Changing
the channel
A special report on television l May 1st 2010
One moment.
                                                                 One satellite network.
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The Economist May 1st 2010                                                                                           A spe...
2 A special report on television                                                                                          ...
The Economist May 1st 2010                                                                                   A special rep...
4 A special report on television                                                                                          ...
The Economist May 1st 2010                                                                                   A special rep...
6 A special report on television                                                                                 The Econo...
The Economist May 1st 2010                                                                                            A sp...
8 A special report on television                                                                                       The...
The Economist May 1st 2010                                                                                                ...
10 A special report on television                                                                                 The Econ...
The Economist May 1st 2010                                                                                  A special repo...
12 A special report on television                                                                                         ...
Survey Television The Economist
Survey Television The Economist
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Survey Television The Economist

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Survey Television The Economist

  1. 1. Changing the channel A special report on television l May 1st 2010
  2. 2. One moment. One satellite network. Infinite connections. Our fleet of over 40 satellites reaches 99% of the world’s population, offering our customers regional strength and expertise on a global scale. www.bizart.lu 13,000 1,102 SERVICES We are the world’s leader in providing high-quality satellite capacity for broadcasting. We transmit more video and radio services for the world’s leading broadcasters than any other satellite network. transponders on 41 satellites www.ses.com
  3. 3. The Economist May 1st 2010 A special report on television 1 Changing the channel Also in this section Beyond the box Television rushes online, only to wonder where the money is. Page 3 Ahoy there! The perils of piracy. Page 4 The lazy medium How people really watch television. Page 6 An emergency screen Mobile television is unlikely to take o . Page 7 The killer app Television needs sport almost as much as sport needs television. Page 8 Who needs it? Television is adapting better to technological change than any other Three-dimensional television is coming, whether you want it or not. Page 10 media business, says Joel Budd Here, there and everywhere O NE evening last year Steve Purdham noticed something odd. The ow of data into and out of We7, a British music- the more favoured Indianapolis Colts in the Super Bowl. The nation spent more time glued to that one match than it spent Television is spreading in new directions. Page 11 streaming website he runs, had abruptly on YouTube, the most popular video- slowed. An hour later it returned to nor- streaming website, during the entire mal. Such a sharp uctuation usually month, according to ComScore. Remark- An interactive future means a server is malfunctioning a po- ably, television can deliver these huge au- The last remaining mass medium needs to tentially ruinous problem. But when engi- diences even though it provides more engage with its audience and target its neers checked the computer system they choice than ever. o erings. Page 13 found nothing wrong. So what could have In 1992 Bruce Springsteen, a rocker from happened between 8pm and 9pm on a Sat- New Jersey, released a song called 57 urday night to cause such a sudden drop in Channels (and Nothin’ On) . There are use? Suddenly it dawned on Mr Purdham: now hundreds of channels. A quick chan- Britain’s Got Talent was on television. nel-surf through a basic cable-TV package At its peak that show drew 68% of all in America turns up a weighty history of British TV viewers and notched up the big- the civil war, a South Korean melodrama, a gest audience for any programme since college basketball game, a Hispanic talent 2004, when the English football team show, a congressional hearing, a zombie played Portugal in the European champi- lm, European football, an evangelical ser- onship. It also turned Susan Boyle, a mid- mon and a documentary about a half-ton dle-aged Scot, into an international star. teen . Many more options are available on Video of Miss Boyle singing I Dreamed a demand with a few clicks of the remote Acknowledgments Dream ricocheted around the internet control. The o erings are decidedly mixed, In addition to the people named in this special report, the author would like to thank the following: Peter and caught the attention of news outlets. but there is always something on. Bazalgette, Sean Bratches, Mike Fries, Eric Garland, Je The singer became a xture of talk shows There are not many genres that are not Gomez, Steve Hasker, Erik Huggers, Bob Ishida, Charlie and tabloid newspapers, which dubbed addressed any more, says Philippe Dau- Kim, Emma Lloyd, Shishir Mehrotra, Gri Parry, Damon Phillips, Ben Reneker, John Rose, Geo rey Sands, Mark her SuBo . Her rst album sold more man, CEO of Viacom, a media conglomer- Selby, Sue Shim, Jack Wakshlag and Alex Za roglou. quickly in America than any other by a fe- ate. We try to think of new ones all the male artist since Nielsen Soundscan began time. And where America has led, others A list of sources is at tracking music sales in 1991. have followed, often much more quickly. Economist.com/specialreports When it comes to mobilising a mass au- Until the early 1990s India had two state- dience, nothing can touch television. On run television channels, Doordarshan 1 An audio interview with the author is at February 7th this year 106m Americans and Doordarshan 2, which were best Economist.com/audiovideo/specialreports watched the New Orleans Saints defeat known for their amateurish dramatisa- 1
  4. 4. 2 A special report on television The Economist May 1st 2010 2 tions of Hindu epics. It now has more than value since Napster, a le-sharing website, 600. In Britain the proportion of homes Filled to bursting 1 appeared in 1999. The internet has drawn that receive multi-channel television has Minutes of media consumption by classi ed advertising away from local and risen from 31% to 89% in the past ten years. 8-18-year-olds, per day regional newspapers, turning once highly The box that delivers all this stu has Type of medium: pro table businesses into basket cases. evolved, too. Televisions used to be squat Movies Print Video games Book publishers have watched helplessly cubes. Gradually they have attened and Computer Music TV as online retailers and e-readers have dri- turned into panels, and their screens have ven down prices. become sharper and brighter. They have 458 700 The internet tends to disaggregate me- Minutes 458 spread to bedrooms, kitchens and even actually spent* 600 dia products, breaking music albums into 381 458 bathrooms (with heated screens to ward 379 381 500 tracks and splitting magazines into their 458 o condensation). The latest devices from 379 381 constituent articles. It also disintermedi- 400 Samsung and Sony are as thin as laptop 379 381 ates by bringing content directly to con- 458 computers. Television has gone online and 379 381 300 sumers, sometimes by means of piracy. become mobile. This year it will expand 200 Online, people can pick and choose the into the third dimension. content that interests them without paying 100 Predictions of TV’s imminent demise much for it. One of the most harmful have come and gone like fast-forwarded 0 things about the internet as it has evolved 1999 2004 2009 advertising breaks. In 1990 George Gilder, in the past few years, says Je Bewkes, the Source: Kaiser Family Foundation *Thanks to multitasking an American writer, claimed that by the boss of Time Warner, one of the world’s end of the 20th century traditional televi- biggest media rms, is the assumption that sion would be extinct because technology responded their subjects. When