For the past few days, the media has been in a frenzy over – well, media.
The industry saw a ton of activity last week as the quarterly earnings of several key media players were released, as stocks were sold off in what seemed to be a panic-stricken reaction from investors.
Disney, Viacom, Time Warner, and 21st Century Fox felt the pressure, along with others, as stocks fell by 3% Comcast) to as high as 11.4% (AMC Networks).
What’s got Wall Street so worked up? Falling ratings, of course – and, there’s the new threat of “cord cutting”, which is becoming more familiar and common as different audiences begin to see less benefit or appeal to engaging with traditional TV media. Although it sounds like what you do when you tell your teenage kids to move out of the house, it’s simply the market’s way of addressing its lack of need for traditional TV time. “Cord-cutting” is the elimination of digital media services, in this case, TV specifically, and it’s changing how networks and marketers respond to a world with smaller TV audiences.
Forbes even went so far as to publish an article on how to get rid of cable TV, in favor of antennas, streaming, and set-top boxes like the Roku and AppleTV – but, it’s a “chicken or egg” scenario. Much of the stock price fluctuation that occurred happened after Disney’s announcement that their ESPN network has been losing subscription customers to cable-cutting.
So what are TV companies going to do about this? In order to remain competitive, they’ll need to re-evaluate the effectiveness of sight, motion, and sound in the TV environment.
For marketers, this indicates a definitive shift in the realm of digital media. If your customers are also participating in “cord cutting” and you’re trying to reach them through traditional TV media buys, you might want to reconsider shifting or reallocating your TV advertising budget to a different model, like streaming.
Steve Shannon, Roku’s General Manager of Content and Services said, “As each contract comes up for renewal, digital rights are becoming more valuable,” he says. “Content creators recognize that there’s value there and as cable companies are looking to reduce programming costs, some are giving up the digital rights.”