Summer Ratings Slump Should Have TV Execs Sweating
Viewing habits are changing, and the industry needs to keep up.
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I'm probably a TV exec's worst nightmare.
A twenty-something fresh out of grad school, I don't have a cable subscription, I love my Apple TV, I subscribed to the now-defunct Aereo, and I have both Netflix and Amazon Instant Video accounts.
For the longest time, this setup perfectly served my needs. So it was with shock and anger that I watched the Supreme Court strike Aereo down at the behest of broadcasters desperate to preserve the status quo.
Still, Aereo's fall hasn't brought me back into cable's fold. If anything, it's strengthened my resolve to cut the cord. As a result, I haven't been watching much TV this summer. And thanks to all of the available streaming and DVR services, it looks like I'm not alone.
Re/code reports that TV ratings have been falling steadily since April. That's not unusual: Viewership typically drops in the summer months, when networks are showing repeats and reality shows. But it's the year-over-year trends that should have TV execs concerned.
For the month of July, broadcast viewership was down about 3.7 percent and cable viewership dropped 6.8 percent compared to the same period in 2013. And some are forecasting that the erosion will only accelerate next year.
This ongoing change in viewing habits has even prompted FX to stop distributing "live plus same day" ratings numbers. The channel will now only publicize "live+3" ratings—numbers for same-day and time-shifted viewing up to three days after airing.
"Live+7" ratings are also frequently bandied about, though a recent study by Bloomberg Businessweek and marketing firm Ebiquity argued most viewers watch shows within the live+3 period. According to their numbers, the extra four days only provide only small gains.
But while the industry is steadily heading toward global acceptance of ratings models that include time-shifted viewing, advertisers remain skeptical. Viewers who watch DVR'd TV can skip ads, and if networks can claim a larger viewership, ad rates could quickly rise.
Aside from DVR viewership, the other factor in the overall ratings decline is pretty simple: time spent elsewhere.
Peter Kafka of Re/code suggests that we may be spending more time on both streaming services and activities unrelated to TV viewing, like Facebook.
He notes that BTIG Research found Netflix subscribers now watch an average of 103 minutes a day on the service. That's 103 minutes when TV networks (and the advertisers who sustain them) can't count on capturing crucial pairs of eyeballs.
At this point, it's clear that TV advertising needs to get with the times. With live viewership steadily declining, advertisers need to find ways to get their ads in front of modern viewers. How that's going to happen is anyone's guess, but we'd put our money on more prominent product placement.
After all, viewers want to watch shows on their own schedule, not the network's. And one way or another, they're going to do it.