the study charging for content is hostile to the con- would enable consumers to track down was repeated in 2009, young Americans sumer. As the saying goes, content wants programmes that catered to their particu- were spending more than seven-and-a- to be free or, at least, paid for only by ad- lar interests. Bass shermen would watch half hours with media each day, an hour vertising. We already tried that, says Mr endless shows about bass shing. Even the more than they had done ve years earlier Bewkes. It was known as the wasteland. technological futurists found it hard to (see chart 1). Into that space they packed an In 1961Newton Minow, chairman of the imagine the explosion of websites, social astonishing 10 hours and 45 minutes of Federal Communications Commission, networking and mobile phones that was consumption. Among other things, they told a room full of television executives to come. Yet these things have not dis- were watching more television. that they had created a vast wasteland of placed television. Rather, they have Report: 90% of waking hours spent uninspired shows. At that time America squeezed around it. staring at glowing rectangles, read a head- had three broadcast networks, which oper- line in the Onion, a satirical newspaper, ated on the principle that the least objec- More of everything last year. The joke contains a profound tionable shows would draw the biggest au- Look at Japan, a country that leads many truth. Distinctions between glowing and diences and the most advertising revenue. technological trends. Last year Tokyo resi- rectangular television sets, computers and As Minow predicted, competition im- dents spent an average of 60 minutes a day mobile phones are gradually disappear- proved matters. In the 1970s cable and sat- at home consuming media on the internet ing. Televisions have long doubled as mon- ellite television began to spread. New sub- or a mobile phone, up from just six min- itors for video-game consoles. More re- scription channels like HBO, which had to utes in 2000. But they also spent more time cently they became digital radios. Now please viewers rather than advertisers, in front of the television: an average of 216 they are turning into gateways to the inter- were able to take risks. Broadcasters raised minutes, up from 206 minutes. Among net. People who buy high-end televisions their game in response. young women, the group that advertisers this year will discover that their new toys The result, beginning in the late 1990s most want to reach, television-watching can obtain all sorts of things, from stock and continuing today, has been a golden went up more steeply. Admittedly their at- quotes to weather forecasts. age for television. It can be argued that Hol- 1 tention was not always xed on the box. At the same time TV is moving beyond Many teenage girls send text messages on the living room. Many programmes can be their mobile phones while watching tele- viewed on computers, mobile phones and The place to be 2 vision. In Japan we like to do two things at tablet devices like Apple’s iPad. Video- Britain’s advertising spending on: the same time, explains Ritsuya Oku of streaming websites are becoming more £bn Dentsu, an advertising agency. professional, meaning they are both better 4 Or take American teenagers. In 2004 designed and contain more proper televi- television the Kaiser Family Foundation reported sion. Services like iPlayer, which carries 3 that the average person aged 8-18 was BBC television shows, and Hulu, which spending almost six-and-a-half hours a distributes programmes from America’s 2 day taking in some kind of media televi- ABC, Fox and NBC, have grown in popular- internet sion, lms, music, video games and so on. ity. At rst this success delighted people who earn their living from TV. Gradually 1 By multitasking, they were able to cram eight-and-a-half hours of media consump- they have become more alarmed. tion into that time. The researchers con- Every media business that the internet 0 2002 03 04 05 06 07 08 09 10* cluded that young people were lled to has touched so far has come o badly. Re- Source: GroupM *Forecast the bursting point with media. Whatever, corded music sales have fallen steeply in
  5. 5. The Economist May 1st 2010 A special report on television 3 2 lywood makes less impressive lms these platforms that audiences will become too er shows, it is helping the biggest ones days than it did in the 1970s (or the 1930s), small to pay for good programmes. The in- thrive. Televised sport is stronger than but that is not true of television. Modern ternet already competes strongly for ad- ever. Viewers have embraced some inno- TV shows like The Sopranos , The West vertising. In Britain more money is now vations but roundly rejected e orts to Wing , Mad Men and Modern Family spent online than on television (see chart transform the living-room set, puzzling are so superior to what went before so 2, previous page), although some of this and frustrating some of Silicon Valley’s much better written, better acted and bet- can be blamed on arti cial restrictions on best minds. ter shot that they almost seem to belong TV advertising rates. Television is not about to su er the fate to a di erent medium. Even so, this special report will argue of music or newspapers, yet the next few Sir Howard Stringer, Sony’s boss, fears that television’s encounter with technol- years will be dangerous nonetheless. A television will return to the wasteland. The ogy is turning out quite di erently from handful of upstart websites, with audi- danger is not lack of choice, as Minow the experience of other media businesses. ences smaller than many channels at the found, but a surfeit of choice. So much con- Although growing choice and the profu- bottom of the programme guides, have al- tent will be available on so many digital sion of platforms is indeed crushing small- ready rattled the giant TV industry. 7 Beyond the box Television rushes online, only to wonder where the money is U NUSUALLY for a microchip-maker, In- tel employs a team of anthropologists. The researchers travel from country to ment for the regular stu ? There is a small segment of the population for whom it is already a replacement, says Chase Carey, country, interviewing people and spend- the president of News Corporation. ing time in their homes to nd out how Most video-streaming websites are they use technology. The ethnographers supported by advertising. Anyone who also quiz oor managers in electronics wants to watch a video has to sit through a stores about what their customers want. short pre-roll ad as well as a few short These days many of the salesmen tend to breaks in the course of a programme. say the same thing. People want a cable These breaks are often accompanied by a that will allow them to connect their com- countdown clock to reassure itchy viewers puters to their television sets. that they will not go on for ever. Advertis- Just a few years ago the notion of using ing rates are high: reaching a viewer on a a computer to deliver television seemed video website can be more expensive than far-fetched. There simply was not much on television. Yet this is achieved in part by video online not much that was legal and restricting supply. A viewer who watches non-pornographic, at any rate. That has an hour-long drama on Hulu will be sub- changed. Each month the British request jected to only a quarter of the number of some 120m television and radio pro- advertisements that a viewer of the same grammes from iPlayer, a website run by the show on TV has to sit through. The returns BBC. Hulu, a website that o ers shows from online video are thus poor even be- from three of America’s four big broadcast- fore the websites take their cut. ers, streamed more than 1 billion videos in And there are other knock-on e ects. December 2009. YouTube, the biggest vid- Because so many programmes are avail- Hulu’s stylish threat to TV eo-streaming website of all (and the oldest able at the click of a mouse, people may be of the bunch, at the grand age of ve), con- less likely to buy boxed sets of their favour- sion, the fortunes of media companies. tinues to expand. ite shows. Spending on DVDs in America One of the myths about the large media At present online video draws fewer fell from $20 billion in 2006 to $16 billion in companies based in America is that they eyeballs than television, and for much 2009. That was partly because of the reces- are diversi ed conglomerates. True, they shorter periods. The average YouTube user sion and the spread of kiosks that rent out do a lot of things. As well as making TV spends 15 minutes a day on the website, DVDs cheaply, but Mr Bewkes of Time shows and lms, News Corporation pro- compared with the ve hours that the aver- Warner says there has been a particularly duces books and newspapers. Time War- age television viewer spends in front of the steep decline in DVD sales of TV shows ner also makes magazines. Disney runs box. But the rapid growth of video-stream- available free online. theme parks and licenses its characters to ing websites, particularly in America, is The biggest worry about online video is toothbrush-makers. Yet all these compa- worrying TV executives. As people acquire a broader one. The television industry is a nies tend to derive the largest share of their televisions, games consoles and set-top complex and delicate edi ce made up of revenues, and more than half their pro ts, boxes that connect to the internet, will many interlinked businesses. Online vid- from television. they come to see online video as a replace- eo threatens its stability and, by exten- The conglomerates’ TV businesses are 1
