Since its inception, television has been perpetually evolving. Today, the difference is that television is evolving at the same rhythm as technology.
As DreamWorks Animation CEO Jeffrey Katzenberg pointed out in his presentation, new media will never replace older ones. New media simply add layers that improve the overall consumer experience.
The indicators provided by the CRTC in its Communications Monitoring Report make it possible to isolate each of these layers that improve the modern television experience.
THE INITIAL LAYERS
At the beginning, there was conventional television, broadcast freely—although it is not free since advertising revenue funds its production—“over the air” on a given territory.
A new layer was later added to the experience. At the beginning of the 1980s, with the development of cable television technology, pay and specialty television services made their debut on the Canadian market. However, the CRTC carefully controlled the entry of these services on the market to preserve the viability of Canada’s radio-television broadcasting system. This new form of television was to complement conventional television and programming was limited to a single genre (news, sports, music, etc.). Among other protective measures, specialty channels were not allowed to broadcast local advertising and their commercial breaks were limited to eight minutes per hour.
The popularity of specialty television, its guaranteed profitability given access to two funding sources and the introduction of digital cable television led to the addition of a new layer of services that transformed Canada’s television landscape. Fragmentation has become a buzzword in the industry, and conventional television no longer dominates the market.
In 2006, there were 165 Canadian pay, pay-per-view and specialty television services. In 2012, their number had increased to 252 and there are 232 additional foreign (non-Canadian) services. This wide array of choices greatly improved the television experience.
The Internet layer
It has been widely discussed on this blog and elsewhere that new over-the-top television services such as Netflix have impacted the television industry. However, even before the introduction of this new layer (Netflix was not present on the Canadian landscape before 2010), Internet was already gaining television market shares. In its report, the CRTC quotes the figures of the Interactive Advertising Bureau of Canada (IAB) on the progression of online advertising revenue in Canada, which increased from $562 million in 2005 to $3,085 million in 2012. I need not remind you that online advertising progressed by leaps and bounds while other means of advertising stagnated or saw their revenue decrease. Radio and dailies were the first victims of this phenomenon which is now catching up to television: soon, online advertising will generate revenue equal to the revenue generated by television advertising, as illustrated in the above figure taken from IAB Canada’s report. As the saying goes, follow the money to determine which layers have been added or will be added to the television experience.
Internet therefore represents the new layer. In part 1 of this analysis of the CRTC’s report, we established the proportion of Canadians who only watch TV online at 4%. MTM considers these viewers as “visionaries able to recognize winning technologies.”
Whether or not these consumers who only watch online TV are visionaries is debatable, but they are certainly less addicted to TV than the average consumer.
Also according to the report, television viewers continue to watch shows that are broadcast by the regulated system: the national average number of hours spent in front of the television remains high and very stable. It increased slightly from 28 hours in 2009–2010 to 28.2 hours in 2011–2012.
But the masses are maybe starting to see the light at the end of the tunnel. Here are two indicators, once again provided by MTM and quoted by the CRTC:
- Over 20% of Canadians uses a portable or mobile device to watch television shows on the Internet.
- The average number of hours per week spent watching television on the Internet increased from a little less than 2 hours in 2007 to 3 hours in 2012.
MOBILITY: THE LATEST LAYER
In his presentation at MIPCOM, Jeffrey Katzenberg pays homage to the latest layer to be added to the television experience, i.e., mobility. Mobility puts an end to the greatest woe of the 21st Century, i.e., the wait. As I mentioned in a previous post on the topic of audience measurement in the multi-screen universe: “People used to watch videos in their spare time, either before or after their work day. Now they ‘steal’ time to view video content throughout the day.”
In 2012, 81% of Canadians were wireless service subscribers and 52% of these Canadians used a smartphone, tablet or other advanced portable device. In 2008, 10% of Anglophone Canadians and 6% of Francophone Canadians owned smartphones, but nobody owned tablets because this technology was not yet available on the market. Four years later, 55% of Anglophones own a smartphone and 28% own a tablet. Among Francophones, these percentages have increased to 39% and 17% respectively.
Television viewers’ experiences are transforming as new technologies give consumers access to new layers that meet their expectations. With each new layer that is added, the television experience is refined, becomes increasingly complex and gives consumers a greater deal of control over their viewing experience.
Jeffrey Katzenberg is right: new media will not lead to the disappearance of the existing ones, they will complement the existing ones. According to the CRTC’s report, Canadian households spend $185 monthly on communication services (wired and wireless telephony, Internet and cable television), up 4% compared to the previous year. They spend 81% of this amount on services that give them access to media: wireless telephony, Internet and cable television.
Will eventually disappear from the landscape those sectors that are unable to harness and cash in on one of the keys of this new power that consumers have over the content.