Even if you’ve never heard the 1979 Buggles classic “Video Killed The Radio Star,” you know the story it tells, because everyone does. Radio was the mode of entertainment in the early part of the 20th century, but by the halfway point it had been thoroughly disrupted and supplanted by TV. Hearing it was good — seeing it was better, especially when seeing it in full color was a real option.
TV has had a better than good run. The average American household has three televisions in it, according to Nielsen’s most recent figures, and over 30 million televisions are sold per year in the U.S. And Americans spend a lot of time watching the tube. The average American watches about 2.5 hours of TV a day, though those numbers are highly affected by age: Younger adults (18-24) watch a bit less and older adults (over 65) watch about a half hour more.
But those TV unit sales are falling, worldwide, according to IHS. Some models are seeing their sales pick up, particularly the larger screened 4K Ultra HD models, though, notably, those models have seen their prices decline sharply, which is certainly stimulating sales. Units that debuted in the market three or four years ago that were priced above $10,000 are now often selling for around $1,000. And while eyeballs are holding constant, they are not growing, Americans have watched about 2.5 hours of TV a day per year for the last decade or so.
For almost two decades – since the first IRC (Internet Relay Chat) message was posted – the Internet has been predicted to slay the television in much the way television wiped out the radio. Those cries have become increasingly intensified as mobile has exploded and the options for how users can (and do) interact with screens has exponentially expanded. Television — or at least television as consumers have known it for the last 60 or so years — being on the way out has become an increasingly conventional idea among analysts and industry watchers
But just because an idea is conventional, doesn’t actually make it wise. Is mobile about to kill the TV star? PYMNTS takes a look …
Consumers have spent the same amount of time watching television per day for over a decade, but the amount of time they have spent “in app” has only been growing. In 2013 the average consumer spent around two hours per day in app, and a year later that figure had crept up by 10 minutes.
But between 2014 and 2015 there was a big jump of an hour, meaning that for the first time consumers spent more time per day in apps than they did watching the television — at three hours, 18 minutes. And that figure doesn’t count time spent in a mobile browser (if that is added on, the number jumps to three hours, 40 minutes).
Television advertising is a very big business that was worth $71.1 billion in revenue in 2015, and projected to be worth between $80 million-$90 million by the end of this decade. The vast bulk of U.S. advertising dollars are spent on TV.
Mobile ads, however, are growing much faster. In 2014 the total mobile ad revenue was $23 billion, and by 2015 it has jumped to $31 billion. If it were to continue at that approximately 40 percent growth rate (a challenge to be sure) in the space of 4-5 years, mobile ad revenue will be a bigger dollar stream than television advertising.
And mobile has a “special feature” that television doesn’t: in-app purchases. Though mostly confined to the world of gaming, such as those $1 upgrades that Candy Crush enthusiasts know so well — in-app purchases brought in more revenue than mobile ads, clocking in at $31 billion. Combined, they represent two-thirds of TV ad revenue. In a year it is entirely possible that combined figure will pull out into the pass lane and leave television behind.
Big growth yields big excitement – but sometimes, particularly in discussion about how mobile is going to change everything we do, people get a bit… overzealous.
The first thing to keep in mind is Americans own a lot of televisions, are actively upgrading them and are watching them the same amount they always have. This means mobile isn’t so much stealing eyes from television, so much as it is sharing them.
Particularly during prime time — when 70 percent of Americans are still sitting down to watch television, because evenings in front of the tube having a shared viewing experience with the rest of the nation remains a rather powerfully ingrained habit. It is easy to overlook things like powerfully ingrained habits <cough>plastic cards<cough> and their value to merchants and advertisers who want to cash in on that experience. Mobile, being so fragmented, doesn’t offer that opportunity, and that is a powerful draw for television.
And of course, much of what those app users are doing is watching content in app that was developed for television and a mass audience. Mobile content providers, Netflix and Amazon most notably, have been working hard and have a few solid successes under their belts — “Orange is the New Black,” “Transparent” and “House of Cards” are all very recognizable brands — but that has been a long work in progress.
So is it the end of TV? Probably not. Is it the end of TV as we know it? Yes, but probably not as soon as some enthused cord cutter might wish. The fully melded mobile TV experience, where everything but live events are on demand and easy to bounce from device to device is coming, but it’s probably a bit early to toss your television just yet.
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