Online Video Killed the TV Star

It may be no surprise to most that TV has taken a bit of backseat in recent years; though what should be a surprise is the 50% decline in TV viewership since 2002

“You had your time, you had the power, you’ve yet to have your finest hour” sang Freddie Mercury on the Queen song "Radio Ga Ga". Though the song concerned the struggling and declining popularity of radio; it seems frightfully relevant considering the current state of television.

It may be no surprise to most that TV has taken a bit of backseat in recent years; though what should be a surprise is the 50% decline in TV viewership since 2002; according to a 2013 report from Morgan Stanley analyst Benjamin Swinburn.

So where are all these cord-cutting viewers going? Well the most obvious answer points to another screen, the one you’re probably staring at right now to use the internet. The home computer or laptop. Include the advent of smartphones, tablets and wireless internet too, and suddenly this further throws a wrench into the works of television moguls and broadcasters; many of whom are left scratching their heads under settling dust of departing viewers.

Though, not all audiences are completely neglecting television. One clear divide present between audiences is based on age demographics; with younger generations spending the most time on online streaming sites and services. To really see this social divide, switch on any morning talk show. There is nothing quite like seeing a panel of middle aged men and women commenting on YouTube videos. It’s like watching an old man on a pogo stick; it’s cringeworthy and you just know things are going to end badly.

Much like how television during its early run severely damaged the motion picture industry in the 1930s and 40s; it seems that the internet and online streaming services are repeating history – this time targeting TV. However, the internet has been around publicly since the 90s, and YouTube first hit the web around 2005; so why is the television industry only starting to see viewers packing their bags now?

The reason is partly seen through an influx of free and paid on-demand streaming video sites, such as Hulu and Vimeo; largely in response due to YouTube’s success. For quite a while, YouTube now considered one of the major streaming sites, operated in a similar fashion akin to public-access television. Open to the public to upload what they saw fit; amateur productions, hopeful musicians, spoofs, parodies, TV and movie rips and the downright bizarre were all on full display like some whacky carnival. In fact, this original appeal and service is still readily available even today on the site.

However, with Google stepping in and taking over the helm in late 2006, YouTube no longer was merely a time-sink for the curious, bored, hungover or stoned at 3am; but instead became a viable investment for big advertising companies and broadcasters alike looking to recoup their losses. This also included new YouTube policies which further created incentives for small channels to grow and become legitimate businesses and enterprises. The benefit for Google meant consistent viewers, leading to more watched adverts and ad revenue streaming in.

Let’s look at the current top 10 most subscribed channels on YouTube. They have an estimated total of roughly 17.97 billion views; and an estimated amount of 68.4 million subscribers, combined. Excluding two Vevo run channels in the top 10, many started out as independent amateur channels and grew into large conglomerates, such as The Yogscast; operating out of an office-block in Bristol, now spread over roughly 10 separate YouTube channels.

While YouTube may be the most commonly used online streaming site, other companies have risen based solely on targeting an influx of new audiences and snatching TV viewers. Netflix, founded in 1997 operates as an on-demand internet streaming service, while also supplying DVD sales and rental deliveries to its customers; operating through a subscription-based model. Largely in competition with premium-cable channels such as HBO and AMC, Netflix has proved itself as a viable business, with an estimated 27.1 million customers in the US alone and 33.3 million total, including a successful original series (House of Cards) to boot.

Regardless of the success of these online services, they still don’t really tell us why some viewers are switching off when it comes to TV broadcasting. You have to ask yourself, what’s making customers cancel? A possible issue may be attributed to high subscription based models and licensing fees implemented by many cable broadcasters. Time Warner’s HBO in the US; the BBC in the UK; and even Foxtel closer to home have all seen their share of declines or flats in subscription numbers. Despite operating through a paid-subscription based business, Foxtel still features a heavy amount of advertising; and just recently faced backlash over reducing the number of movie channels while retaining the same fees. HBO has even attempted to enter the online streaming market by offering their own service HBO GO; however, the actual service is limited to already paying subscribers of the cable channel.

The simple economic model of supply and demand means cable television isn’t adjusting to falling viewer numbers by reducing fees; meaning they cannot compete with on-demand streaming services over a long term period.

Due to high subscription rates, the idea of owning cable TV has become a luxury for some; although there are still other means for people who want to watch a series or episode shown exclusively on cable. Pirating statistics for 2012 have shown that in some cases, the number of downloads have outweighed the amount of on-air viewers; with the HBO series Game of Thrones topping the list of most downloaded series with an estimated 4.28 million downloads. The Showtime series Dexter also came in at second, with 3.85 million downloads; like Game of Thrones, out performing the number of subscription paying viewers, watching through television sets.

For those who have turned away from television, pirating has proven a quick and easy alternative to obtain certain shows, held under lock and key for subscription paying eyes only. However, piracy is a bit like going through back alleys to get a cheap product; it can be great, but you might get stabbed along the way.

Piracy being one of the main factors attributed towards the infamous legislative bill known as SOPA, during 2011 – 2012. A heavily restrictive bill targeting copyright breaches of online videos and streaming services; it was no surprise that some of the companies backing the bill included the Motion Pictures Association of America (MPAA), Recording Industry Association of America (RIAA), Entertainment Software Association (ESA) and Viacom. While SOPA didn’t come to pass, other copyright acts such as the DMCA are still in effect and enforced.

At the end of the day, a large component attributing to this divide between internet users and television viewers comes down to freedom of choice. Many are comfortable getting what they want, when they want it. Internet streaming and online videos mean viewers no longer have to deal with laborious advertisements or broadcasting schedules; instead choosing when and how they watch their shows. Regulation in this case, seems to be a thing of the past.

While television broadcasting isn’t completely gone from the airwaves, and TV sets are still a legitimate substitute baby-sitter; the industry definitely seems to be riding a steady decline. However, live sports for example, are still proving to be a big pull on cable and national television channels, with the recent 2013 Super Bowl pulling in an average of 108.41 million viewers; though still down on previous years 111.3 million, according to a Reuters report.

The big fear is that instead of obtaining stronger shows and programming to combat audience losses, or simply reduce fees; broadcasters might instead resort to gimmicks and novelties in a desperate attempt to retain viewers. Maybe Smell-O-Vision might not be as far away as we once thought.