VOD : The future for linear TV channels

[Horizon]

Originally Posted by Chris

It's nonsense because you have the examples of ITV, Channel 4 and Channel 5, which prove to you that the most effective way to fund a mass-audience channel is via advertising (plus other commercial including foreign sales and DVDs).

Leaving aside its status as a public service broadcaster, which makes it illegal to operate as a subscription service, the BBC is for the most part a mass-market service provider. The mass market in UK TV is served by ad-funded, free-to-air channels, not subscription services.

If the BBC is denied the licence fee, or any similar compulsory funding model, then it will operate its channels free-to-air, supported by advertising, exactly the same way as all the other public service broadcasters in the UK.

But the advertising funded model is dying, though.

OK, ITV is having a reprieve for now, but until recently it was losing vast amount of revenue through lost advertising.

The advertising model relies on a broadcaster bringing in huge audiences which then makes it worth well for that advertiser to spend a lot of dosh on a tv advert. This worked fine, when it was just ITV and then CH4, CH5, but nowadays it doesn't.

If the main channels keep broadcasting drivel like soaps and reality all the time, then they're shooting just themselves in the head. Even Corrie doesn't garner the kind of audience share it once did even ten years ago.

I'm not aware its illegal for the BBC to become a subscription service, that just not in its charter, currently.... If the BBC were to go doen the adverts route too, they would run into the same problems as ITV,Ch4&5 are having.

Linear tv may not be dying, or may never die, but all the evidence is that younger people are not watching it, and its not just young folks either....

I'm now celebrating my 10th anniversary.... that is of being freed from a tv schedule which just "happened" to coincide with faster broadband speeds becoming available.

---------- Post added at 00:25 ---------- Previous post was at 00:17 ----------

Originally Posted by OLD BOY

I would still subscribe to the BBC as I use it a lot, but I know there are those who resent having to pay the licence fee as they don't watch or listen to their services.

By moving to a subscription model it would also encourage financial discipline at the BBC, which must be a good thing.

I would not be averse to commercials to supplement the subscription provided that these were shown between, and not during programmes. I wouldn't watch them myself, of course...

Problem with the BBC is they're lazy. They get several billion pounds of revenue and they don't have to work for it. As the BBC stands now, I would not pay for it in any form, if I had the choice.

And as mentioned above, going down the adverts route would not work for them either as ad revenues decline across the board. And you yourself have highlighted this earlier in the thread as one of the main reasons for the rise of streaming service is lack of ads.

Originally Posted by Horizon

But the advertising funded model is dying, though.

OK, ITV is having a reprieve for now, but until recently it was losing vast amount of revenue through lost advertising.

The advertising model relies on a broadcaster bringing in huge audiences which then makes it worth well for that advertiser to spend a lot of dosh on a tv advert. This worked fine, when it was just ITV and then CH4, CH5, but nowadays it doesn't.

If the main channels keep broadcasting drivel like soaps and reality all the time, then they're shooting just themselves in the head. Even Corrie doesn't garner the kind of audience share it once did even ten years ago.

I'm not aware its illegal for the BBC to become a subscription service, that just not in its charter, currently.... If the BBC were to go doen the adverts route too, they would run into the same problems as ITV,Ch4&5 are having.

To clarify: it is illegal to for ITV1, Channel 4 or Channel 5 to go behind subscription due to the terms of their PSB licence. If the BBC's PSB licence was altered to remove the licence fee, then every legal precedent in UK broadcasting history says they would then fall under the same terms as the others.

I suspect the statistics you're referring to with regards to ITV's difficult past few years are the ones covering the major recession that began in 2008, which is a pretty extreme example, although it is useful because it shows that even in the worst recession in living memory, and with all the competition from multi-channel TV, ITV managed to do exactly what you're arguing it can't - namely, continue to survive on advertising revenue alone.

It's worth noting, by the way, that all the PSB operators also have multiple additional channels not covered by their PSB obligation, and all of them are free to air, I.e. ad-funded.

[Stephen]

Originally Posted by Horizon

But the advertising funded model is dying, though.

OK, ITV is having a reprieve for now, but until recently it was losing vast amount of revenue through lost advertising.

The advertising model relies on a broadcaster bringing in huge audiences which then makes it worth well for that advertiser to spend a lot of dosh on a tv advert. This worked fine, when it was just ITV and then CH4, CH5, but nowadays it doesn't.

If the main channels keep broadcasting drivel like soaps and reality all the time, then they're shooting just themselves in the head. Hey Even Corrie doesn't garner the kind of audience share it once did even ten years ago.

I'm not aware its illegal for the BBC to become a subscription service, that just not in its charter, currently.... If the BBC were to go doen the adverts route too, they would run into the same problems as ITV,Ch4&5 are having.

Linear tv may not be dying, or may never die, but all the evidence is that younger people are not watching it, and its not just young folks either.

Tjays because there are so many channels now and people don't watch as it's broadcast as much. Recordings and catch up are to blame.

Also linear channels are starting to to shift formats.

BBC Three is now an online-only channel http://www.engadget.com/2016/02/16/b...e-online-only/ via Engadget Android

[spiderplant]

Originally Posted by Horizon

If the main channels keep broadcasting drivel like soaps and reality all the time, then they're shooting just themselves in the head.

