Bernard is an economics columnist for the NZ Herald

Bernard Hickey: Free TV's death spiral

Today's TV is so bad, you might as well be watching wallpaper. Photo / Supplied
Today's TV is so bad, you might as well be watching wallpaper. Photo / Supplied

There's a saying that you don't know what you've got 'til it's gone.

I discovered over the holidays that free-to-air television is going, going and is almost gone. This saddened me more than I expected.

I grew up in what seemed like a golden age of free-to-air television in New Zealand, when the advertising was often as entertaining as the regular programmes. I remember the Barry Crump Toyota Hilux ad and the Telecom meerkats from the 1980 to the 1990s.

Six years ago, I got a MySky recorder that allowed me to fast forward through ads and record programmes weeks in advance. Since then, we haven't watched ads at anything less than 30 times their speed.

But this month I found myself stuck in a motel room in Whitianga watching television without MySky. The change in the content and style of advertising shocked me. Most of the ads were of the flashing, loud and cheap style pioneered by the likes of Harvey Norman and The Warehouse.

I decided to note down the type of ads shown on TV One over one hour of prime time.

There were 33 of the cheap and nasty retail ads from 6.27pm to 7.39pm, and just 20 of the more traditional ads without the blaring collection of special offers. Of the "normal" ads, only three of these (ANZ, Finish and Regal Salmon) were brand building.

After an hour, my family forced me to call off this irritating exercise, but it struck me that many New Zealanders would now make this choice, relegating free-to-air television to a spiral towards irrelevance, if not death. This spiral has accelerated during the past 18 months, thanks to a 47 per cent rise in the number of MySky subscribers (to 279,875) in the year to June 30, 2011.

If that growth continued over the second half of last year, then almost 20 per cent of Kiwi households had MySky by the January night when I reacquainted myself with ads.

As more people stop watching ads, viewership drops, driving advertising quality even lower. The most lucrative viewers have already left as can be seen in the average monthly revenue per MySky subscriber of $84.79, versus $65.19 for regular subscribers.

This reinforces Sky's drive to convert regular subscribers to MySky, which also reduces Sky's churn rate, which remains at a near-record low of 14 per cent despite the consumer recession.

The last bastion of free-to-air TV will be motels in Whitianga.

- Herald on Sunday

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Bernard is an economics columnist for the NZ Herald

Bernard Hickey is the publisher of Hive News, a Wellington-based political and economic subscription news email service. He also writes for and appears regularly on Radio New Zealand, Radio Live, TVNZ and TV3. He has been a financial journalist for 25 years, having worked for Reuters, the Financial Times Group and Fairfax Media.

Read more by Bernard Hickey

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