For years, it’s been said that Internet use would cut into the time U.S. consumers spend watching television. Today, those premonitions are beginning to reach the tipping point. TV ratings have dropped by 50 percent over the last decade. Goldman Sachs recently called the decline “the sharpest pace on record.”
The firm found that ratings in the 18-to-49-year-old demographic – the key group targeted by advertisers – fell by 17 percent last winter compared with the winter before. ABC, NBC and Fox were most affected, with decreased ad revenues cutting into profits. (Fox had to get distributors to pay higher subscriber fees to pull a profit). But even highest-rated CBS lost 3 percent of its 18-to-49 audience this season, The New York Times reported in April.
Morgan Stanley analyst Benjamin Swinburne had released charts at the beginning of the year showing the ratings drop, claiming declines are a function of income level.
But it’s not just that.
The writing has been on the wall for some time.
Back in 2004, for example, studies indicated that television viewing would be one of the first leisure activities to be hit by Internet use and online socializing. (Other activities supposedly affected were sleeping and real-world socializing.)
Though today, TV continues to remain the dominant medium, the emerging generation of so-called “digital natives” – the first to have been born into a world where consumer adoption of the web was already mainstream – seem to prefer other behaviors. And it’s more than just splitting time between TV and video games, or TV and mobile apps, or TV and online video. That’s why it’s funny that the general assumption is that services like Netflix, Amazon Instant Video, Hulu and YouTube will eventually claim users’ time and eyeballs in the way that the “boob tube” once did.
That may not be the case. We just don’t know yet.
For a generation who grew up on the web, can we say for sure that watching TV-like content through other devices will be their preferred downtime activity?
TUMBLR AS THE NEW “TV”
Tumblr founder David Karp doesn’t seem to think so. Having built up an online community that Yahoo just acquired for $1.1 billion, he told Charlie Rose in an interview this week that Tumblr is part of a larger transition in consumer behavior.
“What regular people out there in the world do – right now, they spend a huge amount of time in front of their televisions consuming – sort of, what do you call it – ‘premium content’ – stuff produced by publishers, networks, studios,” Karp said. “If we’re not already there today, certainly five years from now, I expect the vast majority of the content that we enjoy not to be produced by a handful of creators who are selected and supported by those big studios.”
Five years from now.
Indeed, we could be watching crowdfunded films, the likes of which Zach Braff and “Veronica Mars” have raised big money for in recent months over on Kickstarter. Or it could be something else entirely. Karp obviously hopes that creators will find their way to Tumblr, and then others will “tune in” to watch.
But will they? Look at Facebook. The social networking giant found its place among this young generation (and those that came before), but it has somehow garnered a reputation as a necessary evil among younger users. Story after story after story tell of teens and young adults who report feeling “addicted to Facebook” or “forced to” use it, rather than pleasantly consumed by it.
Can Tumblr be any different?
Well, if you think of television as a fairly passive activity involving content consumption, and that content is matched up with your interests, and can be humorous, informative, inspiring, educational, and more, then Tumblr’s network of interests comes closer to mimicking the same “feeling” that TV could once provide. This isn’t about connecting with friends like on Facebook, it’s about your own idea of entertainment.
The analogy makes sense, then, though it’s worth pointing out that, today, many of Tumblr’s fandoms still revolve around content still produced for “old media” like TV shows and movies. And Tumblr, of course, may not last. Much of its audience is young, wary of advertising, fickle, dramatic, and could potentially still flee.
TWITTER AS A TRADITIONAL TV COMPANION
Meanwhile, Twitter, too, is slowly heading in the direction of becoming a place for media consumption, not just communication. Its recent moves to support richer media like photos, videos, apps and articles within its stream is one example.
But Twitter is taking a different direction than Tumblr. Instead of betting against TV’s eventual decline, it’s betting big on being the TV companion app.
Twitter CEO Dick Costolo said this week at the D: All Things Digital conference that today’s television companies can become valuable partners for its service. Sure, the networks are clearly hungry to get a piece of the online action – it’s money for the taking. But at the end of the day, they’re still promoting “TV” – as in, flip a switch, power up your DVR, old-school television.
Twitter has been busy catering to the confused and scrambling TV industry. The company launched TV ad targeting for Promoted Tweets, powered by its acquisition of Bluefin Labs. It announced broadcast partnerships with BBC America, Fox, Fuse and The Weather Channel, allowing networks to promote TV clips. It has also struck deals with A&E, Bloomberg TV, theAudience, ESPN, Turner Sports, the NBA, Major League Baseball, Condé Nast, Warner Music, Clear Channel, Vevo, the WWE, VICE, PMC, Discovery, and others. It has partnered with Nielsen for Twitter TV ratings.
“Twitter is the social soundtrack for TV,” Costolo said at the D conference. “We’ve decided to invest heavily in that.”
The good news is that television – the concept, if not the medium and business model – will probably never go away entirely. But like books, or movies, or music, or games or any other entertainment medium, it’s going to change, and that’s happening right now.
It may not be as important going forward.
Some will say that the number of those truly abandoning television is still insignificant. That may be, but the number is growing. Nielsen reported this spring that there are now over 5 million cord cutters in the U.S., up from 3 million in 2007. In these “zero tv” households, almost half were under the age of 35.
As the older generations leave the market, the power will be in the hands of this new crowd. And they might not really care for TV like their parents did, no matter how many tweets you throw at them.
Whether they’ll continue spending their time on Tumblr or other networks, however, still remains to be seen.