I have recently given some talks on the current state of the TV sector, which I thought I’d summarise and share here over a series of short articles:
1 of 4 | The Current State of the TV Sector
2 of 4 | Everything Old is New Again
3 of 4 | The Consumer Perspective
You can see the first two posts here and here.
3 of 4 | The Consumer Perspective
- The received wisdom is that the consumer has never had it so good, with a golden age of television providing more choice than ever before, available to view on-demand.
- That is of course true, but it ignores some significant obstacles in the consumer’s daily experience of watching TV. Those obstacles are holding back the TV sector’s ability to maximise (i) revenue and (ii) competition against other opportunities for consumers’ time, such as gaming.
- What are those obstacles?
?? There are simply too many providers of direct-to-consumer TV services. And, as
Evan Shapīro
showed in a recent post, very few of those direct-to-consumer TV services are seen as 'must haves'.
?? There is too little bundling of TV services, meaning consumers have to make multiple individual spending decisions.
?? Even with bundled offerings, users still have to toggle between apps.
?? There is little or no search functionality across apps.
?? There is no ability to bookmark or create a watchlist across apps.
?? Within each app, the recommendation algorithms are still relatively poor.
?? Last, but not least, the user interfaces of the on-demand platforms are still fairly rudimentary, with content being padded out and repeated on multiple rows on the home pages and search being awkward.
- At the consumer level this leads to frustration. How many of us have scrolled to find something to watch – or searched endlessly for a specific programme across multiple platforms - and given up and gone to do something else? Compare that to the ‘stickiness’ of a YouTube or TikTok rolling feed.
- At the provider level, every instance of a consumer wanting to watch something, getting frustrated, and then giving up and doing something else is a missed opportunity - available value that is not being captured. The return on the huge investment in content and the delivery of streaming services, is not being maximised - far from it.
- The multiplicity of providers, the lack of proper bundled offerings, and the grit-in-the-wheels of the TV consumer's user experience are leading to very high levels of churn for subscription services - one of the TV industry’s biggest systemic problems, and one that has a huge impact on overall profitability. Indeed, as
Doug Shapiro
has pointed out, it may render some subscription VOD offerings permanently unprofitable.
- This is not just an issue for the operators of those subscription services. Their scale, and the fact they have to divert such a large share of their spend away from content to maintenance marketing, means this issue permeates through and affects the whole of the TV industry.
In the final post, 4 of 4 | The Future, I will look at what needs to, and mostly likely will, happen to address those problems highlighted above - what the conclusion of Act III of the disruption of content distribution will look like.