  6. 6. 4 A special report on television The Economist May 1st 2010 Ahoy there! The perils of piracy G O TO Google’s home page and type the name of your favourite TV pro- gramme into the search bar, followed by Lost and found Google searches* for “Lost torrent” 3 tend to be lazy. Trawling virus-addled websites in search of programmes seems too much like hard work. the word torrent . Press the return key. SEASON 3 TV piracy appeals for two reasons. It There it is: a feast of pirated television on 10 can bring shows to foreign audiences fast- SEASON 3 SEASON 4 SEASON 5 SEASON 6 le-sharing websites, found for you by the er, and it is free. The rst advantage mat- 8 world’s most powerful search engine. ters for only a very few shows, most of Napster, a peer-to-peer out t that brought 6 them slick American dramas. The Chi- the recorded-music business to its knees nese do not hunger for episodes of Slov- about ten years ago, was not nearly as 4 enija Ima Talent (Slovenia’s Got Talent) quick or easy. or Top Gear Russia . And media rms Television piracy gets less attention 2 have reduced this advantage further by re- than lm or music piracy, but it is no less leasing TV shows almost simultaneously widespread. One of the big obstacles that 0 in di erent countries. The second advan- 2006 07 08 09 10 had stood in its way the large le sizes re- tage is not as big as it appears either. Un- Source: Google Trends *Variance from average quired to transmit video is shrinking as like music and lm, nearly all television is computers get faster and bandwidth costs free at the margin: once a household has come down. More and more people are tracks and a lot of padding were sold in paid its subscription, it costs nothing to buying televisions that can connect to the shops for $14.99, and often more outside watch another show. internet. There is a danger that piracy will America. Singles were few and cost al- The real threat posed by piracy is not move on from teenagers skulking in bed- most as much as albums. Compressed that it threatens television’s current busi- rooms and into the living room. A furtive digital les such as MP3s were not on o er ness model but that it makes building a activity could become mainstream. yet. And music piracy was widely tolerat- new one more di cult. Aware of the limi- If Google searches are any guide, pira- ed: even respectable folk had their own tations of advertising-supported online cy is at its most rampant while shows like sneaky collections of C90 tapes. Dissatis- video, European media rms are cur- Lost are airing on television (see chart). ed customers and a culture of copying rently testing micropayments for shows. The peaks near the beginning of each sea- created an ideal environment for le-shar- The wide availability of free illegal alter- son suggest that some people use torrent ing to grow. natives may well crimp these e orts. sites to get copies of shows from previous By contrast, television’s unit of output In this sense the pertinent parallel is seasons, lling themselves in on the plot is already the size people want it. They like not with music or lms but with newspa- before the new one starts. It is likely that to watch whole episodes of Desperate pers and magazines. These days print pira- every stream of a copied show represents Housewives , not extract the best ten cy is a trivial issue, since most general a lost viewer on television. Piracy is a di- minutes of an episode, as music fans like news articles are given away free. If news- rect threat. Yet television is not about to to extract the best tracks from an album. papers and magazines begin charging su er a catastrophic Napster moment . Much free television can already be people to read their output, the pirates are When Napster emerged ten years ago, watched legally on computers and mobile likely to turn up, and quickly. So it may be music CDs containing two or three good phones. And TV-watching couch potatoes with television. 2 themselves rather concentrated. Most of television market by far, all is not well. pealing. Cable and satellite distributors their revenues come from America. Their Viewers’ monthly bills for television have could drop the least popular channels. pay-TV channels are worth much more gone up by more than the rate of in ation They could increase subscription fees. than their broadcast networks. And most in the past few years, pushed up by media They will probably do both, which means of those pay-TV revenues come not from rms’ demands for higher a liate fees. people will be asked to pay more for less. advertising but from the a liate fees paid Now broadcast TV stations are also de- If the incumbents aren’t careful they are by cable and satellite rms for the privilege manding retransmission fees . Cable and going to price their customers out of the of carrying their programmes. A fth of satellite companies make little money on market, says Craig Mo ett of Bernstein Disney’s entire turnover in the nancial video as it is and do not want to see their Research. And thanks to the video-stream- year 2008-09 came from this single source. margins eroded further, so disputes are be- ing websites, viewers are no longer faced In short, media companies depend on peo- coming more frequent. Cablevision sub- with a stark choice between a handful of ple’s willingness to stump up for multi- scribers missed the rst few minutes of the live broadcast channels and a pay-TV ser- channel television each month. Oscars ceremony this year as the distribu- vice with hundreds of channels. A home So far they have not been disappointed. tor fought with ABC over payment. with a broadband connection can get hold But in America, the world’s biggest pay- The routes out of this morass are unap- of broadcast TV shows both live and ar- 1
  7. 7. The Economist May 1st 2010 A special report on television 5 2 chived (the latter playing online with de- er is also available, for a fee, for streaming lightfully few advertisements), as well as a via games consoles to those who do not few programmes from pay-TV networks. have satellite dishes. That has brought These shows are arranged on websites that quite a few customers to the service. are attractive and easy to navigate. Best of In America a more ambitious project, all, this option is free. known as TV Everywhere , is under way. Pushed by Mr Bewkes, this would make Why pay? pay-TV channels like HBO available online How much video can viewers get hold of? to all who can prove that they subscribe to Bain & Company, a consulting rm, stud- them on television. TV Everywhere is a ied the American TV schedules from the bold scheme more of an aspiration, real- rst few months of 2009 and found that ly that demands co-operation from many just under half of the most popular shows media rms, television distributors and in- were available free online within a week ternet-service providers, all of whom have of being aired. Another 10% could be their own ideas about how to build an on- bought from services like iTunes, Apple’s line video portal. But at least it has a sound media store. No doubt all the others could business plan. be obtained from websites like The Pirate Here’s to a new business model When the rst TV Everywhere system Bay, which facilitate the exchange of copy- launched, in December 2009, a few righted content. from video-streaming websites altogether pay-TV networks caused surprise by run- The experience of other countries sug- to protect DVD sales. Earlier this year Via- ning the same number of advertisements gests that viewers will plump for some- com pulled some of its comedy shows as they