Television’s “super media” status strengthens
In 2011, Deloitte predicts television will solidify its status as the current super media, defying some commentators’ prophecies of imminent obsolescence1. Viewers around the world will watch 140 billion more hours of television, revenues from pay TV in the BRIC2 countries will rise by 20 percent3; worldwide TV advertising will increase by $10 billion, and 40 million new viewers will be added; TV chefs will sell tens of millions more cookbooks than their non-televised peers4; TV shows will be the most common conversation topic around the world and the subject of more than a billion tweets5. In short, television will likely continue to command a growing share of the world’s attention and pocketbooks.
Deloitte expects television to retain its leadership among all media in terms of total revenues, which include advertising sales, subscriptions, pay-per-view and license fees. Television’s strength as an advertising medium is likely to be once again proven by a second year of solid growth and a fifth consecutive year of increased share of advertising revenue (see Figure 1). Television’s five-year growth in advertising revenue, from $174 billion in 2007 to $191 billion in 2011, contrasts sharply with newspapers’ decline in advertising revenue from $126 billion to $93 billion over the same period. A forecast 6 percent increase in 2012 would take TV advertising revenue beyond the $200 billion mark: more than twice as much as for newspapers, the number two advertising medium6. TV forecast advertising revenues for 2011 should discourage any lingering doubts that the 30 second spot is in structural decline.
Figure 1: Television’s share of all advertising revenues, 2007-2012
Source: Deloitte Touche Tohmatsu Limited analysis, ZenithOptimedia, Advertising Expenditure Forecasts, December 20107
Deloitte also expects television to grow its share of audience attention, despite competition from many other existing and emerging distractions – both online and offline. In 2011, aggregate television viewing will likely reach 4.49 trillion hours. The global television audience is expected to grow by 40 million to 3.7 billion viewers; yet half of the world’s population will remain untapped, leaving significant headroom for the television market to grow. Viewing per person is forecast to rise modestly to 3 hours and 12 minutes per day. This compares very favorably to the 15 minutes per day spent on social network sites by their members8, and to the 33 minutes per day spent on the Internet per US citizen9.
Television is likely to retain its status as the media that most powerfully influences content creation in other media sectors. Television should remain, for example, a key driver of the book trade. Bestseller lists will likely be well represented by television celebrities and television chefs10. Television is also likely to drive tens of millions of magazine sales, including magazines whose principal purpose is to provide a printed TV schedule. In the UK, a country with 23 million households, sales of TV listings magazines are likely to reach several million copies per week11. Television should also remain a key sales driver of children’s toys around the world: Thomas the Tank Engine is the number one pre-school toy in China12. And it seems fair to assume that some of the best-selling music artists of 2011 will have been part of a televised talent contest13. In today’s world, TV is the medium around which all others revolve.
Television’s “super media” status is further reinforced by its impressive ability to sustain momentum.
For example, the most successful global TV franchise, Strictly Come Dancing, currently reaches 250 million viewers in 38 markets14. This leaves hundreds of countries and more than 3 billion potential new viewers for television to target. China is of particular interest, as Chinese consumers have just begun to purchase various formats of television content in earnest15. In 2011, Chinese broadcasters may become increasingly enthusiastic about new formats as a means to compete against Internet television16. Creating local variants of formats that have succeeded in other markets may be a way to win back viewers who had turned to the Web for the content they wanted to watch17.
Television seems to be gaining popularity in emerging markets. In 2011, TV advertising spend is expected to grow 16 percent in China and 14 percent in India18. In the BRIC countries, in 2011 pay TV revenues are forecast to rise by 20 percent to over $17 billion19.
All the while, television technology continues to improve. The steady migration to high definition should provide significant opportunities for up-selling to premium television subscribers. The growing penetration of large flat-panel televisions should increase the visual impact of programming and advertising (in effect 50-inch digital billboards within our homes are proliferating). Also, 3D technology may provide an additional revenue stream in the medium to long term.
Television’s overall trajectory looks to be strong in 2011 and, most likely, for a few years beyond. But allocation of the industry’s spoils may vary widely for different players.
The outlook for smaller content producers could be challenging. These companies lack the scale and reach to launch global formats. They may even struggle to upgrade to high definition (HD) production, which could be a major problem if HD becomes the new table stakes for earning a share of subscription revenues. Consumers’ growing expectation for HD quality may also make life difficult for terrestrial broadcasters whose typical spectrum allocation only enables them to offer a handful of HD channels . By contrast, the growth of HD strengthens the hand of cable, satellite and certain telecommunications providers.
In developing countries, one of the key challenges is likely to be how to increase revenues. A television subscription that only costs a few dollars a month might sound like exceptionally good value to US subscribers accustomed to paying much more. But to consumers in developing countries, it can represent a huge portion of their income.
Technological innovation has so far seemed to bolster the television sector; for example, DVRs and online TV content have tended to boost overall viewing. But as technological innovation increasingly drives viewers to consume multiple media simultaneously, its ultimate impact is unclear. It might reduce the attention paid to advertising. Or it might make television advertising even more powerful, by enabling viewers to take immediate action on their buying impulses.
