CSI Hollywood: The “Death” of Television

We've seen this movie before. Sixty years ago Hollywood was marked for death. "Television" had arrived and it was free, convenient, modern and soon insinuated itself into the very fabric of the post-war consumer lifestyle.

In 1946, Twentieth Century Fox's Darryl Zanuck is said to have remarked: "Video [meaning television] won't be able to hold onto any market it captures after the first six months. People will soon get tired of staring at a plywood box every night." As time went on, other studios weren't quite so sanguine - former Disney CEO Michael Eisner recalls that as a child, the RKO theatre marquee in his neighborhood admonished, “Don’t watch TV.”

But of course people did. By 1956, 65% of US households had televisions (up from less than 5% when Zanuck spoke ten years earlier) and watched them for about 5 hours per day.

Instead of dying, movie studios overcame adversity much like the resourceful heroes in their own films. They transformed, recombined, and survived an often chaotic, sometimes near-death ride to prosperity, re-emerging at the center of the much-consolidated entertainment industry Hollywood is today.

Now, according to experts, the Four Horsemen of the Apocalypse are back, riding not colored horses, but the internet. It's TV's turn to die. In fact, according to some it's already dying. Except it's not.

Bob Hoffman, ad agency CEO and maker of Toyota Prius commercials by day, 'Ad Contrarian' blogger by night put it best:

"It is a story built on shabby journalism, ad industry buffoonery, and the willful suspension of skepticism on a scale unprecedented during my time in the advertising business."

And just because we're management consultants, let's not avert our gaze from our own industry's buffoonery.

A staple of the management consulting business is the "Death of...", "End of...", and "Future of..." oeuvre with apocalyptic overtones. Its intention is to scare (the pitches are often called internally "the burning platform") and motivate clients to meet, maybe even to buy. There's often a blizzard of smart talk and data from which all the reader can ultimately extrapolate is "Gee, maybe I'd better hire these guys because it's so complicated."

Then the impressive volume ends with a simultaneously vague but very ominous conclusion.  Here's an actual one: "At a time of exquisite [sic] change in both demand and supply, immediate action is required." It then prescribes an agenda which includes such winners as "harness differentiated skills and competencies", reminiscent of  China's "Achieve the Four Modernizations!" in the late 1970's, except the Chinese used clearer English.

Television as we know it is under threat. The internet is going to change television. In the long run, television and the internet will combine to form a different medium. In the meantime, however, the relative vibrancy of the television industry and the arrival of internet-delivered video are creating an opportunity. At minimum, to slow the erosion of a huge and healthy industry, and at best to expand the business with economics very similar to today's. 

In our forthcoming book "Television Everywhere: How Hollywood Can Reclaim the Internet and Turn Digital Dimes Back in to Dollars" we'll provide some practical advice on how studios, show runners, channel executives, digital agencies and the like can do that. And our next few blog entries will select a few nuggets from the book, usually with a bit of data, to frame the opportunity and lay out the fundamentals of our case.

Before the closing credits, however, let's leave you with three sets of facts. Given the last years' economic downturn, the television industry may need to have its cholesterol levels checked, but it's nowhere near the cardiac ICU.

1. It's still very big and reasonably stable.
    
   
2. Prices have held up well.
   
   
3. Television is still by far the biggest, most pervasive medium. We pulled this rather astonishing chart from data in the recently published Video Consumer Mapping study. The size of the circles is proportional to how many people use the medium.

   Live television reaches 94% of viewers for 331 minutes every day.

    

Stay tuned...