do on television. That was an thing in between basic broadcast televi- from Hulu and put them on its own web- abrupt change from the be-gentle-to-the- sion and pay-TV. In Britain 17m sites, which carry more advertising. And customer ethos that guided the early move households receive Freeview, which o ers there is talk about turning Hulu into a online. It was also perfectly sensible. Al- about 50 channels without charge. In Italy freemium service, with some shows ac- though habitués of video-streaming web- the number of households receiving free cessible only to subscribers. sites scream whenever they see ad num- digital terrestrial television rose from 4.5m Experiments with charging are already bers increase, the average viewer seems to in 2007 to 11.6m in 2009, according to SNL in progress in Europe. RTL, a German free- put up with it. Quincy Smith, who advises Kagan, a research rm. Italians can use pre- to-air broadcaster owned by Bertelsmann, CBS, says the network has experimented paid cards to buy additional access to sport allows people to catch up free on many re- with running 14 to 17 online advertise- and lms if they like. In both countries the cent shows but charges them to view older ments in the course of a half-hour comedy rise of satellite TV has probably slowed as episodes. It also lets people pay to see on- show quite close to the 19 ads a viewer a result, although it has not stopped. line episodes of Gute Zeiten, Schlechte would expect to see on television. More It is one thing to retard the growth of Zeiten , a popular prime-time soap opera, people watched the online shows to the pay-TV, quite another to reverse it. In several days before they air on television. It end than the television ones. America, where nine out of every ten turns out that some people cannot wait to A big reason why online video is so households already pay for television, that nd out which handsome Berliner will popular is that it is so pleasant to use. would require people to drop a service to end up kissing which other handsome Ber- Hulu’s website is beautifully designed; which they have become accustomed. liner. About two-thirds of those who pay YouTube has a useful recommendation en- Still, some of them are tempted. In 2008 for shows order advance episodes. gine. By comparison, the video-on-de- Dan Frommer, who writes for the Business Canal Plus, a French pay-TV out t con- mand services o ered by most cable and Insider website, announced he was cancel- trolled by Vivendi, has responded to the satellite companies are primitive. Many ling his cable TV service and becoming a growth of online video and the advance of households have old set-top boxes, limit- Hulu household . a telecoms competitor by o ering lower ing e orts to build a better system. Even so, Television ventured beyond the box in prices. It launched two budget services, the user experience could be improved. search of viewers, which it found, and rev- CanalSat Initial and Canal Plus Week-End. For example, more advanced remote con- enues, which it did not. Indeed, its pockets Firms like Canal Plus know that few peo- trols might be used to search for shows. have been picked along the way. But TV ex- ple drop pay-TV once they have it and Traditional TV will never be as innovative ecutives know how to turn a plot. With they can always be upsold to more ex- as the internet, but it can close the gap. much greater alacrity than people in other pensive packages. Those who expected television to with- parts of the media industry, they have re- er when it encountered the internet greatly cognised the danger they are in and begun Gamekeepers turned poachers underestimated its ability to adapt. Some to construct a better online business mod- Perhaps the most important change is that have even conceded the ght. Earlier this el. They now think carefully about when cable and satellite distributors are devel- year Mr Frommer, who had given up and where they put their shows online. oping their own online video services. pay-TV and become a Hulu household , They usually leave a decent pause, general- Britain’s BSkyB is a pioneer. In 2006 the took out a subscription to cable television. ly between a few hours and a day, between year after YouTube appeared it launched The decision was not his alone, he ex- a show airing and appearing on the inter- a video download service, Sky by Broad- plained: his girlfriend wanted to watch net. Viewers who really want to see a pro- band . Now rebranded as Sky Player, it fashion shows. The desire to please others gramme must watch it on television. After streams 30 pay-TV channels to those who is one big reason why television has about a month many shows disappear subscribe to the satellite service. Sky Play- proved so resilient. 7
  8. 8. 6 A special report on television The Economist May 1st 2010 The lazy medium How people really watch television A MIDDLE-AGED couple sits in front of a TV set. He icks idly through a maga- zine, she holds a drink. An advertisement ndings are astonishing. There turns out to be an enormous gap between how people say they watch television and how they ac- live on a television set. Even in British homes with a Sky+ box, which allows for easy recording of programmes, almost 85% for Marks & Spencer, a British retailer, tually do. This gap contains clues to why of television shows are viewed at the time comes on. These are really good ads, de- television is so successful, and why so the broadcasters see t to air them. clares the woman. Her husband glances at many attempts to transform it through People want to watch ‘Pop Idol’ when the screen. Oh, I looked at that skirt, she technology have failed. everyone else is watching it, says Mike continues. It is a humdrum domestic In the past few years viewers have Darcey of BSkyB. If that is not possible, scene, one that could have been captured gained much more control over television. they watch it as soon as they can after- at any point in the past 50 years. But that in Video-cassette recorders have been re- wards. Some 60% of all shows recorded on itself is surprising. placed by DVD players and digital video re- Sky+ boxes are viewed within a day. Often The husband and wife in the video are corders (DVRs), both of which are easier to the delay is only a few minutes just playing back a programme that they have use. Cable and satellite rms o er a grow- enough to nish the washing up or to make captured on a digital video recorder ing number of videos on demand. TV has a phone call. For the most part, internet something they do often. They do not need gone online and become mobile. As a re- video is used in the same way. Matthias to watch advertisements. Indeed, they sult, viewers’ expectations have changed Büchs of RTLNow, a video-streaming web- claim never to do so. Whenever an ad dramatically. Katsuaki Suzuki of Fuji Tele- site, says online viewing of a programme comes on during a recorded programme, vision, Japan’s biggest broadcaster, says peaks within a day of that programme air- the husband says in an interview, he zips nobody feels they need to be at home to ing on TV. through it at 30 times the normal speed. catch the 9pm drama any more. Just outside Brighton, on England’s But a change in expectations is not quite Social animals south coast, Sarah Pearson watches people the same as a change in behaviour. Al- It may seem dated, but the image of the watch television. She has almost 100,000 though it is easier than ever to watch pro- family clustered around the living-room hours of video showing utterly banal grammes at a time and on a device of one’s set is an accurate depiction of how most scenes people channel-sur ng, ghting choosing, and people expect to be able to people watch television in most countries. over the remote control and napping. Her do so, nearly all TV is nonetheless watched In Latin America advertisers have learned to tout grown-up products on children’s channels like Nickelodeon and Discovery Kids, knowing that many parents will be watching with their o spring. Indeed, TV executives believe there is more demand for programmes that the whole family can watch together. Colleen Fahey Rush, head of research at MTV, puts this down to the rise of two-earner households. Because both the father and the mother are absent more often, their company is more valued. Today’s children actually like spending time with their parents, she explains. A big thing they like to do together is watch television. Like all social activities, television- watching demands compromise. People may have strong ideas about what they want to watch, but what they really want to do is watch together. So the great major- ity of them rst see what is on that is, what is being broadcast at that moment. Restricted choice makes it easier to agree on what to watch. If nothing appeals, they move on to the programmes stored in a DVR. On the very rare occasions when they nd nothing there, they will look for Only the content and the curtains have changed an on-demand video. 1
