTV, blah, blah, blah. Not for me but amazing how many variations of the same programme you can come up with. The point is with all of these that the advertiser knows a small self-selecting demographic is watching. The cost of advertising is significantly lower with lower audiences and so a whole range of products become feasible to advertise via TV. I’ve been involved in this market and the response rates to each advert on a high-numbered digital channel is often in the single digits!

My hope is that this economic model continues to evolve and follows the US with localisation. Instead of programming for a tiny share of a national audience I believe there is a market for a larger share of a regional audience. In the US Cable TV offers coverage of high school sports on exactly this basis. Imagine being able to see our local sports teams away games and to broadcast live coverage of Shrovetide to the outside world

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About justaukcook

/kʊk/ Not a chef, not an epicure, not a foodie. Just one who likes to prepare food – What really happens in the kitchen and on the high street is what I write about. Follow me on Twitter @Justaukcook and on https://www.facebook.com/justaukcook
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One Response to The modern economics of TV

  1. contrahead says:

    Your first sentence struck a cord and it revealed your age. I know because during my formative years, I too was privy to only 3 channels. These however were associated with ABC, CBS or NBC.

    The problems with TV are abundant, the most prevalent being poor programming, re-runs, lack of originality and excessive commercials. The ratio of commercial time to program time has never been good, but I estimate the average now to be about 50/50. In regards to program quality; let me say that with 150 channels available (with a basic satellite programming package) it is quite possible – to be able to find nothing worth watching.

    If I were to write my own blog post about TV, I think I’d cover topics like: the slow demise of quality news, the political agenda of some news-like broadcast, the low expectation of an audience’s attention span and the outbreak of idiotic reality type shows geared especially for the urbanite mentality. Speaking of sports coverage, those of us here in America that refuse to pay extra for the privilege – no longer get to watch what goes on during the Olympics.

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