Nathan Field: Old fashioned TV-watching still rules

Popular TV shows such as 'Glee' are tweeted and blogged about the same night they screen so if you haven't watched them live you are out of the loop. Photo / Supplied

Opinion

The internet has killed or severely maimed a lot of businesses over the past decade. High street book stores. Record labels. A-Z encyclopedias.

But one industry that has been surprisingly resilient in the face of new technology is television. When it comes to the box, it seems old habits die hard.

Despite the competition for eyeballs from smartphones, video games and social networking sites, people are watching more TV than ever before.

In the UK, the average person now watches 240 minutes of TV a day and in the US, it's a staggering 290 minutes. Both viewing figures are up about 15 per cent on 1990 levels. Even in outdoorsy New Zealand, where we watch a modest 200 minutes a day, the trend is positive. Clearly we have more time on our hands than we think.

Advertising, the lifeblood of the industry, has almost bounced back to pre-recession levels. More importantly, across most international markets, TV has either maintained or increased its share of the total advertising spend since 2000.

Online advertising has grown over the same period but it's generally come at the expense of other traditional media such as newspapers and magazines.

The outlook has improved dramatically from a few years ago, when the TV industry was not only worried about online threats but also the popularity of digital video recorders and video-on-demand technology (such as TiVo and MySky).

The ability for viewers to easily time-shift shows and skip ads was seen as the beginning of the end for expensive TV-led campaigns.

However, while the credit crunch took a temporary bite out of ad revenues in 2008-09, the impact of new technologies hasn't been nearly as drastic as the doomsayers thought.

Recent studies in the US have shown that in households with digital video recorders (about 40 per cent of the market), time-shifting only accounts for about 15 per cent of overall viewing.

In houses with video-on-demand platforms, only 5 per cent of viewing is actually on demand.

That's a whole lot of box watching done the old-fashioned way - using a TV guide to plan the evening's entertainment and dashing to the bathroom during the ad breaks.

There are a few theories as to why traditional TV viewing has endured.

One is simple laziness. Recording and re-watching a show is hardly strenuous but it requires a little more active decision-making than blobbing out on the sofa and channel surfing.

And let's face it, TV is supposed to be easy. The habit of watching whatever's on will probably fade over time but at the moment, it's still a powerful force.

Another, potentially more enduring reason, is the social aspect of TV. Popular shows such as Survivor and Glee are tweeted and blogged about the same night they're shown.

If you haven't watched it live, you're out of the loop, and the internet has taken the office conversation to new heights.

That's why lots of people are chatting online about the latest instalment of MasterChef or American Idol, but no one wants to hear from the guy who just downloaded an old episode of MacGyver.

The sharemarket has been paying attention to TV's resilience.

Traditional media stocks such as Viacom, Disney and Comcast have rallied strongly over the past six months, largely on the back of surging cable TV profits. Interestingly, this was the market thought to be most vulnerable to competition from the internet.

Cord cutting has been a hot topic in the US for the past couple of years. The theory goes that cable and satellite customers will cancel their expensive subscriptions and get their video content delivered exclusively through the internet (via game consoles and set-top boxes).

So far, however, there is little evidence of cord cutting taking place on a meaningful scale. Cable still has vastly superior content and new products such as Apple TV and Google TV have had limited success.

Of course, it's early days. If the tech giants can improve the quality of their web-TV products, and broadband download speeds continue to improve, and a critical mass of content becomes available online, the internet may yet take over the idiot box. Most media analysts believe it's inevitable.

But the revolution has been slow in coming, and traditional channels are likely to rule the world's living rooms for a while yet.

Nathan Field is a senior equity analyst at Gareth Morgan Investments