  9. 9. The Economist May 1st 2010 A special report on television 7 2 This helps explain one of the oddest into personal e-mail devices and home- The lure of the sofa 4 and most consistent ndings of television shopping outlets have fared no better. The research: that people seem unaware of Media consumption, minutes per day, 2008 killer application on television turns out to their own behaviour. In surveys they al- be television, says Richard Lindsay-Da- most always underestimate how much 0 50 100 150 200 250 300 350 400 vies, CEO of the Digital TV Group. television they watch, and greatly over- Television Some technology rms do get it , as state the extent to which they watch video the bloggers like to say. Yahoo is building in any other form (see chart 4). In particu- Radio internet widgets into the most advanced lar, they underestimate their consumption TV sets that appear as small icons at the Online Actual of live television. One of Ms Pearson’s sub- video Self-reported bottom of the screen. Click on a weather jects, a 27-year-old man, claimed to watch icon, for example, and a sidebar appears Source: Nielsen recorded television 90% of the time. In fact with the latest forecast. The widgets work he watched live TV 69% of the time. He was because they are unobtrusive and do not probably not so much bbing as misinter- they took people at their word. The past distract other viewers from watching their preting the question. When asked how he ten years have seen a parade of websites programmes. watched television, he gave an answer that and set-top boxes Apple TV, Boxee, Joost, Other technology out ts are learning to described his behaviour when he was Roku o ering a huge range of content and become more like television. YouTube, the alone, and thus did not have to compro- interactive features. All promised to deliv- original video-sharing website, became mise. But most of the time he watched er TV the way people (that is, individuals) famous for water-skiing squirrels and bed- with other people. really want it. Because they failed to take room musings. It still has plenty of those, E orts to improve the TV-watching ex- account of the social nature of television, but since November 2009 it has also had a perience have often gone wrong because not one has caught on. E orts to turn TVs TV shows section that is neatly divided 1 Mobile television is unlikely to An emergency screen take o A YOUNG man gazes intently at his mo- bile device, to which he is listening through earphones. He is so engrossed in her bedroom. If she is South Korean or Japanese, on the other hand, she is more likely to live in a high-rise at with only phones, they tend to do so brie y and er- ratically, so programmes often attract small audiences. In South Korea a 15-sec- his lm, his television show, his computer one set. She settles down in her tiny bed- ond advertisement on mobile television game or whatever he is watching that he room, pulls a mobile phone out of her costs less than one-tenth of what it would does not notice he is blocking the door of pocket and turns it on. The screen is small take to reach the same number of viewers the train. Other passengers glare at him. but adequate. You know the characters on broadcast television. Do it at home, counsels the bright yel- already, explains Younghee Yung of No- If mobile TV is not used enough to low poster on the Tokyo metro. kia, a phonemaker. make money from advertising, it is also In 2009 some 43% of Japan’s popula- When asked why people watch mo- not essential enough to persuade lots of tion watched TV on mobile phones, ac- bile television in their homes, Japanese people to pay. There is no business mod- cording to Impress R+D, a research rm. It and South Korean media executives tend el, says Kei Shimada of In nita, a Tokyo is the only country apart from South Ko- to make the same gesture. They clutch consultancy. South Korean broadcasters rea where the platform has become com- their mobile phone to their chests, signify- have threatened to stop paying for recep- monplace. But mobile television in Japan ing mine . The appeal of mobile televi- tion on the Seoul subway, which was is not all that mobile. When broadcasts sion is not so much that it is portable but wired for mobile broadcasts in 2005. Se- began in 2005, people were expected to that it is personal. When it proves impos- ong-Choon Lee of KT, a Korean telecoms use their toys to while away long com- sible to reach agreement with other televi- rm, says the company is wondering mutes by train or to kill time while waiting sion-watchers in a household, mobile TV whether to carry on with mobile televi- for the bus. Instead they mostly choose to is a reasonable fall-back option. It is also a sion at all. play with them at home. dismal business. Even before it catches on elsewhere, Imagine a teenage girl who wants to In both Japan and South Korea practi- mobile television is failing in the two watch an episode of her favourite soap cally everybody gets their mobile televi- countries where it seemed most likely to opera. The living-room television is being sion free. Phones come with receivers that succeed. The experience of Japan and monopolised by her father, who is watch- pick up digital broadcast signals, which South Korea suggests that people will ing sport. Her brother is using the comput- are usually sent in bursts to conserve bat- watch TV on tiny screens if they have to. er. What does she do? If she is an Ameri- tery life. The service was supposed to be But those countries also provide a remind- can, living in a reasonably a uent supported by advertising, but the prop is er that popularity does not always trans- household, she simply switches on an- weak. Although many Japanese and late into business success. Old-fashioned other television. There is probably one in South Koreans watch television on their TV wins again.
  10. 10. 8 A special report on television The Economist May 1st 2010 2 into genres, not unlike a video-on-demand recorded or watched on computers. But Who Wants to Be a Millionaire , a game menu from a cable or satellite company. In there is little to suggest that television is show. Every Tuesday evening it pulled in North America the website has Vevo, a growing a long tail of niche interests. 28.5m viewers. But the rest were not far be- channel o ering music videos. Another in- Quite the opposite, in fact. David Pol- hind. The 10th most popular show that sea- novation is youtube.com/disco, which track, head of research at CBS, says tech- son attracted 63% of Millionaire’s audi- plays one video after another. The aim, nology is helping hits to attract even bigger ence, or 18m viewers. Even the 100th most says Hunter Walker, its head of content, is audiences. Now that it is so easy to record popular show still got 30% of the top gure. to create more of a TV-like experience . TV programmes and to nd them online, By the 2008-09 season the also-rans had the big shows scheduled at peak viewing tumbled. The top show, American Idol , All together now time are freed from direct competition had 25.5m viewers. The 10th most popular Live television is not just the most popular with each other. Faced with a choice be- programme pulled in 55% of its audience way of watching video; it also in uences tween two programmes at 9pm that they and the 100th most popular show just 20%. the way people watch shows on all de- want to see, viewers will often watch one Relatively, the hits are becoming bigger. vices. The most popular live television pro- show live and play the other one back an Humdrum television thrived in a world grammes tend to be the most heavily re- hour later. So strong is the competition of scarcity when there was little to watch. corded and the most watched on from recorded shows that it has become As the number of channels multiplies, computers and mobile devices. In Febru- hard to break a new show in America at more households get DVRs and television ary EastEnders , a British soap, accounted 10pm. Indeed, thanks to technology and spreads to computers and mobile phones, for 12 of the 20 most played-back pro- the rise of multi-channel TV it is becoming there is always something on. You don’t grammes on iPlayer, the BBC’s online vid- ever harder to get away with repeats or me- have to watch the best of a bad choice, eo service. Technology slightly favours diocre programmes at any time of day. says Mr Carey of News Corporation. And programmes aimed at men: science ction In the 1999-2000 season the most popu- one kind of show is becoming more and and shows about cars are more likely to be lar thing on American broadcast TV was more dominant. 