Back in the day, this New Yorker cartoon had pride of place in my then boss, Sameer Nair's room.
Here's where the irony lay. We were hard driving, fast talking Newscorp people. The cowboy wisdom we were meant to practice was 'Shoot, Aim, Draw'. This wasn't the way we did things.
Over a dozen years later, it seems to me, the entire advertising-funded television industry is still living in the 'Shoot, Aim, Draw' world. The industry needs to stop and think. About where it is, how it got here, and where it ought to go next.
1. Every calendar quarter produces growth in advertising inventory consumption. The number of brands vying for the consumers' attention is growing constantly. As various product categories mature, they begin to segment. Each new segment must be addressed with variants or new offerings and promoted to its unique audience slice. The addition of genres, languages and dialects creates new opportunities for addressing hitherto untapped segments. We have been a virtuous cycle of this socioeconomic megatrend almost from the start of the satellite TV revolution in India, back in the early 1990s. Today, it powers on in the form of an endless appetite for TV commercial time.
2. The consumer value of every second of advertising time is falling. The sheer volume is certainly growing but the number of claimants for the viewer's attention is growing too. To use a media buyer/seller's vocabulary, the number of commercial breaks that deliver a 1 rating are vanishing faster than dry ice on a Delhi summer day. This is as you should expect it to be. Each additional second of commercial break you force upon the viewer provides incentive to zap away from your channel. While the initial audience loss may be negligible, it escalates exponentially.
3. Media buyers are responding rationally by forcing down the price they are prepared to pay for every second of commercial time. This creates a double jeopardy for TV advertising sales people. On one hand, their price positions keep falling, on the other, they are forced to increase inventories even further, even at the real risk of losing even more viewers.
4. Alternatives to linear TV are on a tear. First it was YouTube. Then it was Facebook video with WhatsApp video for company. Finally, Hotstar, Voot, Zee5, Netflix, Prime Video and their numerous smaller cousins stampeded into the viewer's ken and comprehensively disrupted - scratch that - shattered the long, and undoubtedly prosperous reign of exclusivity that broadcast TV had enjoyed. Not only was the nuisance of frequent and unpredictable commercial breaks substantially mitigated, consumers had the option of paying the content creator directly and enjoying their favourite shows ad-free. At what point must the broadcast industry sit up and take notice? A story datelined May 24, 2018 featuring Hotstar and Akamai in its cast of characters may suffice. As the Akamai.com site reported it, "The match between Sunrisers Hyderabad and Chennai Super Kings attracted an unprecedented 8.26 million peak concurrent viewers tuning in simultaneously to witness the nail-biting finish, thereby breaking all previous records in online video streaming across the world. Over four hours, more than 26 million viewers tuned into Hotstar to watch the match". Now, as ratings go, this is still a modest volume of viewership. India's top sports channel produced 886 million impressions (30-minute equivalent) last week, or over 120 million every day. Assuming that the 26 million viewers spent 20 minutes apiece, you get about 18 million Hotstar impressions on May 22 night. You will sit up and take notice if I added that this volume of viewing on a single night is larger than what the English Movies genre generates every week.
5. The bellwether indicator in the world of TV advertising, the US Network Upfronts that concluded last week, produced revenue commitments ahead of $40 billion for the 10th year in a row, on steadily dropping ratings. What is the secret behind the gravity defying act that ABC, CBS, Fox and NBC pull off year after year? A willingness to spot opportunity where feebler minds might fold and walk. In essence it is simply this - when audiences become advertising averse, give them less of it but charge more for whatever is left. A small example should give you a flavour of how the networks are adapting. Fox has premiered the 'JAZ' pod. A pod is simply the term US networks call a commercial break. 'JAZ' is an acronym of 'Just A and Z', meaning a pod with exactly two ads in it, the 'A' and the 'Z'. Shrinking a pod down to a minute or less massively reduces attrition in the break given that viewers don't want to risk losing continuity. This is tantamount to a manifold increase in advertiser value. Remember that, unlike here, US broadcasters only price on program ratings, not break ratings. If the show doesn't lose viewership momentum, the JAZ pod becomes super-premium real estate.
6. US broadcasters are underscoring their enduring 'reach' advantage over all other forms of audiovisual content. Excepting event-based viewing: a big IPL night, Felix Baumgartner leaping out of Red Bull Stratos at 39,000 metres, OTT platforms are all about on-demand video. Viewers don't have to set reminders to watch the next episode of their favourite show. It streams when they ask it to. Linear TV gets audiences in front of the screen together. Advertisers need their campaigns to generate conversations. A family watching their shared TV in the living room or friends enjoying a sports event at a restaurant or pub reacts simultaneously to what they see and a discussion is often generated. This reinforces the message and bumps up the probability of generating word-of-mouth, an advertiser's holy grail. This is a permanent advantage. While opportunities of group viewing of linear TV will certainly diminish over time, it will only make them vastly more valuable for advertisers.
7. All is not lost for advertising funded television in India but time is certainly short. Malcolm Gladwell popularized the 'tipping point', that moment when a phenomenon or behaviour previously believed to be localized explodes into popular consciousness. Except for stubborn Luddites, it is impossible to pretend that nothing has changed in the world of audiovisual entertainment. If broadcast TV executives don't start to reorient themselves, they may find themselves at the edge of a precipice, and there is no timetable for this.
A few years ago, the TRAI appeared to be on a warpath to enforce rules related to commercial time on television channels. Broadcasters were up in arms and the News Broadcasters' Association even filed a suit questioning the regulator's locus standi in attempting to enforce what was, after all, a condition of the uplink/downlink license that they all operated under. Just for a change, I had caught myself thinking then, the regulator was actually doing something entirely sensible, entirely in the interests of the long-term financial health of the industry. And in typically, and endemically, myopic manner, the industry was waging war against something that should have been welcomed enthusiastically.
In the end, it comes down to whether the advertising-funded TV industry in India is going to keep blundering on at high speed towards a perilous future.
Or whether it is willing to stop. And think.
The author is the former CEO of India TV and former Ad Sales Head of Star India.