Verizon CEO Ivan Seidenberg recently said that cutting the cable cord is a real phenomena.
“Young people are pretty smart. They’re not going to pay for something they don’t need to,” he said. “Over the top is going to be a pretty big issue for cable.”
But that’s an issue for Verizon (VZ), too, right? Seidenberg’s company sells its own version of the cable bundle, via its Fios service, and it has 3.5 million customers. And Seidenberg noted that the TV bundle isn’t going away immediately. But it will, he said.
“We take the over the top issue with video very seriously,” he said. “I think cable has some life left in its model…but that it is going to get disintermediated over the next several years.”
Seidenberg’s argument is that over the top is a much bigger deal for cable guys like Comcast (CMCSA), who have an entire business built around the bundle, than it will be for his company, which is a relative newcomer to video. Theoretically, he’ll be be able to replace some video subscribers with subs who pay for robust broadband connections. But like it or not, it’s going to happen, he says.
“I’ve seen the movie. If you remain static too long, the technology is going to nibble at you on the edges, and you have to be prepared for it.”
For now, sports like ESPN broadcasts of college and pro football games, baseball games, basketball, etc. are about all that is keeping men subscribing. Most cable channels and all broadcast networks are completely oriented towards women. It is not, of course, just Lifetime Network. As pointed out in the post "How Female Oriented is TV?" from data collected by site TVbyTheNumbers.com (an excellent site and well worth your time), last spring in broadcast TV, only the Simpsons, Family Guy, the Cleveland Show, and Chuck were strongly male-skewing, in that order, with Fringe and 24 slightly male skewing. Broadcast TV, and cable, is a vast, female-gay ghetto. Full of "hunky" men who women can "change" and taboo-breaking scenes, etc. that excite the female audience.
But long-term, this gay-female ghetto offers little revenue growth and significant challenges by new technology, as Seidenberg notes. On the broadcast side, audiences continue to erode. Men have largely fled, "Two and a Half Men" is as noted by TVByTheNumbers.com, a female-skewing show. The White female audience is not growing, Blacks are too few in number and mostly too poor (Blacks are 12.5% of the population, and about 60% of them are urban core / ghetto) to be a profitable growth market. [The over-representation of Blacks in commercials is to signal PC adherence to diversity for Liberal White women, which is most White women, and to get Jessie Jackson and Maxine Waters off commercial makers backs, as well as promoting the Platonic "noble lie" about the socio-economic characteristics of Blacks.] Mexicans, as shown consistently by Nielsen (here), with skeptics on this point invited to click the link and see what Hispanics in the US watch.
Meanwhile, cable faces younger audiences (and old) cutting the cable cord and simply relying on Hulu, Redbox, Amazon, Itunes, and so on for entertainment, with local news and such provided by over-the-air broadcasts. Continued recession, and likely decades long wage pressure and limited job growth pretty much guarantee consumers will penny-pinch for decades to come. Older audiences finding "hip and edgy" not cutting the value equation, are likely to cut cable as a discretionary expense no longer justified, as much as younger ones. Indeed, it is likely pressured families as much as "hip/cool young consumers" (the business world has a pathetic need to appear hip and cool) who would seem to be cutting cable first.
Already Verizon and Sprint offer some streaming of games through phones. Flo TV gives live, mobile TV in portable devices, offering "no streaming, no waiting, no buffering." ESPN offers, as does the NFL, limited coverage of games on their website, via streaming video. These are baby steps, akin to the Creative Labs Rio and other early, pre-Ipod MP3 players. Eventually, some company will get this right, offering a cheap phone or player device, with low monthly fees. Making it cheap, convenient, and easy to watch video on a pocket sized device. Clearly this is where music has gone, from expensive, custom hi-fi set ups in the 1970's to now, cheap/tinny MP3 players offering massive convenience at the expense of quality sound. In the modern world, people seem to prefer convenience, over quality.
