Linear TV: Once It’s Gone It’s Gone For Good

Michael Hedges July 4, 2022 Follow on Twitter

Business school academics study everything they can in search of trends, outcomes and fruitful practices. Every few years all of this is thrown out. Some are happy, some confused, many write books. Remember the long-tail theory? Neither does anyone else. Cycles are popular fodder, mostly because huge datasets are easier to crunch. And everybody looks for an outlier, kind of like aliens.

Big television company NBCUniversal is dropping its Olympic Channel come September, reported Deadline (July 1). It lasted but five years. “We are reevaluating our programming distribution strategy regarding the content that currently airs on Olympic Channel,” read the NBC Sports statement. “We will be announcing our exciting new plans for Olympic content in the fall.”

NBCUniversal is rerouting sports content to its streaming service Peacock. For US customers, NBCUniversal holds Olympic Games TV rights through 2032, Major League Baseball and, soon, the English Premier League football. Big name sports draws viewers and lots of advertising. Why not load all of onto Peacock? Already NBC News, the Today show and everlasting "Saturday Night Live" can be found on Peacock. The very simple reason: linear TV, to be generous, is in the decline stage.

Eventually, nearly all products, services, businesses and companies are relegated to the decline stage. Whatever they are, whatever they do, they always run out of gas, literally and figuratively. New stuff is always cheered by consumers, managers and investors because it powers the grinder that propels the great engines of commerce. In essence, so to speak, all business resembles the coal-fired electric power plant. Look where that got us.

According to the great minds on the subject, for example Ted Levitt in the Harvard Business Review (November 1965), entering decline stage is rather predictable. Customers lose interest and the money stops. No more buggy whips, we’ve got cars. Others have pointed to unsustainable competition; too many offers chasing customers of changing tastes. For some reason pizzerias never go out of fashion. Indeed, fad and fashion can ward-off the evil decline stage. Vinyl records make periodic comebacks.

The malaise for linear television has been years in the making. At its origin, TV land had limited channels, licensed by governments and geographically limited. Networks sprung up for specialized programming, like news and more expensive productions. The advertising people, always keen money watchers, became very happy. But poor reception for terrestrial broadcasting gave rise to cable TV, originally known in the US as Community Antenna Television (CATV). In European countries wired distribution developed quickly and became standard, often through state-owned telecoms. In the early 1990’s Bruce Springsteen had a hit tune in the US with “57 Channels and Nothin’ on TV.” It was revised to say “500 channels.” Within a decade cable TV subscriptions had peaked.

Linear TV has been the standard program scheduling practice; one show after another, usually the same time each day or week. Everybody - from viewers and broadcasters to advertisers - was comfortable with it. A new century and the great digital transition brought something different: TV had become a commodity and consumers wanted more choices. Cable TV was, almost instantly, no longer the cash cow.

Now there is streaming - streaming video on demand. Everybody and their sister or brother has a streaming video platform. Netflix arrived in 1997, almost 25 years ago, the great merger of technology and entertainment. A large portion of the population anywhere has never known a day without streaming video platforms and they all have some degree of comfort with subscriptions.

To refer back to Ted Levitt, competition for streaming subscriptions has become unsustainable. Netflix, for example, has seen new subscriptions crash this year. They are not alone. Disney+ is under stress. Day-trader favorite tip sheet Seeking Alpha (July 2) said Netflix had entered the “maturity” stage. Investors have trained every executive to avoid at all cost - literally - entering this no-growth danger zone.

To ward off this horror, Netflix executive Ted Sarandos made a pilgrimage to the recent Cannes Lions ad festival to proclaim that ads are now good, so long as the revenue, hence lower consumer prices, bolsters average monthly subscriptions. Netflix is limiting password sharing to force new subscriptions. Shows are being cancelled after one or two seasons because viewer loyalty is less important. These developments are not exclusive to Netflix but it is the category trend setter, which should give the company greater resistance to challenges. Every streamer is going for live sports and live music events, all the better to entice the casual viewer.

Zoomers, formerly known as GenZ, can look forward to the metaverse. Just put on the headset and make up their own show. There will be a subscription charge. They never knew TV anyway.

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