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The NFLX Effect: Are We Watching More or Less TV?

Teens still watch TV, but not in the traditional way

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Some interesting data has been surfacing about our TV-viewing habits. However, much of the information seems contradictory, muddying the picture. Does cord cutting mean Americans watch less TV than before, or more?

nflx-cord-cuttingAre streaming video services like Netflix (NFLX), Amazon (AMZN) Prime and Apple’s (AAPL) iTunes killing cable TV? With all the white noise obscuring what’s going on, it can be difficult to determine what trends are developing, who’s driving them and who stands to benefit.

Let’s start with the who. When it comes to change and technology, high school and college students often lead the way. They’re the ones that first picked up on social networking sites like Facebook (FB) and they’re on the leading edge of the viewing behavior changes now hitting the TV industry.

I have a teenage daughter. She has a computer in her room, but still watches plenty of television programming — too much, from my perspective as a parent. However, none of it is live; YouTube and iTunes streaming are the primary sources of video content on her computer and her iPad.

Her preferred method is binge watching, or waiting for a year’s worth of episodes from a TV show, then watching the entire season in a few marathon viewings on NFLX. And she’d just as soon watch it on a smaller display like a computer, iPad or even her iPod as on one of our big screen TVs.

Everything about this is different from the traditional model the TV business developed around — it means no prime time and no advertising revenue for the networks. And by some metrics, it indicates TV is dying. At the same time, when you factor in TV shows that are streamed over the Internet and time-shifted (saved on a DVR), then The Atlantic argues the amount of TV being watched by Americans is actually higher than ever.

So what, exactly, does the future hold for TV? Everything is subject to change — we’re talking teenagers and technology here, two of the most volatile things on Earth — but this is how I see it right now.

Television Networks

The companies producing the content don’t need to be worried about losing viewers. Whether the programming is on cable or streaming, it’s being watched. The issue is payment for the content, since networks are seeing advertising revenues slide (they’re down an estimated 7% this year). More product placements (advertising that’s not removed during streaming or downloading), lower-budget shows and higher licensing fees are in the future.

TV Manufacturers

Lost in all this talk have been the Sonys (SNE) and Samsungs (SSNLF) of the world, but they have plenty of reason to be worried. “Good enough” quality digital music in the form of MP3s, streaming and portable wireless speakers completely trumped the higher quality of CDs and traditional stereo systems. The same thing seems to be happening with video. Even as manufacturers are hoping to rejuvenate their struggling TV sales with big, expensive, 4K UltraHD sets, teens seem perfectly happy to watch a low bit-rate stream on their tablet or even a smartphone.

Article printed from InvestorPlace Media,

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