Communiqué

The end of TV as we know it.

How do you watch TV?  By that I mean what is the source of the TV programming you watch?  If you are a broadband TV subscriber like about 85% of the U.S. population you get your TV via a bundled group of TV channels from a cable or satellite company.  That divides up as roughly 52% cable and 33% satellite.  (These numbers change daily and are only approximate but they do show the trend.)  And by the way, you pay dearly for that service.  That is where I get most of my TV and the cable/satellite companies have most of us locked in.  But that is changing. The basic trend, although gradual, is that more viewers are dropping cable TV for Internet-based TV.

Another interesting statistic from the Consumer Electronics Association is that only 7% of U.S households get their TV over the air (OTA) by an antenna directly from a local TV broadcast station.  That percentage of OTA viewers keeps declining each year.  A Nielsen study in 2012 indicated 9% OTA down from 16% in 2003.  The rabbit ear business has got to be in real trouble.  That is also bad news for the broadcast networks who receive payment from the cable companies to carry the broadcast channels.  The recent CBS-Time Warner (TW) dispute has CBS asking more than TW wants to pay so TW drops the channel.  This hurts all parties including the consumer. 

Incidentally, the National Association of Broadcasters (NAB) disputes the 7% OTA figure.  Their own survey by some group called Gfk says the OTA crowd is really 19.3% of households.  Big difference.  Wonder which one is correct?  Regardless of who is right, the OTA percentage is shrinking.  No wonder the FCC wants to capture back some of that prime broadcast TV spectrum for cell phone and other wireless use at an auction next year.  And it should be no surprise that the white space (unused TV channels) wireless broadband movement is growing.

Despite these OTA figures a company called Aereo recently started a service to stream OTA local signals to any device over the Internet.  Aereo picks up the signals and sends them to your cell phone or tablet via Wi-Fi and the Internet.  You buy DVR space on their servers so can store and watch programs later.  Their service now covers only the major cities but more are on the way.  You can get the usual ABC, CBS, Fox, NBC, PBS and a few others. And it is a lot cheaper than cable.  What happens to Aereo as broadcasts fade away even more?

According to the figures above, the percentage of Internet TV must be about 8%.  But that is not correct as another survey says that about 28% of TV households get Internet TV.  That means many are using both cable/satellite and the Internet.  The survey indicates about 4% Internet-only homes.

The big winner in all this is the over the top (OTT) TV movement.  That means Internet TV sources like NetFlix, Hulu, YouTube and others.  So many of you are using accessories like TiVo, Apple TV and Roku to get OTT TV on the big screen.  I have a Roku box that streams TV from my Wi-Fi network to my HDTV set.  It works great.  It is a pleasure to be able to select a movie or TV show I want when I want to watch it. 

The younger population (ages 18-24) is big on Internet TV watching. Nielsen says that most U.S. households watch 34 hours of TV per week on average only about an hour (3%) of which is OTT.  That is nearly 5 hours a day.  What else in your life other than sleep or work takes up that much time?  No wonder TV drives our thoughts, opinions and viewpoints.  Heavy.  Anyway the 18 to 24 year olds only average 23 hours of TV a week but a greater percentage of it (10%) is from the Internet.  The OTT percentage is increasing.

Another interesting phenomenon is YouTube.  This Google property gets millions of views per day and even millions per views of some episodes.  I have heard that the popular viral Korean Gangman dance video got well over a billion views so far.  While most of the YouTube video is short personal stuff (babies, kittens, and stupid stuff) some of it is commercial. Many new music groups have achieved their success by launching songs on YouTube bypassing the commercial music business.  Overall YouTube video is widely consumed.  And more and more of it is via smartphone or tablet.  YouTube is so successful they recently started to divide the business into channels and to begin developing more formal programming.  But anyone can still post videos any time.  A really unexpected TV success.

Apple, Amazon, Microsoft and others are trying to find a way to monetize video for their businesses.  Google’s latest attempt to build on their video success is the announcement of the Chromecast.  The Chromecast is a device that looks like a USB drive and plugs into an HDMI port on your TV.  It then links up to your Wi-Fi network so that it can stream video from your smartphone or tablet to the big screen.  The apps are compatible with both Android and Apple OSs.  It only handles NetFlix and YouTube now but look for more sources in the near future.  The device only costs $35 so should be pretty popular.  It too will probably affect how we watch TV.

The trends seem very clear.  Less cable and satellite TV and the virtual disappearance of OTA TV.  Internet TV is the new winner.  The cable companies may morph into Internet-only service providers and try to control (boost) broadband connection rates to offset the loss of cable subscribers.  Maybe that is the reason Google is trying to roll out its fiber services over the U.S.  Now if only the movie and TV production companies will turn loose of their shows for wider Internet distribution, this trend will increase faster. 

I only wish we could get better quality material.  In my opinion, most TV content is pure crud, insipid and worthless.  Yet I guess it is entertaining and I guess that is what TV is for.  We entertain ourselves nearly 5 hours a day with this drivel.  Why aren’t we all out being more productive at something else? Have you tried reading or conversation lately?  Are we really that lazy?  I am sure the purveyors of video are happy that we are?

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