Then what sort of 'drivel' should they broadcast?

[passingbat]

Originally Posted by spiderplant

Then what sort of 'drivel' should they broadcast?

The 'drivel' that Horizon is talking about is very popular, and therefore is a compelling reason why the BBC should continue to be funded by the licence fee. If it were to become add funded, the amount of such 'drivel' on the BBC, would increase.

[heero_yuy]

The proles like drivel.

[passingbat]

Originally Posted by Chris

I suspect the statistics you're referring to with regards to ITV's difficult past few years are the ones covering the major recession that began in 2008, which is a pretty extreme example, although it is useful because it shows that even in the worst recession in living memory, and with all the competition from multi-channel TV, ITV managed to do exactly what you're arguing it can't - namely, continue to survive on advertising revenue alone.

.

ITV themselves are aware of the dangers of relying solely on ad revenue and around 2012 made the conscious decision to start growing other revenue streams.

http://www.themediabriefing.com/article/itv-revenue

[denphone]

Originally Posted by spiderplant

Then what sort of 'drivel' should they broadcast?

There are plenty of hidden gems in the TV EPG guide IMO other then the so called drivel which may not be for me personally but many many others like.

Originally Posted by passingbat

ITV themselves are aware of the dangers of relying solely on ad revenue and around 2012 made the conscious decision to start growing other revenue streams.

http://www.themediabriefing.com/article/itv-revenue

As indicated in my earlier post, where I gave foreign sales and DVDs as examples.

[passingbat]

Originally Posted by Chris

As indicated in my earlier post, where I gave foreign sales and DVDs as examples.

Fair enough. So what are you referring to here?

ITV managed to do exactly what you're arguing it can't - namely, continue to survive on advertising revenue alone.

Are you saying they can survive on advertising alone? ITV bosses don't seem to be as sure on that one as you seem to be.

Originally Posted by passingbat

Fair enough. So what are you referring to here?



Are you saying they can survive on advertising alone? ITV bosses don't seem to be as sure on that one as you seem to be.

Er, you've taken that one sentence out of its context, which is a series of posts which acknowledged the role of additional revenue streams from the outset.

You've further ignored the overall context of the last several posts, which has been a discussion of advertising as an alternative to subscription. ITV did not collapse, despite not having subscription revenues to fall back on during the recession of 2008 onwards.

Context is everything, my friend.

[passingbat]

Originally Posted by Chris

Er, you've taken that one sentence out of its context, which is a series of posts which acknowledged the role of additional revenue streams from the outset.

You've further ignored the overall context of the last several posts, which has been a discussion of advertising as an alternative to subscription. ITV did not collapse, despite not having subscription revenues to fall back on during the recession of 2008 onwards.

Context is everything, my friend.

Ok, fair enough.

So, out of interest, and separate from any previous context, do you think all services (subscription services such as Netflix etc.) and linear channels will have to include advertising at some point in the future?

Originally Posted by passingbat

Ok, fair enough.

So, out of interest, and separate from any previous context, do you think all services (subscription services such as Netflix etc.) and linear channels will have to include advertising at some point in the future?

Well, all linear broadcasters already do, with the exception of the BBC. Personally I think the BBC will become the principal beneficiary of a broadcast precept on council tax, once the licence fee becomes untenable (and the earliest that will happen will be the charter renewal in 2026). Depending on what proportion of that precept the BBC gets, it may or may not have to start running limited advertising. I think they will try to avoid doing it as hard as they can though, as the ad-free thing is their USP. Only if the BBC completely loses out on any kind of compulsory levy, will it have to re-model itself after ITV in terms of how it raises revenue.

One thing I am absolutely confident of, however, is that the BBC will not ever lock itself behind subscription. That model simply doesn't work in the UK for mass-audience broadcasting.

As for the non-linear content providers, well I believe that market forces will compel them to run adverts eventually. Once they reach saturation point in terms of subscribers, it is the only easy way they will have in order increase revenue. Services that have made a virtue out of not running adverts may hold out for longer, but they will do it eventually, and they will use customer profiling to try to soften the blow by making their ads 'targeted' and 'relevant'.

[steveh]

Market forces haven't ever compelled HBO to carry adverts though.

[passingbat]

Originally Posted by Chris

As for the non-linear content providers, well I believe that market forces will compel them to run adverts eventually. Once they reach saturation point in terms of subscribers, it is the only easy way they will have in order increase revenue. Services that have made a virtue out of not running adverts may hold out for longer, but they will do it eventually, and they will use customer profiling to try to soften the blow by making their ads 'targeted' and 'relevant'.

And I believe differently on that part.

One of the reasons people like services such as Netflix is the shows are add free. Another, is that whole seasons are available in one hit.

It has changed the way I like to watch shows, and I suspect other people are the same.

Hulu, which until recently, always had adds, even on the paid subscription, has introduced another paid for tear that is add free and I recall a post on CF saying that was proving successful.

I think there will always be a demand for add free TV from cord cutters. Yes it is more than likely, like Hulu, it could be a more expensive subscription tier but some people will be prepared to pay for it.

And services like Netflix know how popular the add free aspect of their service is and resist it as long as possible. And if they are forced into it will add the add free tier at the same time.