Cable is extraordinarily vulnerable to this shift, and Comcast's purchase of NBC can be seen as either extraordinarily stupid, or a desire to hedge the exposure (of being dumped as a "dumb pipe" delivering content for cheaper/better alternatives) by getting into the content creation business. If so, that move may yet prove foolish, as NBC has shown no real ability to create and sustain winning content, that appeals to both men and women. "Outsourced" may do OK ratings after the Office, but it does not seem something that would be a winner in the new scale required by a shift to personal video consumption. In that new world, scale matters. Winners would be defined, because of the cheapness inherent in the pricing model (inherited from MP3 downloads and already established by Amazon's video on demand, and Netflix's offerings), by massive popularity. While production costs can be whittled down, there's only so cheap a production can get before audiences tune out. This means a world of low-margin, high volume entertainment. Something Hollywood just can't do. Particularly TV.
FX has tried to rebrand itself as male-oriented. Ads for "Two and a Half Men" (itself female-skewing) stress male-orientation. FX's lineup includes "Sons of Anarchy," "Terriers," "Its Always Sunny in Philadelphia," "the League," "Two and a Half Men" (re-runs), and "Lights Out" (in January, about a boxer). FX has been around since 1994. Recently, MediaLife published a story on FX.
With “The Shield,” which begins its final season in September, and “Nip/Tuck,” plus movies like “Batman Begins,” FX in only a few years has gone from a nondescript network to becoming the closest thing to HBO on basic cable.
“They have some great, great cutting-edge, gritty shows that have become appointment viewing for millions of people,” says Brad Adgate, senior vice president and corporate research director at Horizon Media.
Another big plus: The diversity of that programming makes FX a top-five network in virtually every demographic advertisers care about, putting it on par with broadcast TV in another important regard.
The other challenge facing FX may prove thornier. The network must deal with the failure of many of its newer series to perform up to the level of "The Shield” and “Nip/Tuck." FX will debut one new drama this September but it's also bringing back three of its newer dramas, “Damages,” the Glenn Close series, "The Riches," and "Dirt," and none has fulfilled their critical promise in the ratings.
What makes it such a thorny challenge is that FX can't air just any new series. It has to be edgy, pushing the limits, and it also has to be a substantial drama. There just aren't that many scripts that meet those high standards. In a sense, being like HBO, FX shares HBO's programming challenge--one that has hobbled the pay network for several years.
FX’s tagline for advertisers is “There is No Box,” meaning it’s not confined to any demographic group or any particular genre.
That’s to say it's an edgy network airing original series and movies that you’d sooner find on pay TV than on cable or broadcast TV.
“The whole strategy of originals, which goes back to ‘The Shield,’ is to bring people in by providing fare they can’t get anywhere else,” says Lefkowitz.
FX’s target is adults 18-49, but its originals zero in on a variety of demographics. It targets men with the firefighter drama “Rescue Me,” women with “Damages,” and younger adults with the comedy “It’s Always Sunny in Philadelphia.”
FX ranks among the top five cable networks in the 18-34, 18-49 and 25-54 demographics.
Its average primetime audience in February was 1.5 million viewers, up 26 percent from February 2007. Among 18-49s, FX ranked No. 4 behind USA, TBS and TNT with 875,000 viewers, up 28 percent.
FX’s appeal to advertisers is its big ratings and broad demographic reach, notably with edgy programs that build loyalty among viewers. It's among the strongest brands on cable.
But the network faces a real challenge in keeping itself fresh with yet more edgy shows that draw viewers, as the “The Shield” has done, without going so edgy and dark that advertisers shy away.
Edgy and hip of course being code-words for female and gay oriented entertainment. Men like action, and adventure. None of which is particularly edgy and hip. Think "Die Hard," or "Star Wars," or even the Star Trek movies. "Death Wish," the Dirty Harry movies, and the current Jason Statham action movies, are not edgy and hip. Nor are they "dark." They're filled with … action. Which is what draws in the male audience. "Damages," "Dirt," and "the Riches" were of course, female skewing (Dirt and the Riches were not renewed).
