(The following guest post was written by Mike Hudack, CEO of Blip.tv, who will be speaking at our fourth annual NewTeeVee Live conference on November 10 in San Francisco. To learn more about the show, click here.)
Television’s first hit, in 1948, was NBC’s Texaco Star Theater. At its peak the show pulled in 80 percent of U.S. television households. The show shepherded in the golden age of television.
Television’s most recent hit is American Idol. At its peak three years ago it pulled in about 26 percent of U.S. television households. Of course, there are many more TV households today then there were in the 1950s. American Idol‘s total audience size is about five times that of Texaco Star Theater at its peak.
Other than live event programming like the Super Bowl, however, the days of a single television show pulling in the vast majority of American TV households are over. The broadcast networks are long past their peak. Their audience — in absolute numbers, not relative numbers — has been shrinking since the early 1980s.
Broadcast television was introduced, at scale, right along with Texaco Star Theater in 1948. Cable television subsequently scaled in the ‘80s. What television did to radio — an assault that led to lower audience share and ultimately much smaller audiences — cable has done to the broadcast networks.
The erosion of the broadcast television audience has not been driven by massive hits that happen to be on cable TV. Quite the contrary. Mad Men, a tremendously successful cable show, reached fewer than one million television households during its first season. The fourth season drew an average of about three million households. These ratings are enough to get a network television show canceled but are the stuff of transformational success for a cable network like AMC.
Because of opportunity cost, broadcast networks like Fox must program every second of airtime to reach the maximum possible audience. This is why fantastic shows like Arrested Development, which reached six million households in its first season and four million during its last, get canceled to make way for potentially larger shows. On a cable network Arrested Development would have been considered a huge, and profitable, success. It was, after all, consistently bigger than Mad Men.
People often say that the web video industry will not come into its own until it creates a hit. This thought is, quite frankly, wrong. The cable TV industry has clearly come into its own. And it’s done this without producing a single hit on the order of a network TV success. Yes, the network television business is meaningful, but it no longer produces the hits it did just a few years ago. This year’s slate of network series premieres was the first to pass without a clearly defined “hit” show. That’s no accident. The networks are lost.
Media naturally trends towards fragmentation. As capacity increases so does choice. As choice increases audiences fragment. When given a choice people generally prefer media that speaks to them as individuals over media that speaks to the “masses.” While American Idol remains strong, the trend is clear. Americans have been abandoning broadcast television in favor of cable’s niche shows for thirty years.
Historical trends like these do not disappear, they accelerate. Internet video is growing at a significant pace. It has not yet taken a chunk out of the broadcast and cable audiences, but the trend is there. Shows on the web are infinitely more targeted than the shows broadcast and cable companies deliver. There are shows for old Jews who like jokes. There are shows for every type of video game geek. There are shows for every audience you can imagine. There is, in fact, a web show made just for you (although you probably haven’t found it yet).
There will be “hit” shows on the web that have a profound influence on our culture. But they will not be the size of network television hits, or even cable television hits. You also won’t see a television show command 80 percent of the viewing audience as Texaco Star Theater did in the early ‘50s. But it doesn’t matter. Over time the Internet will steal share — small piece by small piece — from broadcast and cable just as cable stole from broadcast, which stole from radio before that.
Network television in the coming years will become more niche, but not niche enough. NBC’s 30 Rock is more targeted than almost anything carried on the network before. Its audience is only a couple million people larger than Mad Men‘s. But that’s not enough. Traditional broadcast and cable companies are not able to support shows under a certain size.
The broadcast distribution model, which dictates that only one show can air at any given time, makes it impossible for a niche show to thrive. The opportunity cost is too high. And the corporate structures, cost structures, business models and cultures of the network and cable companies make change far too difficult. Thus the Internet will do to broadcast and cable what cable did to broadcast. It’s inevitable. And it’s already beginning to happen.
Related content on GigaOM Pro: