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Future of traditional TV looks bleak

The future for broadcasters might look bleak, but there are also some likely winners. Streaming services such as Netflix, Amazon Prime or Apple TV spring immediately to mind, but there is also room in the market for investigative news media such as The Guardian, The Times, or The Economist. By 


The review of the BBC’s charter overseen by culture secretary John Whittingdale doesn’t just have important implications for one of the UK’s most iconic institutions, it is also a symptom of a broader phenomenon: the disruption of television by on-demand content. The future for broadcasters might look bleak, but there are also some likely winners. Streaming services such as Netflix, Amazon Prime or Apple TV spring immediately to mind, but there is also room in the market for investigative news media such as The Guardian, The Times, or The Economist.

The big challenge for TV broadcasters is the fierce competition for people’s time from an ever-increasing group of content, media and entertainment providers. Competitive strategy scholars would describe the problem as follows: the level of competition in an industry is determined by the degree of substitution for a particular product of service. In other words, the more alternatives to fulfil a particular need, the more competitive the industry.

For Harvard’s Clayton Christensen such substitution is particularly likely if a common technology platform emerges. In this case, the improvement in broadband coverage and the affordability of Smart TVs have made web content a serious rival for traditional television.

Business model broken

The value proposition of traditional television has been to cater for a very diverse audience, produce unique content and provide high-quality journalism. This has all been paid for by TV license fees or advertising revenues. However, this business model seems to be broken, for a number of reasons.

Dumped. James Good, CC BY-NC-ND

First, the underlying logic of service provision is still the “TV programme” with pre-defined broadcasting time slots, and now accompanied by restricted availability after broadcasting via platforms such as the BBC’s iPlayer or Channel 4’s All 4 streaming service.

Second, TV stations aim to be “everything for everybody”. While this has made sense in the past, it is questionable whether this still appeals to the media and technology savvy viewers of today. Finally, the legitimacy of the TV licence as a quasi–tax is increasingly open to challenge, while the advertising model looks fragile too as people are only prepared to pay for what they use.

Who are the likely winners?

It looks grim, but there is also a big chance in all of this.

The internet and online streaming as a common technology platform allows content providers to focus on what they are really good at, be it sports, drama, shows or news coverage. This is a clear opportunity for TV broadcasters. It reduces the pressure of that suffocating “everything for everybody” idea and opens the door for increased specialisation. Look at it this way, and the demise of traditional television starts to be a potential source of exciting and innovative programmes and formats.

Success is going to be a question of scale; the availability of up to date, high quality content on-demand. Much has been written about how streaming services like Amazon Prime and Netflix are likely winners in the battle for primacy in home entertainment. These companies are already fighting their own battles for dominance by expanding their libraries of on-demand films, documentaries and TV shows at a breathtaking speed.

The move by streaming services into original content also offers a direct challenge which bites into the core model for traditional broadcasters. One key example is Netflix’s “House of Cards”, an international hit. Amazon Prime also just announced that they are going to add a music streaming service as part of their already existing streaming service; another example for the importance of scale.

Good news

There is space for others, however. News media such as traditional broadsheet newspapers are in a strong position to benefit in future. Earmarked for a slow death even before the big broadcasters, these stately institutions have endured their fair share of suffering due to shrinking circulations. But some of them, such as the British paper and website The Guardian or German weekly Der Spiegel have developed innovative web platforms which not only provide traditional news content but timely video content. Der Spiegel even has its own TV channel broadcast via the internet.

News was always one of the crucial propositions of the major broadcasters; yet, as we move deeper into an on-demand world, newspapers and news magazines are in a very strong position to be the news or documentary providers of choice.

Brand recognition is an asset of course, and their success will particularly depend on their ability to leverage the authenticity and subject expertise these organisations clearly have accumulated. Using business news as an example, both the Financial Times and The Economist appear well-positioned, and have already proven an ability to develop innovative content in a fast paced and highly competitive environment. These are important skills to have in order to thrive in a “post-television” industry whose shape is yet to be determined.


A clip from The Economist’s YouTube channel.

As this evolution continues, traditional broadcasters need to engage in serious soul searching. In a world that is increasingly fractured and where TV programmes are substituted by content provided in YouTube channels, by pioneering newspapers or a growing band of specialist publishers, they need to find an answer to the question: What is unique to what we have to offer?

One thing seems to be clear: this soul-searching will reveal some unloved truths, it will be painful and, ultimately, it will lead to significant changes to how TV broadcasters around the world operate. So, the pressure is on for John Whittingdale and his panel of experts. In their bid to set the foundations for the BBC to navigate a chaotic next ten years, there are plenty of dangers, but also a chance to create media history.

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