Meanwhile, the numbers for FX itself are not particularly compelling.
How often does a scripted series hit an all-time ratings high in Season 6? Well, FX's comedy It’s Always Sunny in Philadelphia just did it with its sixth season premiere last night. Also breaking series records was the network's comedy The League, which opened its second season behind Sunny. At 10 PM, Sunny delivered 1.83 million adults 18-49 and 1.46 million adults 18-34, up 3% from the previous series demo highs posted by last season's premiere. In the male demographics, the gains from the Season 5 premiere were bigger, 16% in Men 18-34 (1.01 million) and 11% in Men 18-49 (1.24 million), both all-time series highs. The total viewership, 2.21 million, was was off by 1% in Live+same day but is expected to be a series best when Live+7 data is factored in.
Or, translated into English, "It's Always Sunny in Philadelphia" had 1.01 million men watching it and 450,000 women, ages 18-34, and 1.24 million men, and 590,000 women, ages 18-49. Of the core advertising group, this adds up to about 1.83 million (ages 18-49).
Terriers ratings were even worse, about half a million people watching. Comments on TVByTheNumbers.com included:
I dont think Terriers ratings are bad because it's a bad show but because its on a network whos audience isn't really into that type of show. Justified debuted big but then dropped a lot when people saw it was a procedural type show. FX built its brand off adult serialized dramas and i think thats what its audience expects. It would probably be a hit on TNT.
Unfortunately, there doesn’t seem to be a wide audience available for the ‘PI’ genre. (Somebody wake the Mike Hammer folks up.) We saw this with Veronica Mars, and other than that show and Angel name the last PI show outside of Magnum that lasted longer than a wasted breath? (Bored to Death , Monk, and Psych aren't true gumshoe shows. They are dramedies.) I could argue that this is the wrong time to launch a new show on cable. What with all the broadcast nets pimping their wares, but who gives a hoot. I think it would've done a lot better with an early summer run. (Y'know when there's little competition.) It’s no longer a question of ‘if’, now it’s a question of whether or not the fans get to see all of it before the ax claims another victim.
Terriers, for those who saw it (about half a million people), has some major problems. Only Donal Logue ("Life," "Tao of Steve") is a compelling actor who holds your attention. Co-star Michael Raymond-James does not really register (he played "Tex" on an episode of "Life" and was also on "Tru Blood"). Nor does his character hold much interest, a blue collar crook persuaded by Logue's "Hank Dolworth" to mostly ride the straight and narrow as an unlicensed PI. The female characters remain ciphers, mostly uninteresting. Though its implied the character Britt Pollack (Raymond-James) pulls his hot girlfriend mostly on the basis of his outlaw status, the writing and performance don't indicate raw charisma. While the main description of the show, as two down and out private eyes seeking to slowly adopt responsibility and maturity, has male appeal, that theme seems a turn-off for women. Who prefer men already "hot" (i.e. high status, charisma, dangerous) and merely need their magic guiding hand and uber-sexual appeal to "change him." I.E. make him commit to one women, the female proxy character.
This is not the only "magic formula" and by itself does not guarantee success, but does seem to describe those shows with substantial audiences (nearly all female) absent gross-out, one-liner animated comedies and semi-action/sci-fi dramas, that appeal more to men. Terriers leaves men slightly intrigued, but not enough to stick around, and FX is still, mostly a female-driven audience. Hip and edgy being dead give-aways. The fruitless pining by the lead character for his ex-wife, soon to be married, seems a pointless turn-off for men, who did tune in the next day in far greater numbers (about twice the amount as Terriers total viewers) for "Sunny in Philadelphia," which is basically a more explicit Seinfeld. There seems to be a lack of action-adventure to draw in a male audience, itself a tough sell on cable even on FX (the network being mostly female oriented), and not enough "hunky guy you can change" for women. Add a lack of really compelling writing, particularly in creating compelling supporting characters, and Donal Logue can't carry the show by himself. The lead characters demons (alcoholism and a life of crime, respectively), are interesting to a female audience if the guys are "hot" Alpha males. Not so much when they're blue collar, down and out, scrapping for change. Meanwhile, guys don't see much action, adventure, or the lead characters winning. But the main problem remains lack of compelling characters (and the lack luster performance by the other actors). TV (or, serial entertainment) requires a magnetic, compelling presence by most of the cast. Aside from Logue, that's just not there in Terriers. But the problem is not confined to just one show. FX itself is trapped.
