professor david waterman with sung wook ji and ryland sherman, dept. of telecommunications, indiana...
TRANSCRIPT
Professor David Waterman
with Sung Wook Ji and Ryland Sherman,
Dept. of Telecommunications, Indiana University
Television Competition in the U.S.: Online vs. Offline
The Digital Media and New Media Platforms: Policy and Marketing StrategiesNational Chengchi University, Taipei
March 29, 2012
非常感謝你們 ,
讓我有機會在這裡發言 ,
並且遊覽美麗的台灣!
Part of a broader project on economic development of 10 media in the U.S. (“Offline vs. Online: Are the Media Shrinking?”)
Focus on professionally produced copyrighted commercial media products
A long term historical perspective
Individual media focus: television
Presentation Today
Overall, revenues of 10 media steadily declining (as a % of GDP) since about 2000
Online revenues very small and not compensating for offline declines
Consistent pattern for newspapers, music, movies, radio, books, magazines…..
The television case
Overall, an exception: robust industry growth, though slowing since 2000s
Online revenues very small—but growing and shifting from advertising to direct pay
For the future, some optimism…First some perspective on all media, then TV
Overview
Overall, revenues of 10 media steadily declining (as a % of GDP) since about 2000
Online revenues very small and not compensating for offline declines
Consistent pattern for newspapers, music, movies, radio, books, magazines…..
The television case
Overall, an exception: robust industry growth, though slowing since 2000s
Online revenues very small—but growing and shifting from advertising to direct payment
Total Revenue of US Commercial Media, as % of GDP; 1950-2010
* includes: newspaper websites; digital music/movies; television station/network websites; Internet radio; e-booksSources: U.S. Census; trade associations; industry analysts; 10-K reports; author estimationsPreliminary data (Waterman/Ji/Sherman, March, 2012)
-0.5%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
2.6%
2.1%
% o
f G
DP
Multichannel TV
Home Video
Broadcast TV
Radio
Theater
Internet*
Books
Newspapers
Magazines
Rec Music
Three reasons we find for recent revenue declines
2) More difficult Intellectual property (IP) protection Music, movies, news
3) Shortcomings of online business models Advertising faltering, but not direct support
4) Internet distribution is cheaper, more efficient Examples: movies, news
Focus on television
Overview of the U.S. Commercial TV Industry, 2011
Broadcast NetworksNBC,CBS,Fox,ABC
Cable Networks MTV,CNN
Local StationsLocal
Cable/telco Systems
DBS
Viewers
10% ShareViewers
62% Share
Viewers
28% Share
29
Television: Total Revenue by Category,as % of GDP, 1970-2010
Sources: U.S. Census; trade associations; industry analysts; 10-K reports; author estimationsPreliminary data (Waterman/Ji/Sherman, March, 2012)
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
1.4%
.38%
.93%
1.12%
% o
f G
DP
Broadcasting
Internet
Cable TV
DBS/Telco
The television case
Drivers of robust economic performance to date
Continuing conversion from free broadcast to pay TV
U.S. Multichannel Subscribersas a % of all U.S. TV HH: 1970-2010
Sources: U.S. Census Bureau; FCC (1998); NCTA; SNL Kagan (2001, 2007, 2010 & 2011)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
6.7%
86.8%
Advertising vs. direct pay support as % of GDP: Television, 1970-2009
Sources: U.S. Census; trade associations; industry analysts; 10-K reports; author estimationsPreliminary data (Waterman/Ji/Sherman, March, 2012)
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
.35%
.55%
.47%
.03%
.43%
.60%
% G
DP
Advertising (% GDP)
Direct Pay (% GDP)
The television case
Drivers of robust economic performance to date
Continuing conversion from free broadcast to pay TV
Analog digital, especially cable and DBS
The Digital TV Transition, 1995-2010
Sources: SBCA, GMID-Global Market Information Database, MPAA, NCTA, SNL Kagan, TVB, Nielsen, Leichtman research
Pen
etra
tion
s as
% o
f a
ll T
V H
H
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
0%
10%
20%
30%
40%
50%
60%
70%
DBS
Digital Cable
Digital/HDTV Sets
The television case
Drivers of robust economic performance to date
Continuing conversion from free broadcast to pay TV
Analog digital, especially cable and DBS
Cheaper, higher quality, more programming
Source: Authors’ compilation from TV Dimensions (2009)
1980
1990
2000
2005
2008
0 20 40 60 80 100 120 140
10
27
72
97
117
Number of Channels
Average Number of Channels per U.S. TV Home
The television case
Drivers of robust economic performance to date
Continuing conversion from free broadcast to pay TV
Analog digital, especially cable and DBS
Cheaper, higher quality, more programming More efficient pricing
Comcast Cable TV Tier Pricing - Bloomington, IN, 2011
Packages
Number of Channels Price per month**
Basic
21 $19.99
Digital Economy 43 $39.95
Digital Starter* 178 $64.99
Digital Preferred* 243 $81.94
Digital Premier*
295 $137.00
* 158 HD Channels are available from Digital Starter with HD Box($8/month) ** published full rates after 2 years; reduced rates for some packages for first 2 years;
Source: Comcast website, Program Lineup by Zip code: 47401, Consult with customer center
The television case
Drivers of robust economic performance to date
Continuing conversion from free broadcast to pay TV
Analog digital, especially cable and DBS
Cheaper, higher quality, more programming More efficient pricing
TV use keeps rising
Early 1970s: 43 hrs./HH/week Late 2000s: 57 hrs./HH/week
