TV's irreversible decline

The level of denial within the TV industry about which way the trend lines are heading is astonishing. Sure, publicly at conferences my fellow TV executives will talk endlessly about how excited they are about digital, social and interactive media. Privately, though, they're terrified.

Their audiences are fragmenting, revenue is in steady decline and, possibly worst of all, their egos are taking a hit as fewer and fewer people think TV is "cool" anymore.

From Paris to Singapore to here in Ho Chi Minh City, the story is the same. TV revenue is on an irreversible downward trajectory just as digital budgets steadily, albeit slowly, rise. Take for example what is happening with FMCG ad share spending here in Vietnam. While still dominant, over the past five years TV's share has fallen from 87% of total FMCG ad spending in 2011 to 70% as of next year, almost a 20% drop. Conversely, digital's share of FMCG ad spending will rise 21% over the same period:

There is nothing to indicate that these trends will stop or even slow as audiences break the habit of regular of TV viewing as they shift their video consumption to mobile devices, online services like YouTube, Netflix, Amazon and illegal file sharing (please remember that an estimated 1/3 of all internet traffic in Asia is for torrents).

Despite the overwhelming evidence of where the market is going, over and over, the reaction within the industry is the same:  'what, me worry?' In just the past month I have heard first-hand from senior ad agency reps, ratings agency executives and the chairman of a major broadcasting group who all speak from the same talking points: digital is growing but TV will remain dominant for at least another decade. What?! Ten years? SMH!

The situation is even worse at many of the world's leading state-run TV broadcasters who are largely immune from commercial pressures and who operate their channels in a way that someone from 1997 would find very familiar.

So what can be done?

1. We have to acknowledge the reality as it is and stop believing the talking points promulgated by the incumbent industries that have so much to lose in the shift to digital.
2. We have to adapt. It is no longer acceptable for TV networks to be run by people who proudly declare they "don't do Facebook" and who are digitally ignorant. Pretty much everyone who works in TV news will know an executive who fits this profile, right?
3. We have to get in the game. It is mind blowing in this day and age, with so much evidence about the surging popularity of YouTube and social video, that a number of major global TV networks have little or no presence on these platforms. Holding on to last century's business model will do nothing to stop the erosion of your audience share and revenue base.
4. We have to diversify our business operations. Branded content is not a fad. I have been producing customized content in the US & Asia for over a decade and the popularity among agencies and clients is only getting. Every TV channel must transform itself a digital studio that produces branded or customized content for all platforms at almost any budget. This is a must.
5. We have to take bigger risks. The TV business model is over a century old and has calcified due in large part to generations of executives who became accustomed to sitting atop of the media pile where massive profits just rolled in regardless of the lack of programming quality and technical innovation. Those days are over and TV channels, particularly in news, must take much bigger risks with their content, distribution and business models.

We know how the story is going to end for the newspaper business. Right? It will not be much longer before the last print product rolls off the printing press, loaded on to a truck and sold at a ridiculously high price point (really, it's remarkable that it's taken this long for the newspaper industry to die). For TV, though, it doesn't necessarily have to be this way.

The sustained popularity of illegal file sharing and the new video delivery services combined with the surging popularity of branded video content demonstrates that both audiences and advertisers love video, they just may not like traditional, linear TV. Who else is better positioned to produce the video that our customers want than the legacy TV networks? However, this can only happen if we are prepared to undergo a radical culture change within the industry that I suspect is unlikely to happen.