The broadcast TV model is broken and it’s unclear if it can ever be fixed. Internet streaming is the culprit – it has given power back to the audience. Here’s why:
The basic business model of TV is to entice you to watch with content – and then rent those eyeballs out in bulk to advertisers.
This all worked well while the general public lined up each night to watch whatever was put in front of them in real time. For decades TV ads were the glam business end of the marketers’ arsenal. They would take an eye-watering budget, produce anything they liked – because anything seemed to work – and congratulate themselves all the way to the award dinners.
The trick to making money is a fine balance between what you spend on programming and the rates those eyeball ratings let you command from advertisers. A TV man’s wet dream is to find some unknown (therefore cheap) content overseas that is an overnight success and has everyone talking in the smoko rooms. Get it wrong and pay top dollar for programmes that nobody watches – and the business model is on the verge of a downward spiral – less eyeballs, less revenue, less to spend on content, and so on round it goes. (Think Campbell Live.) But its not just cost – free content can be fraught too (think Party Political broadcasts), while attractive to some can be too contentious for some advertisers – dropping the cost of an ad at that time slot. Read more »