It feels like there’s too much TV. FX Networks CEO John Landgraf has been talking about a TV content bubble for years. According to a list compiled by FX, 412 scripted shows premiered in 2015 and another 455 in 2016. This year, we’re on pace to exceed that number, which is why Landgraf recently said TV is headed “from an optimal number of shows to an unmanageable number of shows.”
Leading the streaming charge, Netflix CEO Reed Hastings, who has borrowed $20 billion to finance content operations, recently said, “we’re competing with sleep.” Comments like these should concern TV content owners. Yes, the industry is moving toward a nonlinear future, but it’s also producing too much content. Put simply, we have a TV content bubble, and we need a plan for when it bursts.
Be skeptical of the digital mindset
TV is moving from a linear model predicated on filling time slots to an on-demand model that flirts with “infinite” content. The case for infinity will grow stronger as tech giants like Apple, Google and Facebook muscle their way into the TV business. Silicon Valley’s biggest names have no problem inflating the bubble, but TV companies should be skeptical of infinite content. Frankly, oversupply in digital hasn’t benefited publishers, but it has led to a Google/Facebook duopoly.
By incorporating audience analytics and targeting into their core competency of producing must-watch shows, TV companies will be able to better align content with audience. The more that audience insights drive production and distribution decisions, the better prepared a TV company will be to face the content glut. Even so, they cannot afford to produce infinite content.
Build bigger data sets
Long timelines are the norm for digital disruption. After more than two decades online, newspapers still produce print, and physical books remain strong relative to ebooks. It’s still early days for TV disruption. According to eMarketer, legacy TV remains the dominant medium, despite growth in cord-cutting. As TV companies build first-party data and race toward over-the-top content (OTT), they should understand that while fortune favors the bold, you must define your disruption timeline in years and decades, not quarters.
Netflix, often called the most innovative TV company today, began life in 1997 as a mail order rival to Blockbuster. It took decades for Netflix to amass the consumer data and insights that are now essential to its production and audience-acquisition strategies. Disney passed the tipping point in terms of embracing OTT, but they shouldn’t be too quick to cannibalize their legacy model because the journey to OTT profitability (and content equilibrium) will likely be longer than we think.
Small bets win over time
As TV companies collect and analyze their own data, they’ll learn a lot about their audiences. Placing many small bets as quickly as possible accelerates the learning curve, but it also fuels the content bubble, leaving TV companies vulnerable if their OTT investments don’t pay off immediately.
A better strategy would be to place a measured number of small bets over the long-haul. This strategy reigns in the oversupply problem to a degree. More importantly, it reinforces a commitment to methodical experimentation — something all content owners must be cognizant of in the face of rapidly changing consumer behavior. Consumers know there are too many shows and that the OTT experience is still somewhat fragmented and frustrating. The question is: will content owners quantify those insights and take action or will they continue to blindly fuel the bubble?