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Tuesday, September 2, 2014

Keeping up with Changes in the Media Landscape

Posted by Rainier Sky on March 29, 2011

A big part of being a good marketer is keeping up with the evolution of media. All the buzz about social networking is leading some entrepreneurs to think they can achieve success without the use of traditional media. Its heyday may be over, but marketers should be too quick to dismiss it when developing their marketing plan. They key is to align the message, medium and audience, which you cannot do unless you keep up with the ongoing changes in the media landscape.

So, here’s a reminder of some of the changes we have seen lately.

Newspaper

Kevin reading newspaper

I washed a lot of ink off my hands back in the day.

Newspaper print circulation has been in decline for quite some time, but that’s not be the whole story. The Newspaper Association of America has been releasing studies for several years now arguing that readership is actually growing in some markets if you combine those who read a newspaper in print combined with those who read it online. Now to temper that enthusiasm, a recent Scarborough Research studycommissioned by the Poynter Institute revealed that – even with the combined numbers – more newspapers are losing audience than gaining it. While the numbers vary for each newspaper, there remains no doubt about the increasing significance of online readers. As a result, publishers are experimenting by varying content access between free and paid editions as well as new formats that improve readability on mobile devices.

Changing Editorial Content and Formats

Consider the Associated Press storyabout USA Today’s efforts to adapt to the increasing importance of its online readers. Ironically I found the article in the Seattle Post-Intelligencer, itself a former daily newspaper that morphed into a blog. USA Today has always positioned itself as friendly to an audience addicted to visual stimulation, but its now coming out with new formats for tablets and smartphones and the content will shift towards subjects more friendly to a digital audience (more about mobile devices later). According to the article, we should see more investigative journalism in USA Today along with more “…travel tips, gadget reviews, sports features, financial advice and lifestyle recommendations.” As an industry leader, we’ll likely see many local newspapers follow suit which could further reduce the amount advertising and publicity opportunities for some business sectors.

Online Subscriptions

Taking an alternative route, the New York Times announced earlier this year that it would begin charging readers for frequent access to its online edition. The entire industry is nervously watching as the change will undoubtedly have a dramatic effect on its readership. The Pew Research Center’s annual report on news media indicates that only a dozen or so local newspapers have tried charging for online subscriptions and their experiments have miserably failed (only one percent of readers were willing to pay). The report goes on to suggest, however, that the numbers may rise ( up to 23 percent) if readers believe the future of the newspaper is at risk. I would not be surprised to see newspaper demographics shift to audiences with even higher education and income if subscription does become the norm.

Radio

USA Today ran a story last week declaring its “surprise” that the number of radio listeners is on the rise. Citing the latest annual study from media and marketing research company Arbitron, the article notes that the number of radio listeners age 12 and older rose by 2.1 million or 4.9 percent. The biggest gains were among adults age 18-34, but there are also gains among teens age 12-17 with 92 percent reporting that they tune in at least once every week. Teenagers are not yet giving up their infatuation with the Internet, video games and other distractions, but they may be rediscovering that radio programming offers them local news and information they cannot get elsewhere. The other exciting part of this story is the continuing growth of Hispanic radio programming which captured nearly a quarter of the total increase.

Subsidies Help Boost Satellite Radio Subscriptions

AudioVox XM onyX XM Radio Receiver

The AudioVox XM onyX XM Radio Receiver

Satellite radio remains strong thanks to some indirect help from the government. Subscriptions to satellite radio are closely tied to auto sales, so the government stimulus for the auto industry also helped Sirius XM limit its subscriber losses to the first half of 2009. One might expect the growth to be short-lived, but Satellite Radio Playground reports that the company continued its growth thanks to stronger than expected vehicle sales in February 2011. Satellite radio offers one of the most cost-effective ways to reach a nationwide audience with targeted programming and it looks like it will continue to be viable for some time to come.

Increasing Competition from Streaming Services

Meanwhile, both terrestrial and satellite radio face a growing threat from customizable streaming music services, such as MOG, Pandora, Slacker and others. The number of subscribers are projected to grow substantially in the next few years. A new reportfrom ABI Research. projects a compound annual growth rate of nearly 95 percent, much of it focused in the Asia-Pacific region where the concentration of smartphones and other mobile devices is fueling much of the growth. Such services will likely affect radio audiences, but we may not see the full here in the United States for several years.

Remote Areas  Suffer Loss of Public Broadcast Funding

No discussion of changes in radio can overlook the debate over funding for public broadcasting. While it may not offer traditional advertising opportunities, sponsorships of both public radio and television programming present unique branding opportunities for organizations targeting highly educated, upper income audiences. A lack of federal funding could cause some public broadcasters to sweeten their sponsorship deals. Small stations serving remote areas of the country will be hit hardest because public funding typically accounts for a greater share of overall revenues.

Television

The biggest change to television this decade has been the shift to digital broadcasting mandated by the Federal Communications Commission (FCC) in an effort to make better use of the increasingly crowded broadcast spectrum. The digital television (DTV) transition initially fueled an increase in the number of cable and satellite subscribers, but the rate slowed and eventually started to drop. By some reports, Comcast lost one million subscribers during the past two years. Numerous sources were quick to attribute the loss of cable and satellite subscribers to a trend categorically labeled “cable cutters” or individuals fed up by high prices and poor service. They also point to evidence from antenna manufacturers who reported sales that went through the roof (sorry, bad pun) immediately after the transition. More recently a New York Times story from this past December cited numbers from Antennas Direct, a maker of TV antennas in St. Louis, that expected its 2010 sales to rise by 115,000 units. Some sales can probably be attributed to a spate of recent conflicts that caused some cable and satellite providers to temporarily drop local network programming. The latest reports suggest the cable and satellite subscriptions losses many be slowing,  but local broadcasters are still adding additional OTA programming while come cable companies test lower cost subscription packages.

