TV Flexes Its Muscles

April 11, 2011 World Screen
This article originally appeared in the MIPTV 2011 issue of World Screen.
 
Despite audience fragmentation and a multitude of smaller screens and devices competing for viewers’ attention, television is as resilient as ever.
 
To paraphrase Mark Twain, the report of the death of television has been greatly exaggerated. In fact, the medium is thriving as never before: think mushrooming channels and burgeoning viewership around the world, more diverse, edgier or otherwise compelling content, and advertisers paying ever closer attention to the small screen to jump-start brand awareness.
 
The concept of TV Everywhere is no longer just a mantra chanted by corporate titans like Time Warner’s chairman and CEO, Jeffrey Bewkes, and others in the U.S. and Europe, but increasingly and insistently a self-evident right demanded by people from Asunción to Algiers to Ashgabat, by the emerging world as well as by advanced countries.
 
Most notably, old and new media are beginning to complement each other, as they did most convincingly during the uprising in Egypt. Just as quickly as the government pulled the plug on one outlet or another, news channels finagled new frequencies and online operators adroitly found work-arounds, like Speak to Tweet, to get the message through. Both the attempt at repression and the creative responses to it were testament to the crucial role that platforms of all kinds now play in the lives of people wherever they may be.
 
The resilience of television, creatively and financially, will be seen by the 11,000-plus participants at the upcoming MIPTV market in Cannes, which comes as most national economies, broadcasters’ balance sheets and ad markets around the globe start to percolate again.
 
It wasn’t obvious that the small screen would continue to loom so large on the media landscape. Newspapers are reeling, sour notes are bedeviling the music business, book publishers are perturbed about Kindles, independent movies are struggling for exposure, but television? It’s holding its own and then some. Still, as they scurry along the Croisette, the folks who buy, sell, create, package or fund TV programming should have not only a lilt in their step but their ear to the ground. There are still challenges to be met as well as victories to savor.
 
FRANCHISES RULE
On the positive side, at least for the big players:
 
It’s not just content that’s king, but franchise content that’s lording it over country after country. Beginning with the CSI juggernaut a decade ago, Hollywood producers have been on a consistent tear, turning out well-acted and astutely plotted shows that rivet mass audiences and occasionally coming up with envelope-pushing fare to delight the elites so dear to advertisers. Think The Good Wife, NCIS, Glee and The Vampire Diaries in the first category; The Sopranos, Mad Men, Californication and Boardwalk Empire in the second. Not to mention nonfiction nonpareils like the Idols, Got Talent and Dancing with the Stars brands.
 
Bruce Rosenblum, the president of Warner Bros. Television Group, points out that “the appetite for good episodic storytelling has never been stronger. Viewers everywhere enjoy living with well-drawn characters 22 episodes a year, for sometimes five, six or ten seasons.” Consumers have come to expect a high level of quality from TV shows, he says.
 
And apparently they’re getting it in spades. A recently published annual survey by the accounting and consulting firm Deloitte called The State of the Media Democracy concluded that, despite an environment saturated with new and evolving entertainment platforms, “television continues to hold significant power, both from a content and device perspective.” Consumers may not always watch programming on the traditional TV set, but they are watching. Some 71 percent of U.S. households consistently rate watching TV content on any device as one of their top three media activities.
 
The latest Nielsen figures bear this out: the average American watches television an astounding 143 hours a month or almost five hours a day. Viewership abroad, while lower, is also increasing by leaps and bounds. And, despite the proliferation of smartphones, computers, game consoles, pads, pods, tablets and what-not, a lot of the watching is on those square contraptions in the den.
 
Those boxes themselves have thrown off their 1950s fustiness and stretched out into movie theater-like rectangles, slimmed down like starlets, and moved up onto walls. Flatscreens, now in 60 percent of households in the U.S., are so popular that they’ve become the number one target of burglars.
 
TV producers and executives are no longer dismissive of new-media upstarts and challengers but rather coming to terms with them, embracing them or in some cases co-opting them. As The Economist put it in a report last May, new devices and platforms haven’t replaced television: “Rather, they have squeezed around it.”
 