FX's problem is that their audience base is about 1.5 to 2 million viewers, tops. That's not very much. Basically, FX makes its money from carriage fees (what satellite and cable providers get charged for carrying the channel, regardless of who watches). As noted above, that money is under significant pressure from a variety of sources, and is one big shift away, from collapsing like music sales. Nokia right now, is under huge pressure. The company just hired its first non-Finn as CEO. It has no real advantage in the lucrative, high-end smartphone market, being tied to the Symbian OS with significant short-comings, including apps. The way out for a company like Nokia, seeking to challenge Apple or Google in apps, is entertainment content. Some folks at Deadline Hollywood Daily got it.
stevenp is absolutely right. These numbers are nothing to harp about and yet everyone does. It’s a calculated decision to tout these numbers for the advertisers and no one else. The issue is most of the scripted shows are mediocre at best and non-scripted is often so cheap, it doesn’t matter what numbers they do as long as audience flow is established so a channel can maintain its carriage. Reality at FX is they continue to make shows for very narrow niche audiences and although their success has been spotty, the value of the channel continues to grow due to perception. The question I have is when does cable stop cuming [he means cumulative adding] numbers and own up to its real sampling? If they did, the reality of these kinds of numbers for the cost of the programming should give one pause. But Sunny benefits from a contained budget and a ridiculous guarantee from MRC and ownership for FX productions that makes it impossible not to make and you see it again with The League which I’m sure gets made under the low budget FX model. The bath on Terriers and Justified and Damages and Dirt and The Riches is a much more important thing to look at and gage. But it’s irrelevant because the perception of the channel is in place and therefore the overall value of the asset to Newscorp is really all anyone at Fox cares about. So much for quality programming.
This commenter gets it. Cable is not delivering numbers, in proportion to the hype. Indeed, I would suggest that if you added up all the cumulative numbers of both Broadcast and Cable, it would not come close to the TV watching of say, 1968 or even 1975, when there were only three networks, plus spotty PBS, but entertainment was much broader. Emphasis on niche content inevitably drives those not enamored of out of the marketplace. There is a whole mass of under-served groups, particularly men and older audiences, who don't find hip, cool, edgy, and dark entertainment particularly appealing. And don't watch.
The problem is, that Netflix (whose CEO recently insulted Americans by calling them "self-absorbed" and implied they were stupid, on price, regarding his Canadian pilot to sell streaming video at cheaper prices than US plans), and Redbox, and Amazon, and Itunes/Apple, are all spending billions of dollars to carry content that is not making them much money. It is my view that one hungry player, will spend less, by creating their own content, deliberately engineered to be as broad as possible, reaching all four "quadrants" (young/old, male/female), to make themselves a come-from-behind player. Offering a cheap handset/player, priced less than $200 (the disposable income marker these days) and very cheap monthly rates (probably less than $10 a month).
Nokia, or Samsung, or even Motorola could be a player in this. All are under earnings pressure. Verizon, or T-Mobile, or other mobile service providers could use this to get "tie-in" and increase their earnings (by getting people to switch and stay). Obviously, technical issues such as bandwidth, compression, and reliability of service need to be addressed, but they are not insurmountable. The goal is to move video one-way only, and deliver that video onto a fairly small screen (Hi-Def need not be delivered in the first generation). So people can view video pretty much anywhere. Just like listening to an Ipod. Indeed, serialized entertainment, available ONLY through such a service, perhaps downloadable at first, could prompt switchers if the entertainment was broad enough. Men of course, form the majority of technology early adopters, so are a prime target, but women would have to find the entertainment desirable as well, given their robust participation (about half) in the technology consumption marketplace, for organic growth after an initial adoption.
