January 29, 2013

Latest Nielsen Data Confirms: A Decline in TV Consumption Is Underway

Recently Nielsen released its Q3 2012 edition of its Cross-Platform Report that presents a variety of metrics on the use of television and other forms of video (including Internet and mobile). While this report and past editions present data that indicates that TV is still the “King of All Media” with enormous reach and usage, the trends that those metrics reveal are not happy ones for traditional television delivery. As of Q3 2012, the total viewing of TV had been in a year-long decline and the number of people watching television was in steady decline since Q4 2010.

Based on TDG’s calculations from data in the Nielsen report, the total number of hours of TV viewing (including live and time-shifted) in Q3 2012 was flat vs. Q3 2011. That’s the good news. The not so good news was that Q3 2012 included the London Summer Olympics. So the best the TV industry could muster in Q3 was a flat year-over-year, despite an exogenous event of Olympian proportions.

Plus, this followed three quarters of steady and sizeable decline in total annual viewing.
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Annual TV viewing is now (as of the latest Q3 2012 data) running at Q1 2010 levels. While it’s true that annual TV viewing is still enormous (about 510 billion person-hours) and the year-over-year decline in annual viewing as of Q3 2012 is only 2%, this represents a significant change for the dominant entertainment, information, and advertising medium in the US.

Not only is total viewing declining, the number of people watching TV is in decline as well. According to Nielsen, the average number of people watching TV monthly in Q3 2012 was 282.6 million, down 1.1% vs. the year before. As well, the number of people watching TV monthly was in close to a two-year downward trend in Q3 2012, off 2.2% from the all-time high in Q4 2010.

This is undoubtedly concerning for those who sell and buy advertising. Part of TV’s appeal is its enormous reach for delivering mass marketing messaging. TV’s reach is certainly still enormous but it’s trending downward nonetheless.

Why TV viewing and reach is in decline is not hard to figure out. The causes are all around us. American consumers are increasingly devoting more and more media consumption time to non-TV digital platforms – PCs, tablets, smartphones, game platforms, smart TVs, and Internet set-top boxes all play a part.

It’s clear this is creating a world of opportunities for new digital entrants. But what of TV incumbents? How are they responding to these increasingly long-term declines? On the one hand, many TV networks and MVPDs are active on new digital platforms, particularly tablets. On the other hand, TV incumbents often look like inertia-filled enterprises too focused on the past. Two of many examples include (1) the perpetually bogged-down-in-negotiations TV Everywhere efforts, and (2) the continuing refusal of networks and operators to move away from archaic channel bundling to more flexible a la carte-like subscription models.

Can TV turn around these declines? It is not impossible, but it seems increasingly unlikely given the rise of new digital platforms and services. Can television incumbents cooperatively loosen the contractual shackles before the TV bus rolls too far down the cliff? We will see…

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