Viewers, especially the younger demos that advertisers so covet, are admittedly taking to new gadgets with alacrity, but the chief thing that they are doing on these devices is watching, sharing and interacting with TV shows. And producers are returning the compliment by enriching their linear story lines via these new platforms.
 
It is telling that the buzz at MIPCOM in October and likely at MIPTV this April is no longer about digital darlings who show up for the semiannual rendezvous on the Riviera, but rather about the stars of this or that hot TV show: not Joost, but Jon Hamm; not Zune, but Eva Green.
 
BALANCING ACT
The conglomerates that control most content—not just the major Hollywood studios but also Fremantle­Media and Endemol, the BBC, RTL, TF1, Globo, NHK, et al.—have to tweak the timing for content availability on these proliferating platforms and calibrate the balance between ad-supported and subscription viewing on them.
 
Warner Bros.’s Rosenblum says the new-media business is “constantly shifting and very fluid right now.” He notes that emerging over-the-top digital-subscription systems (with companies like Amazon and Apple behind them) are the next big thing to rattle the current sequence on windows. Warner Bros.’s parent company, Time Warner, recently inked a deal with Comcast to support TV Everywhere and supply its cable channels TNT and TBS to the latter’s new VOD service.
 
Big players also have to get or keep their cost structures under control. While they benefit from economies of scale and pacts with top talent, they are encumbered by huge overheads and bound by union rules. Broadcast and cable producers alike could take a page from those digerati who are, by necessity, making content for less. Many converts are already finding inventive ways to stretch their budgets, often by shooting outside expensive cities like Los Angeles and New York, by harnessing technologies like CGI—or just by being scrappier.
 
Generate, a company co-founded five years ago by traditional media mavens Jordan Levin (ex-CEO of The WB) and Peter Aronson (former head of Regency Television), is one such upstart, which prides itself on being a platform-agnostic producer and turning out content for much less than the studios’ going rate. Given rising costs for talent and marketing, Aronson thinks producers will increasingly rely on international presales to get shows made and that advertisers will play a greater role in funding entertainment.
 
“It’s very hard, for example, to make money on broadcast: you’re either a hit or a strikeout after 6 or 13 episodes,” Aronson says. “And there are many more flops than hits.”
 
For the sellers of rights to content, the ricochet effect of new media means their jobs have gotten more complex.
 
“Because licensees are terrified they might leave something on the table or give up some usage they might later want, we’re often trapped in a negotiation paralysis,” says Marion Edwards, the president of international television at Twentieth Century Fox Television Distribution. Buyers, she explains, feel they have to chase rights even when they have no foreseeable plans for exploiting them. “Closing a programming deal, even with clients we’ve worked with for decades, can now take months and many meetings,” she points out.
 
Despite all the time and effort devoted to divvying up the digital opportunities, nothing has really replaced the value of the broadcast rights to content, as over-the-air networks, in whatever territory, command the most eyeballs and the most efficient ad dollars.
 
In short, it is the big broadcasters and the franchise shows that still dominate and define the television experience worldwide. And bring in the biggest bucks.
 
Although it’s tricky to extract official numbers, the Hollywood majors together with key U.S. independents like Lionsgate will rake in upwards of $10 billion this year from program sales to terrestrial and pay-TV outlets outside North America, with Europe still accounting for the bulk of the revenues. Add to that haul the estimated $5 billion that Yankee spin-off channels—HBO Ole, FOX International Channels, Discovery’s panoply of outlets, etcetera—mint from their dual stream of ad revenues and carriage fees abroad, and it’s clear that the international TV business is going from strength to strength. A good thing too, since the DVD business continues its downward trajectory.
 
And where TV goes, so follow advertisers. As John Hayes, the chief marketing officer for American Express, puts it, “Advertising on television is a great conversation starter. It’s up to the marketer to manage that conversation—and now it’s a two-way, interactive one.”
 