The initial problem, though, is not technology but content. Hollywood has been in its own niche of dark, hip, edgy, and cool (read, female and gay) that its not really capable anymore of making broadly appealing content. Serialized entertainment, like most TV series, are a natural for personal consumption. Because unlike a movie, its not "one and done," audiences want to see lengthy development of characters, situations, and action to enhance their pleasure. If a movie is like a short story, TV is like a series of novels. Where about 17 hours, for the average hour-long drama (about 43 minutes per episode when commercials are subtracted out) that runs 22 full episodes, compared to about 2 hours maximum, allows far greater detail to be presented to the viewer, in action, drama, character development, and simple quirkiness. It is this advantage of time, that at its best, makes television superior to movies. Capable of covering either drama or comedy in far greater depth, and more carefully, than even the most skilled team can deliver in two hours.
Companies like Netflix, or Amazon, or T-Mobile, or Nokia, or Verizon, or Redbox, or Apple, or Samsung, all seeking first-mover advantage to have the complete system, cheap, fast, and good, are stuck in dilemma. They pay a lot for Hollywood content, which just isn't that compelling. Inevitably, one or more of these companies will start creating their own content. By tapping some of the more lean and hungry creative teams, definitely not including the Wachowskis, who are currently making a movie about a gay US soldier and gay Iraqi terrorist plotting to kill Bush. That's Arianna Huffington in the middle. The Wachowskis look like extras from "the Hills Have Eyes," and certainly cannot be accused of even having a remote understanding of what mainstream America finds entertaining. The one sibling as you can see has had the full sex change operation.
Likely to be tapped are those folks who attempted, but failed, in making broad-based entertainment (because TV is now such a female-gay ghetto that men have fled it for good). Rand Ravich and Far Shariat ("Life") come to mind, as the sort of model content creators approached. Folks who know how to run shows, budgets, and make male-appealing stuff that can also have appeal to women. With an offering of non-Hollywood accounting, i.e. full profit sharing on "first dollar revenues" as long as costs are kept down, with perhaps increases in percentages if consumption goes up (i.e. the shows are sold on a per-download basis, or streaming sign up, etc). Creating direct and unmistakable incentives to make the content as popular as possible. Going for people hungry for money, and willing to trade awards, "respect," and critical acclaim to get it. Young Andrew Lloyd Webers, in other words. Folks who will take critical disdain in exchange for making a a lot of money.
It is pretty clear that the current model of cable offers little possibility of change, caught in Hollywood's Hip and Edgy Trap. Which offers critical acclaim, career advancement, and plays to the desire of execs in cable and broadcast to win publicity and coverage, not audiences, for their shows. Since even in broadcast, and definitely in cable, masses of viewers don't translate into revenue. Indeed, broadcast TV is increasingly resembling movies, where a few massively profitable shows (sports, American Idol) and a few thinly profitable shows (cheap reality) subsidize money-losing "prestige" shows.
The new model (not a certainty, but a probability at least) offers canny first-movers the ability to escape the trap, use their own custom-built content, to draw subscribers/customers to a new model. One of mass, not niche appeal.
Which overall, would be good for the country. By having to appeal to male audiences, which are generally more culturally conservative than female-gay ones, the constant drift ever leftward (for example the norming of polygamy) can be arrested, at least for a while. And a common culture, among men and women, offers a way for each to have greater understanding of each other. Something the isolated culture of today provides little support for, and indeed constantly undermines.
It would be ironic indeed, if a great mass of people a short time in the future, watching videos of serial entertainment, alone and individually, on small portable screens, were more connected via mass-appealing media, than the collective viewing of TV today in living rooms and sports bars today. The world of Max Headroom is today, only instead of only Network 23, there are thousand choices, all the same, all very niche. Let us hope for a broader, more unifying tomorrow.