Money Finance News Commercial TV is under the pump in a wired world
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Commercial TV is under the pump in a wired world

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Commercial television is losing its allure as young viewers desert the medium in favour of the internet, streaming and gaming.

Figures from Roy Morgan research show 20.7 per cent of people in the 25 to 34 age group never watch commercial TV on a weekday, while for those aged 14 to 24 it’s 18.8 per cent. Just eight years ago, the figure for both groups was around 7 per cent.

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Just how brittle commercial television has become was evidenced on Tuesday, when Nine Entertainment shares fell 23.7 per cent to $1.16, wiping $315.5 million from its market capitalisation and leaving the broadcaster worth just over $1 billion.

The driver for the fall was poor ratings from last summer’s cricket and some other programming flops.

Revenues are flat

0406tvCommercial TV, like print media, is under pressure from the migration of advertising to the internet and that reality is making the once golden cow that built the wealth of magnates like the Packer family look distinctly tarnished.

Figures provided by research group Venture Insights show advertising revenues for commercial TV are at best flat. In 2015, both metropolitan and regional TV groups say ad revenues declined.

For this year, metro TV ads will raise $2.98 billion, just one per cent more than last year, while regional players’ ads will yield $861 million, a fall of half a per cent. Till 2020, revenues are expected to rise only one per cent which is well below the rate of inflation, Venture estimates.

TV remote
Aussies are now more discerning about when and how they watch TV. Photo: Getty

That means “networks will have to continue to cut costs”.

“They’ll have to make newsrooms more efficient and might even have to share news rooms,” said Steve Allen, independent media analyst with Fusion Strategy.

This is the damage

In the last two years, those surveyed by Roy Morgan who watched the Seven Network fell from 69.6 per cent to 66.1 per cent, Nine viewership fell from 68.3 per cent to 65 per cent, and for Ten the decline was from 56 per cent to 51.1 per cent. The ABC and SBS experienced very small losses in viewer numbers.

Commercial TV has also lost out to the explosive growth of video streaming services like Netflix, which now has over one million subscribers, along with Stan, Presto, Fetch TV and others.

As the commercial channels fight back against the streaming revolution with extra channels, they face higher costs but have so far not gained extra revenues, Mr Allen said.

The squeeze on free-to-air revenues would halt the recent blowout in sports rights like those won recently by the NRL and AFL.

Another driver for the decline of commercial TV is the rise of the internet with usage among Aussies exploding in the past few years, according to statistics from the Australian Bureau of Statistics (ABS).

Web use skyrocketing

Aussie internet users chewed through just under 200,000 terabytes of data in the December 2010 quarter, a meagre amount compared to more than 1.7 million terabytes five years later – an increase of nearly 800 per cent.

Even in the past year, downloads have increased by nearly 45 per cent, from 2.1 million terabytes in 2014 to 3.1 million in 2015.

0407downloadsSophistication is partly to blame

Consumers are revelling in the chance to watch television and movies on demand, while websites have evolved to incorporate ‘rich content’, like video, audio and interactive technology.

This consumer evolution could explain increased data demand, according to one IT expert.

“More and more traffic is being sent along the internet, such as streaming media content, and the arrival of Netflix recently has been a significant influence on how the media industry responds to providing content to individuals,” University of Technology Sydney fellow and IT consultant Rob Livingstone told The New Daily.

“Increasingly with the explosive uptake of mobile devices, more and more people are using their tablets and smartphones to access rich content and as a result, a knock-on effect for data volumes.”

Research commissioned by NBN Co in 2015 indicated video streaming and social media were among the top four applications used by households in peak times.

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