Recently Time Warner Cable made a new iPad app available to its subscribers that allows them to stream live TV signals directly to the tablet and immediately a number of networks jumped on TWC and demanded that their channels be removed from the app. Now, you might be asking yourself why any TV broadcaster would want to reduce the size of its potential audience? While the networks make noise about licensing restrictions, the truth of the matter is something completely different and it poses a threat to the whole revenue stream of mainstream media.
The TWC app is actually quite restrictive in how it lets users stream content. In order to watch anything, users have to be at home on their local network, meaning that you can’t watch your shows when you are traveling or just standing in line somewhere. Time Warner’s argument is that this limitation means the iPad is just like any other TV in the house showing content. The networks argue that their licenses with cable companies only allow feeding shows to TVs over the cable and not over WiFi.
The real problem however is not the type of device being used to view shows or how the signal gets there. It’s about the fundamentally flawed way in which traditional TV viewership is measured. Broadcasters make their money by selling advertising during programming. The prices charged for ads are based on how many people watch a show. For decades, AC Nielsen has provided the ratings numbers that everyone in TV uses to set ad rates. For nearly as long, everyone that uses Nielsen numbers has known that the survey results which are based on surveys of viewers are highly inaccurate. Unfortunately they tend to err on the high side which meant that advertisers were probably paying too much for advertising time. However, since everyone was using the same numbers all broadcasters went and advertisers went along with it.
Now however, the advent of internet broadcasting turns the whole ratings game on its head. Unlike traditional broadcasts, internet streams can be counted precisely. A quick check of server logs can reveal exactly how many times a program was watched and for how long. The result is a far more accurate measure of ratings that is likely to be substantially lower than traditional measures. Rather than embracing the new technology, and finding ways to make money off it, broadcasters are shunning it in order to protect an old unsustainable measurement method.
Of course the old guard won’t be able to maintain this facade for long. Just as the music and publishing industries have had to evolve, it’s only a matter of time before traditional broadcast channels go away. Viewers increasingly watch what they want, when they want and where they want. More accurate measurements of viewer engagement will mean allow some programming to flourish while other material fades away.