As for other forms of media, television could prove to be a significant enabler – both directly (through advertising) and indirectly (as a source of new ideas, celebrities and content). Other media sectors should look for creative ways that television could help sell their products. For example, a TV documentary of a band rehearsal could help promote a forthcoming tour. The music sector might also find television to be a growing source of direct revenues from licensing songs for use in commercials and TV programs.
1Sorry, There's No Way To Save The TV Business, Business Insider, 12 June 2009:http://www.businessinsider.com/henry-blodget-analysts-begin-to-realize-that-theres-no-way-to-save-television-2009-6;TiVo CEO Declares TV Almost-Dead, Wired, 20 October 2008:http://www.wired.com/epicenter/2008/10/tivo-ceo-declar/
2Brazil, Russia, India and China
3PAY TV subscriber base expands in BRIC Countries while revenues grow more modestly, DatAxis Intelligence, 13 July 2010: http://www.dataxisnews.com/?p=19220
4A growing genre of cookbooks skips recipes and focuses on science, Globe and Mail, 23 November 2010:http://www.theglobeandmail.com/life/food-and-wine/a-growing-genre-of-cookbooks-skips-recipes-and-focuses-on-science/article1810272/
5 According to this article television is responsible for “a lot” of the 90 million daily tweets generated as of November 2010. Assuming that “a lot” is at least 5 million per day, this would imply over a billion tweets per year. Source: There Are 90 Million Tweets per Day, And A Lot Are TV Related, TechCrunch, 10 November 2010:http://techcrunch.com/2010/11/10/twitter-tv/.For a list of the most popular television trends topics on Twitter in 2009, see: Top Twitter Trends of 2009, Twitter Blog, 15 December 2009:http://blog.twitter.com/2009/12/top-twitter-trends-of-2009.html
6Advertising Expenditure Forecasts, ZenithOptimedia, 6 December 2010:http://www.zenithoptimedia.com/about-us/press-releases/zenithoptimedia-adspend-forecast-update-dec-2010/
8Calculation based on Nielsen data measuring time spent on Facebook in US, UK, Australia, Brazil for June 2009 and June 2010. Across all four countries, average time spent on Facebook was 7.5 minutes in June 2009 and 10.3 minutes a year later. Assuming a similar year-on-year increase in 2011, average time spent would be just over 14 minutes. Nielsen data provided in: The ups and downs of social networks, BBC News, 22 July 2010:http://www.bbc.co.uk/news/technology-10719042
9This data point is based on the total population in the US aged 2 or over whether or not they have the technology. Nielsen Three Screen Report, Volume 8, 1st Quarter 2010
10In 2009, 9 of the UK’s top 50 selling books were written by individuals who had television programmes, were regular guests on television shows or who has been made famous by television. Source: Review of 2009: The Bestsellers, TheBookSeller.com, 7 January 2010: http://www.thebookseller.com/in-depth/feature/108940-review-of-2009-the-bestsellers.html
11The two leading TV magazines sell over 2 million copies between them. Five of the top 10 UK magazines are television related. Source: MAGAZINE ABCs: New editor puts Radio Times back over a million, MediaWeek, 11 February 2010: http://www.mediaweek.co.uk/news/983483/MAGAZINE-ABCs-New-editor-puts-Radio-Times-back-million/;the UK X Factor magazine sells 300,000 copies per week. Source: Why the 'x factor' is A licence to print money, Independent.ie, 30 October 2010: http://www.independent.ie/entertainment/music/why-the-x-factor-is-a-licence-to-print-money-2400552.html
12Apax on track to sell Hit Entertainment, Financial Times, 29 October 2010:http://www.ft.com/cms/s/0/6c92bd10-e2dd-11df-9735-00144feabdc0.html#axzz16Dx4O9nS
13'Got Talent' Kid Jackie Evancho Makes Chart Impact, Billboard, 19 August 2010:http://www.billboard.com/news/got-talent-kid-jackie-evancho-makes-chart-1004110235.story;Susan Boyle achieves transatlantic sales record, monsterandcritics.com, 17 November 2010:http://www.monstersandcritics.com/people/news/article_1599771.php/Susan-Boyle-achieves-transatlantic-sales-record
14Strictly Come Dancing is 'world's most successful reality television format', Telegraph, 23 November 2010:http://www.telegraph.co.uk/news/worldnews/northamerica/usa/8155637/Strictly-Come-Dancing-is-worlds-most-successful-reality-television-format.html
15For more background on the market dynamics of the Chinese television market, see: China's got viewers , The Economist, 18 November 2010:http://www.economist.com/node/17522454
16China broadcasters strike gold with foreign formats, AFP, 23 November 2010:http://www.google.com/hostednews/afp/article/ALeqM5j5Cdo04NVSYsQwSYE3Lk-M1AnYCw?docId=CNG.9d7cb2e161ee25e135303c0ac0ee51ec.281
18Year-on-year change at current prices, ZenithOptimedia, December 2010. For more information see:http://www.zenithoptimedia.com/about-us/press-releases/zenithoptimedia-adspend-forecast-update-dec-2010/
19PAY TV subscriber base expands in BRIC Countries while revenues grow more modestly, DatAxis Intelligence, 13 July 2010:http://www.dataxisnews.com/?p=19220