TV: Yielding to User-Designed Viewing

Paul LaCamera, general manager of WCVB in the Boston area, has some keen observations on the broadcast industry in general and in particular the news industry. "Consumers are demanding more immediacy from news, particularly among the younger viewers that seem to be designing their own personal delivery systems. The emerging generation is not looking for news at 6 P.M. and 11 P.M., but rather expects news to available at all times and from a wide variety of sources, which they choose and in a format they've created."

LaCamera uses the term fractionalized when discussing how the audience has changed over the years. Essentially, the total viewership is about the same but no longer can the industry count on having the audience all present at either 6 P.M. or 11 P.M. The standard broadcast hours have a much smaller audience than in years past, yet the size of the overall news-needing audience and their appetite for news has grown. Like we have seen in many other businesses we have studied so far, this in turn places a need to have tighter distribution to a more targeted customer. WCVB addresses this through a relationship with a local 24-hour cable news station, NECN (which they part-own). This provides another mechanism for distribution of their material and on a more continuously available format. WCVB, like other stations, also has a relationship with various cable companies and offers many of their stories as video-on-demand elements. TV station Web sites are yet another format for distribution of the stories and actual news video (enabled by pervasive in-home broadband).

"TV stations are still a good business. Far higher returns than a typical business. But we do have to work harder to deal with smaller audiences for any single distribution venue. The world has shifted to a more on-demand and customized mentality, even for news," describes LaCamera. "As of the late 1980s, 80% of the people that watched prime-time TV were watching one of the three main broadcast networks. Today, it's under 50%, with the other 50% watching cable. Cable, with its volume of channel selection, offers viewers a wide range of distractions."

Tivo and Tivo-like devices have added to the changing landscape. Tivo essentially enables users to watch any show any time they desire because it transparently records shows locally. (You could, for example, watch the 6 P.M. newscast at 6:10 P.M. if you like, and even "pause" it while on a phone call.) Cable companies are scurrying to offer Tivo-like services through their new digital set-top boxes. (Who needs yet another box at home? This is much the same way that some telephone companies have offered answering services to reduce the clutter of the old in-home answering machines.) With Tivo-like capabilities and the broadness of cable (e.g., news channels, sports channels, science channels, etc.), "connected" viewers are truly able to design their own viewing experience. For advertisers, this trend toward more narrowcasting can be a good thing.

For years, the broadcast industry has struggled with a changing demographic of the nightly viewer. As cable viewership increased and viewers have more avenues for news watching (including Web and more news hours during the day), the nightly audience faded. "Today, the average age of someone watching any of the national nightly news shows is well into the 50s," exclaims LaCamera. "By contrast, if you want to reach that almost-impossible young male audience, you'll want to have placement with NESN (sports network). Whether it is broadcast or cable or Internet, the trend is clear: Audiences are getting fractionalized into more narrow buckets, which is probably good for advertisers that desire better targeting and somewhat more challenging for those of us that need to fill more pipes and delivery mechanisms."

Although tight connectivity between computer, cable, and the Internet has been envisioned for quite some time, no solution to date has been well received. But there are some technologies blending as well as a different set of desires from the viewership. In the Boston area, 82 percent of the homes have cable TV, and quite likely a large percent of those are also receiving their Internet from that cable company. In the new world, while watching a live broadcast such as the news (or perhaps more specifically, The Top National Political stories, or The Top Local High School Sports stories, or The Top International Pet stories), viewers can press Pause on their clicker in order to answer the phone, adjust the stove, or assist with homework. Should a well-targeted advertisement appear (say, a campaign-contribution solicitation, or a new exercise device), "connected" viewers could press Play on their clicker to momentarily suspend the original program, view the advertisement, and then resume their live program.

The acceptance of Tivo-like technology (as well as a general love for interfacing to only a clicker while in the Lazy Boy) will enable narrowcasting to benefit both the viewers and the advertisers alike in the connected world. When you're designing your own daily TV viewing experiences, including even the live news shows, you know you've crossed the connectivity divide. Those who don't will only be able to watch that which is broadcast over the air waves, which will effectively be its own narrowcast to the single audience demographic that remains unconnected.