Can TV Survive Long-Term?

I believe it can.  However, the current TV business model requires progressive change.

PricewaterhouseCoopers recently released their 2009 -2013 Global Entertainment and Media Outlook.  The report shows no signs of the shift to digital advertising as slowing, yet PWC estimates that overall ad spending in 2013 will be lower than 2008.  How can this possibly happen when the the amount of advertising channels continues to increase at an alarming rate?

Here is why:

• Fragmentation leads to more supply
• More supply and volume results in lower ad-rates
• Up until 2008, the trend was masked by strong markets

The Global Entertainment and Media Outlook report stresses that the shift to digital is not a new trend.  It has simply become more apparent during tough economic times.  Traditional media suffers from a lack of accountability.

“More than 77% of traditional advertising agencies are increasing the amount of digital in their budgets by 1% to 29%. And over 10% are upping online budgets by 30% or more.” -eMarketer

“The economic crisis will accelerate the shift of focus and importance from traditional media to digital media.” -SoDA

“The combination of accountability, convergence and the infusion of digital media into every facet of life makes the future look bright for marketers making the move to digital.” -Ad Media Partners

As the demand for traditional advertising declines, CPM rates drop and television becomes less profitable.  Will the Web save TV?  Great insights on the subject from a recent Bloomberg article – Loyal ‘Simpsons’ Fans Fetch Higher Ad Rates on Web.  From the article:

“Marketers, who are now considering commitments for the 2009-2010 TV season, are willing to pay more because TV.com and Hulu.com, owned by investors including News Corp., NBC and Walt Disney Co., provide committed viewers who actively seek out shows. There are fewer commercials, and consumers are twice as likely to recall Web ads.”