TV at 75: How HBO and Netflix are forcing networks to evolve

Many have forecast a bleak future for the traditional TV industry with the arrival of smart mobile devices and video streaming. But is it really on the way out?

Television industry marks 75th anniversary of first broadcast in North America

CBS comedy The Big Bang Theory averages about four million Canadian viewers every week, making it the most-viewed show in Canada. (Robert Voets/CBS/Associated Press)

With people increasingly turning to mobile devices and video-streaming services to catch up on their favourite shows, many have forecast a bleak future for the traditional TV industry.

But as the industry marks the 75th anniversary today of the first television broadcast in North America, rumours of the imminent demise of networks may be greatly exaggerated.

TV analysts say that while innovations such as YouTube and Netflix have changed the way we watch and think about television, networks such as CBS and Fox have actually gone to great lengths to adapt to the new landscape.

"I'm seeing a change when it comes to what a television network is," says Greg David, a longtime television critic at TVGuide.ca.

"It used to be that they would broadcast on a television set. Now, they're going online and doing extra programming" in addition to their traditional TV offerings, he says.

It was 75 years ago today that Americans got their first glimpse of a television broadcast. It had been previously demonstrated in Britain and at the 1936 Olympics in Berlin but made its North American debut three years later at the World's Fair in New York City. 

Set in the U.S. in the tumultuous '60s, Mad Men follows the exploits of philandering ad man Don Draper (Jon Hamm, right). (Michael Yarish/AMC/Associated Press)

By the mid-1940s, TV had become a commercial venture dominated by a handful of national networks in the U.S. Canadians living near the border received U.S. signals in the late '40s and early '50s, but in 1952, the CBC became the first network to broadcast television within Canada.

For many decades, big networks such as CBS and NBC were king, controlling the production and distribution of TV content, in the process commanding large advertising revenues.

But the rise of high-quality dramas from cable networks such as HBO and Showtime in the last 15 years, along with the advent of online video-streaming, have changed the game dramatically.

Thanks to cable offerings such as The Sopranos and Mad Men, viewers have become accustomed to better-quality television, while the proliferation of streaming services such as Netflix, Amazon Prime and Google Chromecast has set an expectation that you can watch good TV relatively cheaply and on demand.

Not only that, but people are moving away from the conventional television monitor as their prime viewing mechanism. According to a study released in March by research firm Millward Brown, Americans now spend more time on average on their smartphones (151 minutes per day) than in front of their TVs (147 minutes).

"TV networks today have to reinvent themselves and accept the changes which are happening due to technology, but also due to the expectations and desired experiences of the different audiences," says Irina Mihalache, a professor of museum studies at the University of Toronto who has done extensive research on television.

David, who has been with TV Guide since the early '90s, when it was a print publication, says many network executives were originally resistant to putting shows on the web, believing it to be a passing fancy that would harm viewership and ad sales.

Not only have they embraced it, he says, but they've also discovered that online streaming has unique benefits for them.

"If you tune in to an episode of MasterChef Canada, you're going to see ads online as well as on television," says David, adding with a laugh, "and you can’t fast-forward through the ones on your computer — you have to sit through those."

One of the most critically acclaimed TV series in the last year is HBO's gritty drama True Detective, which stars Matthew McConaughey, right, and Woody Harrelson. (Jim Bridges/HBO)

Not only that, but networks have tapped into the appetite online for shorter videos and DVD-style extras, which extend the reach for shows, says David.

Bill Brioux, another Canadian TV critic, says the modus operandi for many networks has largely remained the same.

"If you look at CBS, they're the No. 1 network in the U.S. and they still really operate the same old-fashioned way: they launch six shows in the fall, they launch three more in January and a couple in the summer, and their biggest draws are still shows like NCIS and Survivor," he says.

Watching when you want

The difference, he says, is that viewers aren't necessarily tuning in at the same time anymore — an increasing number are streaming shows on network websites at their leisure.

He cites the example of The Big Bang Theory, another CBS title, which garners four million viewers in Canada every week, making it the most-watched show in the country.

"About 20 per cent of that audience don't watch it on Thursday at 8 [p.m.] — they watch it up to seven days later."

As a result, TV measurement company Neilsen "is just counting differently."

In a bid to reduce production costs and improve the quality of content, some networks have taken a page out of the cable playbook by cutting the number of episodes they produce for shows each season.

It used to be a given that the big networks would produce upwards of 20 episodes per season, but some have been moving closer to the cable model of 13 or fewer episodes. David points out that Fox is airing a new, abridged season of the thriller 24 starting in May, bringing it back, he says, as "a 10-episode 'event.' "

"They're broadcasting it as an event rather than a season, and I think that's really interesting," says David. Screenwriters he's spoken to say that 10 episodes is "kind of a sweet spot. You can just tighten your storylines and make them better."

Given the popularity of video streaming, there has been much talk in recent years of "cord-cutting" — people cancelling their cable subscriptions in favour of better-quality, non-conventional TV options. David doesn't think it's an either-or proposition.

"I'm not really sure how many people are actually cutting the cord and not watching cable TV," he says.

Set in a women's prison, the comedy-drama Orange is the New Black has solidified Netflix's position as a purveyor of challenging original content. (Netflix/Associated Press)

In its 2014 outlook, Deloitte found that by year's end, more than 2.5 million Canadian households will actually have multiple TV subscriptions. Furthermore, it said the number of households paying for a second source of TV content will be more than 100 times greater than the number of households that cancelled their cable subscription in 2013.

The cable-vs.-Netflix rivalry becomes even less relevant after Netflix signed an agreement last week making its vast library of shows and movies available to about 700,000 U.S. cable subscribers.

Extra programming helps

Part of the appeal of Netflix is its growing stable of original series, such as the Emmy-winning House of Cards and Orange Is the New Black. Like HBO before it, Netflix has evolved from a video-delivery mechanism to a celebrated producer of content. But that comes with its own problems, says Michael McGuire, a media analyst with U.S. consulting firm Gartner.

Netflix will have to "come to grips with the reality that our friends in the cable and broadcast industries and the studios have known for decades: it's really hard to keep pumping out hits," McGuire says.

"Don't forget: the [networks] have a lot of extra programming, like live [events] and reality TV. Those guys have had those other revenue streams."

Brioux says that while the traditional networks aren't producing critically acclaimed shows such as Game of Thrones and True Detective, they continue to garner big ratings.

As a result, the networks still do huge business with "up-fronts," which is the money that advertisers pledge to spend when a network first presents its new season every spring.

With "the up-fronts in the U.S., you're still looking at nine or 10 billion dollars every May," Brioux says. "While that money is on the table, it's going to keep going this way."


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