A Dilemma for Local Broadcasters

The change to DTV was only the first step in an effort to redistribute the limited wireless spectrum. What remains is an ongoing battle between the National Association of Broadcasters (NAB) and the Cellular Telephone Industry Association (CTIA) over reallocation of spectrum currently controlled by broadcasters. The debate even has some calling for cessation of all over-the-air (OTA) broadcasts. While unlikely, the suggestions presents a dilemma for local broadcasters who receive income for retransmission of their content by cable and satellite services. Cable and satellite can also be segmented for distribution to smaller geographic areas making it more efficient for small advertisers. On the other hand, local broadcasters don’t have to share OTA advertising revenue so it can be more profitable.

More options for OTA Viewers

As it stands now, homes in most urban areas receive over-the-air (OTA) signals from roughly a dozen or more local television stations. While areas of dense population may suffer poor reception due to tall buildings and other obstacles, viewers in surrounding areas – weather permitting – enjoy better pictures than they can get from cable or satellite.

This-TV Seattle

This-TV Seattle offers movies from MGM

Broadcast Engineering magazine estimated back in October 2008 that only 15 percent of Americans would rely entirely on local OTA signals, and Nielsen Television Audience Reports recently revealedthat the number shrank to nine percent in 2010. Not surprising considering the lack of programming, yet local broadcasters recognize its potential and new broadcast-only networks are capitalizing on their interest by ofering new programming options. MGM Studios and Weigel Broadcasting launched This TVin 2010 airing movies from the studio’s vast collection on stations in various markets nationwide. The two companies partnered again to launch Me-TVor Memorable Television this past December airing classic television shows. Then Tribune Broadcasting launched Antenna TV in January featuring its own collection of classic television series and movies.

The current audience for OTA programming is largely low-income, but that could be changing. A study by Horowitz Associatesshowed that 39 percent of current broadband users watch television online at some point during the week with as many as one quarter watching it daily. It should come as no surprise that younger viewers are leading the trend with 37 percent of 18-34 year olds watching online regularly and 44 percent of teens age 15 to 17 watching daily. The Horowitz study even goes so far as to suggests that roughly seven percent of respondents age 18-34 with cable or satellite may soon cancel their subscriptions, and an additional 19 percent would join them if they could watch their favorite shows.

Streaming Movie Services Grow

Hulu Plus Premium Service

Hulu Plus Premium Serice

 While the numbers look good for OTA programming, a closer look at consumers who cut cable suggests that most are turning to a combination of OTA and online television supplemented by a growing selection from online services like Netflix, Hulu and others. Netflix is the clear leader in the group delivering 61 percent of all movies legally streamed online according to one recent study by the NPD Group, and it is now reportedto be in negotiations for the purchase of original content competing directly with broadcast and cable networks. The shot across the bow signaled the entire television industry that Netflix will not sit by and wait for them to make their content available. Regardless of whether Netflix lands the bid, the intent signals the coming of a new way for consumers to access content that excludes advertisers all together. Amazon.com upped the ante recently in its bid to compete with Netflix by supplementing its popular Prime service subscription with free movies streamed online. Prime subscriptions cost just $79 annually, but so far Amazon has yet to match Netflix’ vast collection of content. Meanwhile, Apple holds just four percent of the total streaming market despite its many attemptsto repeat its success with music. Now Facebook is testing the waters and announced today that it would continue its experiment to stream content from Warner Brothers via its popular platform.

Meanwhile, cable other Internet Service Providers (ISPs) are imposing data limits, eliminating unlimited plans all together and promoting an initiative called “TV Everywhere” that requires viewers to have a subscription to stream programming controlled by the cable networks. Alternative distribution services like the TV Everywhere concept offered by Epix have reportedlyyet to fully take hold, but someone will eventually tap the market demand for mobile ala carte entertainment. The battle with ISPs is drawing the FCC into the fold by suggesting new efforts to keep the Internet free and open for all content providers.

More Options for Mobile

Local broadcasters are also looking at programming for mobile devices. Using a portion of the same channel, they can transmit programming formatted for mobile devices with relative ease. More than 60 stations around the country have already upgraded to offer mobile programming according to the Open Mobile Video Coalition of America. OMVC estimated two years ago that somewhere between 25 and 100+  million people would be watching locally broadcast television on a mobile device by the end of 2010.

The recession and its affect on disposable income may have stalled that projection, but the group continues to promote the technology. Just this month the OMVC displayed a number of new services and devices at the annual meeting of the American Association of Advertising Agencies (4A’s).

Netflix on an iPhone

Netflix Streaming on an iPhone

The other problem is keeping up with the diversity of mobile devices. Two years ago, the Apple iPad was just an idea yet Korean manufacturer Valupsi introduced The Tivizenat the Consumer Electronics Show (CES) this past January. Its an OS-compatible mobile digital television (DTV) receiver that converts OTA television signals for playback on an Apple iPad or iPhone. Meanwhile, Netflix and Hulu have both announced efforts to make their services available to select iPhone and Android products sometime in the near future.

Now I know there are a lot more changes afoot in the media world and I would love to hear your thoughts and ideas. Leave a comment and let me know what media changes you have been following lately.

Thanks for reading,

Kevin Bush, Principal & CEO
Rainier Sky Marketing & Public Relations

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