TV Networks Doomed To Extinction

Television networks, once dominant providers of home entertainment and news, are fast becoming superfluous as viewership shrinks and consumers flee to content available on the Internet.  The seismic shift spells doom for the unwieldy networks: ABC, CBS, NBC and FOX.

It wasn't too long ago there were only three over-the-air network channels, black-and-white sets and one television perched in the living room.  Over the last five decades, there has been a sea change yet the network dinosaurs have failed to keep pace with fluctuating viewing habits.

A look at viewership data offers a stunning rebuke for network television.  In 1950 at the dawn of the television age, the top rated weekly program Texaco Star Theater attracted 61.6 percent of television households, according to data compiled by media tracking firm Nielsen.

By comparison, Nielsen's top-rated network weekly program last year was American Idol, which captured a measly 8.1 percent of television households.  That translates into about 23.9 million people in a nation of more than 300 million.  Outside the top ten programs, viewership falls off the cliff to less than 4 million people for most network shows.

Where have all those viewers gone?  They are scampering to the Internet.  A recent Forrester Research study found that American households have increased their time online by 121 percent since 2005.  By comparison, the time spent watching television has remained virtually unchanged.

For the first time, consumers are devoting as much time to online activities as they are to watching TV, according to the study.  Viewers are turning to the Internet to watch video on their computer, smartphone, tablet or game player.  Many Internet videos are churned out by amateurs, rather than Hollywood studios.

Nielsen data underscores the burgeoning demand for non-traditional content.  For example, an estimated 111.1 million people watch videos each month on YouTube.  Some of the featured entertainers on YouTube attract millions of viewers each day, dwarfing network television audiences.

Other players in this new arena include Hulu, which streams video of TV shows, movies and other content, along with lesser-known VEVO, which offers music videos.  Hulu draws 13.1 million viewers each month, while VEVO, despite its lower profile, pulls in 34.5 million people.

Movie provider Netflix grabs 7.4 million viewers monthly, while 29.8 million people watch videos on social networking site Facebook.   No wonder network television is losing all those eyeballs.

While its programming has been licensed from the networks, Hulu shook up the industry this year with its own original fare.  The popular online service aired two dramas and has indicated it plans to create more shows.  YouTube recently announced it will bankroll 100 new channels this year with an investment of $100 million.  

Rumors are swirling about Apple's plans to acquire content.  The technology leader may be planning a new venture into television that would include original programing.  If Apple enters the fray, it will surely change the landscape forever.

While the networks offer standard entertainment supported by paid commercials, the content available elsewhere often is delivered with no or little advertising and some providers supply video on a subscription only basis, such as VEVO and Netflix.

The network TV business model was built on paid commercial advertising.  However, more viewers are recording shows for later viewing and skipping the ads.  More than 62 percent of viewers report having watched a TV program either via their DVR, internet or on-demand channel.  That's a 61 percent increase over the previous year, according to TV Pulse Survey.

As this data suggests, consumers are abandoning "live" entertainment for delayed viewing.  They want their entertainment on their time schedule, not dictated by a network broadcaster.  Increasingly, consumers aren't passive viewers either; instead they prefer to play an active role in programming.

That trend will drive viewers to abandon the networks in droves in search of an interactive experience. These videophiles will want to be more involved with shows and the cast, while sharing their experience live with others online.  In the future, viewers will contribute ideas for shows and plots.

Video fare will follow users from the big screen (television) to the little screen (smartphone), streaming seamlessly from one device to another.  Content will likely reside on a cloud, a computer server accessible via the Internet or other high-speed connections.

None of this bodes well for the hide-bound networks.

Those three-letter dinosaurs (ABC, CBS, NBC, FOX) won't become extinct overnight.  But their size, content and reach will slowly ebb. Then they will vanish from the earth just like those reptiles from the Mesozoic Era.