Palm Beach, FL 11/11/11 (StreetBeat) --A few years ago, many people were predicting the end of television as we know it. The rise of video-on-demand, social games and other Web-based diversions all were supposed to kill TV. Who could possibly want to watch an antiquated, live network or cable show, the theory went, when one could Tweet, surf Facebook or watch something cached on Hulu or streamed on Netflix (Nasdaq: NFLX) instead?Fast-forward to today. The TV business certainly has undergone some seismic shifts due to new technologie. But the bottom line is, people are still watching the tube. Nielsen predicted that the number of U.S. homes with TV access would hit 115.9 million in the 2010-11 season, up 1 million from the year before and representing an all-time high. American teenagers, one of the most tech-savvy segments of the population, have seen their TV viewership actually increase six percent in the last five years, according to a Nielsen report. And major, live TV events continue to draw enormous audiences: 111 million viewers in the U.S. watched the Green Bay Packers beat the Pittsburgh Steelers in the 2011 Super Bowl, while 38.6 million tuned in to see last season’s American Idol winner crowned.
Why has live TV remained so powerful? Part of it, obviously, is community. People still like to be a part of major world events and discuss them while they’re fresh—not a week later, when everyone knows which handsome bachelor “The Bachelorette” picked, or who won the big game. But there’s a new twist to that today: Thanks to the rise of social media and the Internet, people can discuss live TV while it’s happening. It’s even given rise to a new term, “social TV.” A recent study by Ovum, a business/technology research firm in the U.K., found that almost 40% of TV viewers discuss particular TV shows via social media while they’re watching them. This is evidenced by the average one million tweets generated during each of the seven games of this year’s World Series and 4.5 million from this year’s Superbowl viewers. Some shows, like “The Voice”, a live singing contest, even show viewer tweets on air.
More broadly, 51% of consumers surveyed said they used the Internet to access news or information while watching TV—the “second screen” phenomenon. The upshot: Rather than being a replacement for TV, many Internet technologies are proving complimentary; the online environment is the new water cooler where people gossip with each other about TV shows and other topics. Indeed, the new stereotype of a couch potato is fast becoming someone splayed out on his or her couch, snacks in hand, pecking away periodically at a laptop or tablet to trade comments with friends.
Equally important, the nature of TV content has changed profoundly over the last several years to favor live viewing. Today, reality, talk and contest-type programs, a la “American Idol,” “The Biggest Loser” and “Dancing with the Stars,” dominate the airwaves. Old-fashioned comedies and dramas no longer sit at the top. (In the 2010-11 season, the top-rated, prime-time network shows were, in order, two “American Idol” episodes, “Dancing with the Stars”, “Sunday Night NFL Football” and, then, finally, “NCIS.”) And to fully participate in some of these programs, like Idol, one must watch them live. Otherwise, you can’t vote for the winner. And people like to vote—over 100 million votes were cast in this year’s Idol season finale. And even for traditional broadcast shows, social media presents the opportunity for “spoilers” from your network, so you better watch your show live to avoid missing out on the surprise ending in the season finale of your favorite drama.
That said, it doesn’t mean people are going to be watching all their TV on an actual TV set in the coming years. Cable and satellite companies are all working feverishly to catch up to new, Internet content-providers like Hulu, YouTube, Netflix, AppleTV, Roku and, of course, Amazon.com (Nasdaq: AMZN). The traditional players, like Comcast (Nasdaq: CMCSA) and Time Warner Cable (NYSE: TWC), are testing new technologies to allow them to deliver shows and movies via Internet protocol, which means they can be beamed via broadband connections to multiple devices—PCs, smartphones, tablets, whatever. It’s a concept known in the industry as “TV Everywhere”, and it’s the natural evolution of online video. It’s also a natural evolution of IP: The Internet has gradually chewed through countless traditional industries, from data to voice to music, and TV is one of the last analog bastions.
There are some obstacles to the IP-video revolution, including securing rights for specific content and figuring out how to measure viewership when people are watching shows on multiple devices. But the cable and satellite providers have a big incentive to figure it out—namely, keeping their subscribers. Today’s on-the-go consumers, who expect to complete most computing tasks on a mobile phone or an iPad, are also demanding the kind of high-quality video they get on their living room TVs when they’re out of the house. And right now, the video experience on computers, smartphones and other mobile devices—especially for live content—can still be lacking. Current pay TV providers are in the best position to be a one-stop source for high-quality video, anywhere and everywhere. Many start-up companies, including ours, are working to provide them with cutting-edge technologies to make that happen—keeping TV alive (with a little help from Simon Cowell).
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