TV Viewing in U.S.: Weekly Hours per Person
Source: Nielson 2010-2011 Audience Report
2008-09 2009-10 2010-110
5
10
15
20
25
30
35
40
33:48
34:01 34:12
The television case
Drivers of robust economic performance to date
Continuing conversion from free broadcast to pay TV
Analog digital, especially cable and DBS
Cheaper, higher quality, more programming More efficient pricing
TV use keeps rising
Early 1970s: 43 hrs./HH/week Late 2000s: 57 hrs./HH/week
Result: massive growth of industry revenues since 1970s
Online Television Timeline
• YouTube launch; Free broadcast TV programs posted
• iTunes offers TV programs for sale ($1.99)2005
• Networks give “takedown” orders to YouTube/lawsuits2007
• Fox, NBC launch hulu.com
• CBS launches tv.com2008
• ABC joins hulu.com2009
• Comcast, other cable operators launch Everywhere TV 2010
2011-12• Amazon, others launch or announce online video services
Some Major Online TV Program Providers
Service Primary Content Primary Business Model(s)
Comcast Xfinity* Cable/Broadcast networks/moviesFree to offline cable subscribers/PPV
CBS CBS Broadcast network programs adv
huluBroadcast networks (Fox, NBC, ABC…) Adv/subscription
Viacom DigitalViacom cable networks programs (MTV, Comedy Central…) Adv
Netflix Broadcast/cable programs/movies Subscription (also DVDs by mail)
iTunes Broadcast/cable programs PPV
Amazon Broadcast/cable programs PPV/subscription
*Similar services offered by other leading cable operators
Characteristics of Online TV Providers
Now many providers and business models Independent networks (eg, HBO-GO, ESPN 360) or program
suppliers (eg, Viacom Digital) …but aggregators appear to dominate
To date, online TV contributes relatively tiny revenues
Sharp contrasts in 2010
National U.S. Television industry revenues by source2010
Total: $130.2 bil.* Subscriptions include movies
Sources: trade associations; industry analysts; 10-K reports; SNL Kagan; authors’ estimation
Multichannel subscriptions
42.6%
Broadcast/Cable Advertising
56.0%
Online TV adv.(Hulu & CBS)
0.3%
Online TV sales and video subscrip-tions*1.2%
Characteristics of Online TV Providers
Now many providers and business models Independent networks (eg, HBO-GO, ESPN 360) or program
suppliers (eg, Viacom Digital) …but aggregators appear to dominate
To date, online TV contributes relatively tiny revenues Sharp contrasts in 2010 Online TV episodes account for 5% of viewing, 2.7% of industry
revenues in 2010 (CSG, April, 2011)* Our estimate of total 2010 revenue per viewing hour :
All U.S. TV (exc. online): $ .79; hulu: $.28 Online increases in 2011, but contrasts still high
Very little Internet- original programming launched or announced by netflix, hulu, YouTube, in 2011-12
The Future for Online Video Services
Healthy industry growth depends on….. IP protection successful business model development low cost distribution
These factors will determine the quality and variety of programming– especially Internet-original programming –that is made available to viewers.
U.S. Broadcast TV case: reasons for optimism
Relatively easy IP control Fairly strong U.S. copyright law Low incentive to steal programs that are already “free”
Business model development
in-program ad model transfers to Internet Direct payment models growing—esp. subscription (eg, Netflix)
Apparently lower cost of distribution
Especially compared to clumsy system for broadcast signal distribution to 200 local stations
Broadcast networks (for now) have mass audience and advertisers want that!
Source: Authors’ compilation from Nielsen TV Ratings Data via tvbythenumbers.com
Week of February 27th to March 4th, 2012
* Authors' calculation based on Nielsen TV weekly ratings data Rating is defined as the average % of possible viewers with access to T.V. (out of 289.7 million) who are watching at any given time.
Snapshot of Top 10 Broadcast & Cable TV Networks
Network Primetime
Rating*Type Some popular programs
CBS 4.2 Broadcast CSI, Survivor, Two and a Half Men
FOX 3.2 Broadcast American Idol, Glee, Simpsons
ABC 2.9 Broadcast Modern Family, 20/20, The View
NBC 2.7 Broadcast The Office, 30 Rock
Univision 1.2 Broadcast Spanish language
USA 1.0 Cable Psych, WWE Monday Night Raw
Discovery .8 Cable Mythbusters, Dirty Jobs, Planet Earth
TBS .7 Cable Conan O'Brien, movies
History .7 Cable Pawn Stars, Swamp People
Fox News .6 Cable News and debate
The U.S. Cable TV System case
Over the long term, a different threat..
Cable systems are themselves offline program network aggregators
IPTV can potentially disaggregate cable (like newspapers)
Potential Cable TV Disaggregation
Programming Networks
Cable TV SystemsIndependent
networks/aggregator websites
(YouTube, hulu)
Subscribers
U.S. Cable TV case
Over the long term, a different threat..
Cable systems are themselves offline program network aggregators
IPTV can potentially disaggregate cable (like newspapers)
Can cable operators make Everywhere TV work?
Cable System Operator Websites
ProgrammingNetworks
Cable TV Systems
Subscribers
TV Everywhere TV Business Model
U.S. Cable TV System Case
Over the long term, a different threat..
Cable systems are themselves offline program network aggregators
IPTV can potentially disaggregate cable (like newspapers)
Can cable operators make Everywhere TV work?
Cable TV is a very versatile and efficient broadband technology, but…
Many contracting/coordination problems reported It will be very difficult to compete with independent
aggregators.
The End, Thank you