7 The killer app Television needs sport almost as much as sport needs television D URING a recent tour of ESPN’s Con- necticut headquarters, William Lamb became lost. The studio to which he was ing to Forbes magazine. Major League Base- ball is worth nearly as much. Both are so dependent on television that is di cult to a singing competition. All of which makes for a fun evening at the ground, no doubt, but the real audience for all this razzmatazz trying to lead your correspondent seemed imagine what would happen if the cam- is sitting at home. When looming elections to have disappeared. Perhaps it was on the eras were to be removed. caused worries about violence in 2009, the fourth oor. But what oor was Mr Lamb Even the English Premier League, which Indian Premier League simply decamped on? The building suddenly seemed unfa- earns more from ticket sales than any other to South Africa. miliar, even to somebody who had European football league, draws most of The deep recession of 2008-09 did little worked there since 1979. its revenues from TV (see chart 5). Thanks to slow this juggernaut. Many sports-rights That is how things are at ESPN. The En- largely to BskyB, broadcast revenues grew deals signed during the recession actually tertainment and Sports Programming Net- at a compound annual rate of 29% be- increased in value. In June 2009 Cristiano work, as it was originally known, is in a tween the 1991-92 season just before Divi- Ronaldo, a Portuguese footballer, was 1 perpetual state of growth and redevelop- sion One became the Premier League and ment. Its studios and o ces sprawl over 2007-08. The league is now worth £2 bil- Home comforts 5 100 acres and continue to expand. It is the lion ($3.5 billion). It is doubtful that the most envied out t in television, and one of clubs could sell so many scarves or charge English Premier League clubs’ revenues, £bn the most pro table. Disney, which owns so much for tickets without the marketing Broadcasting Commercial Matchday 80% of ESPN, does not break out its ac- boost provided by television. counts. But SNL Kagan reckons its main TV has even created sports categories. 2.0 channel turned over some $6.3 billion in ESPN was the moving force behind the X 2009, mostly from a liate fees paid by ca- Games, a showcase for competitions like 1.5 ble and satellite rms. ESPN also operates street skating and snowmobile jumping. 46 TV networks outside America. Not bad Cricket, once a staid sport, has been trans- 1.0 for an out t that started out lming the formed by the camera. Sony broadcasts Hartford Whalers ice-hockey team. the Indian Premier League, which plays a 0.5 The marriage between sport and televi- fast-scoring form of the game called Twen- sion has made both parties rich. The teams ty20. The league has cheerleaders, Ameri- that made up America’s National Football can-style team names (the Deccan Char- 0 2001 02 03 04 05 06 07 08 09* 10† League, the world’s wealthiest, brought in gers, the Kolkata Knight Riders) and †Forecast Source: Deloitte *Estimate $7.6 billion in the 2008-09 season, accord- pre-game shows, including IPL Rockstar ,
  11. 11. The Economist May 1st 2010 A special report on television 9 2 bought by Real Madrid for £80m, a record sum at a time when Spain’s unemploy- ment rate was 18%. The second- and third- highest transfer deals in history were done in the same year. Yet these huge sums merely re ect the true value of players, and of sport itself. Television needs sport almost as much as sport needs television. Casey Wasserman, a sport agent, cites three reasons why media rms pay so much for the stu . First, sports rights are unique. There are only a certain number of teams in the Premier League or the Nation- al Football League, and they play each oth- er only a certain number of times. Second, sport is nearly always watched live on tele- vision. There is little danger that people will record games and then fast-forward Hey, I can see my salary! through the advertisements. Third, ratings are almost guaranteed. Unlike scripted daily media diet that broadcasters and video to about 1m customers. Although fare, it is fairly easy to predict how many pay-TV networks can a ord to experiment many make do with free content, about people will tune in for a match. with other platforms without fear of los- 40% of them pay 2 ($2.70) a week to re- Changes in the broader media market ing their audience. In 2002 Major League ceive subscription channels, including Sky are reinforcing these advantages. As televi- Baseball launched an online video service. Sport. And about a third of those users pay sion has splintered into more and more Fans can pay to watch four games at once, extra to receive even more football. A sub- channels, the average audience for shows replaying pitches and updating their fanta- scription to four channels carrying Serie A has dropped. It has become so hard to sy teams as they wish. games costs 4 a day. draw big audiences that advertisers are ESPN has found another way of mak- When it is handled by experienced prepared to pay more to reach them. Sport ing online video pay. It charges internet- rms that specialise in it, televised sport provides a growing proportion of such service providers for access to its website, can be a powerful money-making mach- events. And it reaches a particularly valu- ESPN3. The ISPs pass on the cost to their ine. To others it can be dangerous. Several able, and elusive, group. subscribers as though they were cable or rms have been struck by what econo- satellite distributors. The website, which mists call the winner’s curse after paying Those elusive young men o ers video of everything from basketball too much for sport rights. In the past ten Because they spend so much time at work, to the world Monopoly championship, years ITV Digital, Kirch Media and Setanta young men tend to watch less television reaches 50m American households. Dur- Sports have gone into administration. than most people. Unless they are into ing live games it runs as many advertise- NBC, an American broadcaster, said even sport, that is. In 2008 ESPN trailed avid fans ments as a television network. ESPN3 may before the 2010 Winter Olympics began around the city of Indianapolis to see how be drawing eyeballs away from TV. But, as that it would lose money on them. they fed their sport addictions. The an- Christine Driessen, ESPN’s chief nancial On any given Sunday, the saying goes, it swer: at length, at any time of day and in o cer, puts it, it is better to cannibalise is possible for any team in the National every way possible. The average sport fan your own TV business than to stand by Football League to beat any other team. consumed almost ten hours of media in an while another company does so. The business of televised sport is less uid. average day, against just over ve hours for Sport is also an important exception to It more resembles Italy’s Serie A or the other young men. They spent more time the rule that mobile television does not Scottish football league, both of which doing everything listening to the radio, make money. One out t that claims to be have a few habitual winners. Sport has al- sur ng the web and even reading newspa- making a pro t is 3 Italia, which delivers lowed companies like BSkyB, Canal Plus pers. But, especially, they watched more and ESPN to build such strong businesses television (see chart 6). that the main threat to them comes from Watching with a passion 6 None of those worries about the rise of politicians and quangos. online video and the danger that pay-TV Media consumption, minutes per day In America cable and satellite rms subscribers will cut the cord applies to may be obliged to o er their channels to sport fans. In polls conducted by TNS, 0 100 200 300 400 consumers à la carte, which would allow some 30% of people, asked to rate their in- Television people to drop sport if they wished. Of- terest in sport on a ten-point scale, choose com, Britain’s media regulator, is trying to a position between eight and ten. Many of Web force BSkyB to sell its games to other dis- the avid fans are young men precisely the tributors for a xed fee. French politicians group that might be most tempted by vid- Radio may try to weaken Canal Plus’s grip over eo streaming, illegal le-sharing and other football. But do not underestimate the Newspaper/ Young men, 2005 things of that sort. Sport thus props up the Magazines Avid sports fans, 2008 rms’ ability to make money from sport entire TV industry. even in a more regulated market. Mr Ron- Source: Council for Research Excellence So central is television to sport fans’ aldo’s record may not stand for long. 7