CHASING VIEWERS
American Express has been energetic and inventive in its relationship to television of late, collaborating with Glee writers and cast members to come up with brand-building, philanthropic-tilted vig­nettes on air.
 
“What can I tell you?,” says Hayes. “The networks are creating franchise programming, live broadcasts of sports are booming—and people still want to see great event TV. The most important thing for us is to focus on how consumers use each ‘channel’ of communication and to be there to shape the conversation.”
 
From Hayes’s perspective, the most important thing for an advertiser is not to be afraid to experiment. “There’s a revolution going on now in that smart devices are changing the habits of global audiences—buying habits as well as social habits. We have to harmonize across channels of communication. You can’t just create a great spot for the Super Bowl and go home.”
 
Peter Tortorici, the CEO of GroupM Entertainment, says the growth of brand-funded entertainment is hard to quantify but that it inarguably has skyrocketed as TV producers have become more receptive to the idea (and needful of money) and digital opportunities have complemented broadcast’s reach by allowing for more targeted relationships with consumers. Back in 2003, when he left the network-TV business for the ad-agency trenches, Tortorici says, talking about brand integration was like the sound of one hand clapping. Today his company fields hundreds of projects, which try to speak “the language of production and the brand.”
 
And not only is the quality of entertainment programming exceptional right now, Tortorici agrees, but it has raised the bar for advertisers to tell their stories as deftly. That doesn’t mean long, lingering close-ups of a product in a show but rather organic integration that doesn’t disrupt the storytelling. There is so much competing content, and bad content dies so quickly, that unless you provide a compelling narrative, the end user will not be convinced, he points out.
 
Still, the basics are not to be sneered at. David Klein, the publishing and editorial director of Advertising Age, suggests that that much maligned cornerstone of advertising architecture, the 30-second spot, is still carrying the weight of campaigns as gamely as ever. As the Deloitte report indicates, a whopping 86 percent of respondents say that of all media they encounter, traditional TV advertising has the greatest influence on their buying decisions.
 
Sure, it’s no longer the be-all and end-all of what an advertiser must do, but, Klein points out, a TV spot is still “the center post” that sparks mass awareness. From there, digital and social media have to come into play, so most key advertisers now enhance their campaigns to include Twitter, Facebook, viral video, YouTube, events, philanthropy—you name it.
 
Sometimes their efforts surpass expectations. The “Old Spice Guy,” for example (the hunky actor in commercials for Old Spice deodorant who has become a sensation), started out on a TV spot and movie trailer but then moved to Twitter and went viral.
 
Other times content comes across as too “out there” for mainstream clients. Take MTV’s Skins, from which a passel of major brands yanked their spots once they got a closer look at the racy story lines, for example.
 
So, where is the growth in content plays and branded entertainment going to come from in the next few years? After decades of focus on the U.S. and Europe, the sights of both content suppliers and advertisers are shifting toward the emerging markets in Asia, Latin America and Africa.
 
Consider these projections: the ad agency giant ZenithOptimedia estimates that global ad revenue will grow by 4.6 percent this year, and the spend on TV, the largest venue, by 6 percent, with Asia’s on-air investment surpassing Europe’s for the first time. Further, the growth in consumer spending for subscription TV worldwide will, according to the consultancy PricewaterhouseCoopers, edge up by almost 7 percent this year.
 
Set to overtake Germany in 2011 as the third-largest ad market in the world, China is by fits and starts turning into a mass consumer and media-obsessed society.
 
Latin American and Hispanic nets in the U.S. are tuning up telenovelas as never before for their increasingly well-heeled viewers at home, as well as exporting them far and wide. That in turns means more money freed up to invest in original programming. And on the cycle goes.
 
Given a boost by the World Cup last summer, Africa is starting to crank up its own production machine and to become an attractive market for Westerners to sell into. DISCOP recently held a trade show in Accra, Ghana, to help galvanize the nascent transnational content business.
 
In short, as the Deloitte study put it: “Long Live the King: the power of TV persists”—and the medium shows no sign of abdicating its role any time soon.