As television sales in the US fall, and the use of targeted online advertising rises, there more challenges ahead for the advertising industry.
A new report from Nielsen, the United States media ratings firm, conveys some bad news to the broadcast TV networks.
Ownership of television sets by US households has fallen for the first time in two decades.
Granted, the decline - 96.7 per cent of American households now own sets, down
from 98.9 per cent previously - may not seem like much, but there will be many in the industry who will wonder if it's the faint tremor that presages an earthquake.
After all, for as long as most of us can remember, a TV set has been almost as commonplace a piece of domestic kit as a cooker. And broadcast (ie, few-to-many) television has been the dominant organism in our media ecosystem for just about as long.
If that's changing, then it's big news and not just for the industry concerned: politics in most western countries is largely driven and dominated by broadcast TV. So it's important to know if the Nielsen finding represents a blip or a tremor.
There are arguments either way. If it's a blip then the explanation is simple, if sad: it's a reflection of growing poverty in the US as a result of the economic downturn that has followed the banking crisis, possibly exacerbated by the switchover from analogue to digital TV. Nielsen's research suggests that the TV-less households have annual household incomes of less than US$20,000 ($25,000).
This blip happened once before in 1992, when the percentage of US homes with a TV set also declined briefly after a prolonged economic recession. But ownership bounced back as the economy recovered.
But there are also reasons for thinking that the current decline might be a harbinger. The main one is that for younger generations, ownership of a TV set is no longer seen as a badge of adulthood. The number of kids taking a receiver with them to university, for example, is now vanishingly small.
And that's not just because most campuses have communal viewing facilities; it's also a reflection of the fact that young people increasingly watch video material via their laptops, iPads or other tablet devices.
As the New York Times puts it: "While Nielsen data demonstrates that consumers are viewing more video content across all platforms - rather than replacing one medium with another - a small subset of younger, urban consumers seem to be going without paid TV subscriptions for the time being. The long-term effects of this are still unclear, as it is undetermined if this is also an economic issue that will see these individuals entering the TV marketplace once they have the means, or the beginning of a larger shift to online viewing."
This doesn't mean that broadcast TV is finished: there are some things for which a few-to-many medium is the most appropriate (think X Factor, Olympics, cup finals). But it does have radical implications for TV networks everywhere. It means that time-shifted viewing becomes the norm.
The BBC's slogan for its iPlayer service - "Making the unmissable unmissable" - says it all. Most TV networks now offer something like the iPlayer which, in turn, has radical implications for our broadband infrastructure, which is already struggling to cope with streaming video.
And that's before HD becomes ubiquitous.
But it's not just the broadcast networks that are affected by the switch. The music business is also feeling the pinch. Last week the Digital Entertainment Group, which represents film studios and consumer electronics companies, reported that US sales of new DVDs had fallen by 20 per cent in a year. Given that DVD sales used to be Hollywood's biggest revenue earner, this is startling news.
What lies behind it is the same phenomenon that's affecting the TV networks - movie streaming by companies such as Netflix, which provide films on demand to their broadband subscribers.
Years ago, when the battle to decide the next DVD format was being fought between the Blu-ray and HD DVD standards, Bill Gates said that we would never see another such conflict. It would be the last time that an industry would "ship atoms in order to ship bits". For once, he was right.
- OBSERVER