  12. 12. 10 A special report on television The Economist May 1st 2010 Who needs it? Three-dimensional television is coming, whether you want it or not P EERING through special glasses at a ste- reoscopic photograph in 1859, Oliver Wendell Holmes experienced a surprise gan in the mid-1990s, the proportion of American homes with an HDTV set stood at just 11% in 2004. Then it exploded, reach- This year Hollywood is releasing a rivulet of about 20 lms to cinemas. Even if a TV network bought the rights to every mod- such as no painting ever produced . The il- ing 49% in 2009. Forrester, a research rm, ern 3-D lm released until the end of this lusion of depth was extraordinary. The reckons that by 2014 some 71% of American year it would still end up with less than a branches of a tree reached towards him as households will have at least one high-de- month’s-worth of prime-time viewing. though to scratch his eyes out. 3-D photo- nition television. Other content, including World Cup foot- graphs were so realistic, he thought, that The switch to high-de nition was ex- ball games, has been promised, but there is whole libraries of them could take the pensive for everybody. Studios had to be not nearly enough to ll the channels that place of museums. Who would want to widened and smartened up to withstand are popping up. see an object when it could be reproduced the camera’s sharper eye. Consumers had And 3-D content can vary drastically in so vividly? It was a new epoch in the his- to shell out roughly twice as much on tele- appearance. Avatar , a science- ction tory of human progress . visions. By contrast, 3-D technology is a lm that has scooped up $2.7 billion in box- A little more than a century and a half bargain. Although shooting an action lm o ce sales, uses the additional depth pro- later the rst three-dimensional televi- in three dimensions costs more because of vided by the third dimension in a re ned, sions are appearing in stores. Some of the higher price of computer-generated subtle way. Not so My Bloody Valentine them come with a free Blu-ray disc of imagery, shooting a tennis match or a com- 3D , which ramps it up for shock value. Monsters v Aliens , which serves as a re- edy is no more expensive. It costs only a lit- Televised sport, with its abrupt cuts from minder that the path of human progress is tle more to build an active 3-D set than a wide to tight shots, is a di erent visual ex- not always predictable. Yet TV pro- high-end HDTV set, says Woo Hyun Paik of perience again. Ad breaks may prove even gramme-makers and media rms reckon LG Electronics. There is no need for a spe- more disorienting as they switch between that the technology will prove epochal cial set-top box. And consumers in focus two and three dimensions. nonetheless. BSkyB, Canal Plus, Discovery groups say they are prepared to pay more Communications and ESPN have an- for 3-D. So what’s not to like? Pass the shades nounced plans for 3-D channels. Holly- The content, for one thing. A trickle of The biggest question-mark is over whether wood has shown that people will pay ex- three-dimensional lms appeared in 2009. consumers will want to don what looks tra for 3-D lms in cinemas. And the early like a pair of lightly tinted sunglasses be- adopters are responding like latter-day Oli- fore opping down in front of the TV set. ver Wendell Holmeses. Those glasses may enhance the viewing Three-dimensional TVs work by pro- experience, but they would not help with jecting two images lmed from slightly dif- checking e-mails, icking through maga- ferent angles onto the screen; the images zines and all the other things that people are then directed to the correct eye to pro- like to do while watching television. duce the 3-D e ect. At present there are two Moreover, the shutter glasses that come main ways of doing this. An active TV set with active 3-D TVs are expensive. They ashes images intended for the left and will sell for up to $150 a pair at rst, al- right eye onto the screen in quick succes- though the price should fall over time. Tele- sion. The set is synchronised with battery- vision manufacturers expect to provide a powered glasses that alternately darken couple of free pairs with each set, but this is each lens, so each eye sees only the image it not much good for the family that wants to is supposed to see. Passive sets display sit and watch Up together. the two images on alternate lines of the One cable executive has compared screen, polarising each line in a di erent three-dimensional television to a choco- direction. They are viewed through glasses late sundae not something you want ev- that allow the left eye to see only one im- ery day. Je rey Katzenberg, the head of age and the right eye to see only the other DreamWorks Animation, reckons that al- one. Both kinds of TV set work normally though 3-D pictures will eventually be- with two-dimensional content. come ubiquitous in cinemas they will re- Manufacturers and media companies main an occasional treat in the home. alike hope that 3-D television will follow You’re not going to sit down and watch the path set by high-de nition TV. That the BBC world news in 3-D, he explains. technology, which delivers a crisper pic- So what warrants the third dimension? ture especially noticeable on a big set, took The obvious answer is lms. For many, an o slowly at rst. Although broadcasts be- 3-D before it was respectable evening spent at home watching a lm is 1
  13. 13. The Economist May 1st 2010 A special report on television 11 2 already a special experience with its own But the thing that will really drive peo- Viewers at home are able to see for the rst rituals. People pour themselves a glass of ple to buy 3-D sets, Mr Katzenberg and oth- time where the ball will come down and wine, draw the curtains and settle down ers agree, is sport. If the measure of a new which player is in the best position to on the sofa. They can surely put on a pair of visual technology is not that it looks cool tackle it. Those who have experimented glasses to make it even more special. 3-D but that it allows viewers to see things they with lming sport in three dimensions say computer games should appeal, too. Video have never seen before, sport is the clear the e ect is so compelling that they need games are already absorbing; the technol- winner. Watching football in three dimen- fewer cameras (which are placed lower ogy makes them more so. Lucky Sony, sions is a revelation. A crush of players down, near the touchline) and many fewer which makes not only lms and 3-D cam- jostling for position as a ball sails through cuts. Once again, sport may give television era systems but also games consoles. the air suddenly becomes intelligible. a new dimension. 7 Here, there and everywhere Television is spreading in new directions T HE Price Is Right was looking a bit long in the tooth when Fremantle Media bought it in 1996. The game show, ger simply to make shows but to create branded entertainment franchises made up of many products of which television multi-platform franchise a kind of His- panic answer to Hannah Montana , Dis- ney’s tween pop colossus. The show ap- which invites contestants to come on shows are merely the most important. And peared with an entourage of Facebook and down and guess the value of various con- promoters no longer wait to see whether a MySpace pages. There are websites in sumer goods, had rst appeared on televi- programme becomes popular before turn- Spanish, Portuguese and, for American sion 40 years earlier. Since 1972 it had been ing it into a merchandising machine. Latinas, Spanglish (a sample: When he’s hosted by one man, Bob Barker. Its audi- A good example is Isa TKM , a Vene- not mirándose en el espejo, Rey pasa el ence was aged. When Mr Barker an- zuelan telenovela about a schoolgirl ob- tiempo working out ). Fans can buy mo- nounced his retirement, one talk-show sessed with a dishy musician. The show, bile-phone ringtones and videos. The cast host joked that when he started watching made by Viacom and Sony, became a hit of Isa has launched an album which The Price Is Right he knew he was getting soon after it was launched in Latin Ameri- topped the music charts in three countries. too old to keep working. ca in 2008. It was subsequently sold to tele- These days you can hardly watch a TV These days the show is a multimedia vision networks in more than 50 countries. show aimed at young people without be- phenomenon. It has been turned into com- In view of its growing international popu- ing invited to visit a website. Find out what puter games and slot machines. Perhaps larity, actors from Argentina, Colombia music is playing in the background! See inevitably, there is an iPhone app, which and Mexico have been drafted for a second some footage that did not make it into the has been bought more than half a million series, Isa TK+ . nal version! Discuss the show with other times. Bally’s, a casino in Las Vegas, puts on From the beginning Isa has been a fans! And, of course, see some more adver- 1 a theatrical version of the competition ve days a week. Now with a new host, the show is chugging along on daytime televi- sion, not doing at all badly. Once people fall in love with a brand, they want to interact with it in all sorts of ways, says Tony Cohen, the head of Fre- mantle Media. This would be true even without prodding from media rms. Win- ter Sonata , a South Korean soap opera, sent honeymooners ocking to the places where it had been lmed. There are plenty of uno cial tours of famous TV locations in New York and Los Angeles. Media rms have learned to capture more of this de- mand and pro t from it. About one-third of Fremantle’s revenues now come from consumer goods and other spin-o s. Popular TV shows routinely spawn DVDs, toys, websites, computer games, board games and comics. Germany’s Gute Zeiten, Schlechte Zeiten soap has an eveningwear collection. Indeed, the point of the television business is no lon- Bob Barker builds the brand
  14. 14. 12 A special report on television The Economist May 1st 2010 2 tisements. The websites of big-budget tition for channels launched by interna- Plenty of growth left 7 American dramas are dense and well de- tional media rms comes from local out- signed. The shrewdest producers have re- Multichannel-TV revenue forecasts; 2007=100 ts. Knowledgeable, well connected and alised that this profusion of spin-o s Eastern Latin North often protected by foreign-ownership Europe America America opens up a new approach to storytelling. Western Europe rules, they have an advantage over the Asia One of the buzzwords in Hollywood 250 new entrants. Some, like the BBC, have a these days is transmedia . It refers to a guaranteed source of income. Others have kind of storytelling that goes beyond both exploited historical and linguistic connec- a single platform and a single narrative. 200 tions overseas. France’s Canal Plus has a Big-budget TV shows like Lost and He- channel in Vietnam; Brazil’s Globo is doing roes pioneered the use of web episodes to 150 well in Angola, like Brazil a former Portu- esh out minor characters. The Heroes guese colony. website hosts cartoons, subsequently A few have even sneaked hits into printed and bound into graphic novels, 100 America. The Spanish-language telenove- that go o on tangents to the main story. las that Mexico’s Televisa supplies to Uni- 2007 08 09 10 11 12 13 14 Such extensions create deeper, more im- vision frequently draw bigger prime-time Source: SNL Kagan mersive experiences for fans. They also al- audiences than English-language shows. low the main story, on television, to be Europeans dominate the worldwide reali- kept fairly uncluttered or at least less clut- and India needs cars and hair-care pro- ty-TV business. Fremantle Media, which is tered than it might have become other- ducts, and television advertising for such owned by Bertelsmann, produces Ameri- wise: by its third or fourth season Lost things is growing. Sir Martin Sorrell, head can Idol . Endemol, a Netherlands-based was quite complicated enough. of WPP, a large global ad agency, says the rm, churns out the kind of reality shows It is not yet clear that transmedia story- rise of TV advertising outside North Amer- that Americans love to complain about telling is pro table in its own right. Its val- ica and western Europe more than com- and love to watch. But these are localised ue is not measured in advertising dollars pensates for the drift to the internet of mar- versions of imported formats. Most Amer- but in audience engagement. Web epi- keting expenditure in those regions. But icans probably do not realise that Ameri- sodes keep viewers interested during the the best thing about middle-class consum- can Idol or Dancing with the Stars origi- summer when broadcast shows go o -air. ers in emerging markets, from the perspec- nated in Britain. Only Hollywood routine- They especially please dedicated fans, tive of the international media rms, is ly exports its shows unaltered. who can evangelise for the show. The fans that they are increasingly prepared to pay might be few in number but they are ex- for television. An international beauty contest tremely vocal, says Nathan May eld of In America nine out of ten homes with To see why the big studios are so successful Hoodlum, an Australian rm that has televisions already subscribe to multi- at selling overseas, conduct a test. Get hold created online content for Lost and Em- channel TV, leaving little room for growth. of a copy of a drama made by Hollywood merdale , a British soap opera. In Asia and eastern Europe the proportion for American broadcast TV CSI , Glee is less than half, and in Latin America it is or Heroes will do ne and, at a random Have content, will travel less than a quarter. SNL Kagan reckons that moment, press the pause button. What do When a TV show goes o the air for the last pay-TV revenues outside America and you see? Handsome actors, no doubt. But time, the online community that had gath- western Europe will rise steeply in the next also a well-composed shot that resembles ered around it tends to vanish. The games few years (see chart 7). Just as important, a photograph, with the actors well posi- and the CDs stop selling, too. Television consumers in countries such as India are tioned within the frame. The shot will be brings audiences to all these other activi- acquiring second and third television sets. well lit, too. Now do the same for a show ties and gives them life. It is also an excel- This provides an opening for teen-oriented made by a foreign broadcaster. The result? lent vehicle for carrying stories and charac- fare, which otherwise might not get a Probably less impressive. ters to other countries, where the whole look-in. If you have only one television in Finely crafted television like this is ex- merchandise-rich ecosystem can get going the house, the patriarch controls it, says pensive. It costs more than $3m for an hour all over again. Indeed, it is almost the only Philippe Dauman of Viacom. of drama that is good enough to pass mus- means of doing so. Overseas markets are the healthiest, ter on an American broadcast network. The internet is not multilingual yet, fastest-growing part of the television busi- The visual acuity of Hollywood’s best notes Sir Howard Stringer, Sony’s boss. ness. Discovery Communications, which shows is a big reason why they can com- Television and lm travel much better. ventured abroad early, now derives a third pete against home-grown products that are Shows and movies can be dubbed and of its revenues from outside America. It more culturally relevant. Their advantage subtitled and, in any case, it is not clear helps that Discovery produces a lot of doc- is growing as households across the world that The Girls Next Door or Transform- umentaries and natural-history shows: invest in bigger, sharper televisions. And ers: Rise of the Machines are greatly im- programmes with voice-overs can be read- Hollywood is less ashamed of its role as proved by explanation. These days Holly- ied for export simply by recording a new global storyteller than it used to be. wood depends on income from cinemas narration. Fox International Channels, A few years ago there was much talk of outside America. Sony’s lms earned $1.5 News Corporation’s overseas arm, turned localising television shows. Stung by char- billion at the American box o ce in 2009 over more than $1 billion in the scal year ges of cultural imperialism, which were but made a record $2.1 billion outside the 2008-09. Five years earlier it had brought particularly loud in France, the big media country. It is the same with television. in less than $200m. conglomerates encouraged their foreign The rising middle class in Brazil, China In many countries the strongest compe- subsidiaries to develop their own pro- 1

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