Evan Shapiro On Why TV Isn’t Dead And How Marketers Need To See It

By Brandon Gutman Forbes.com During his keynote at last month’s Brand Innovators Television Summit, Evan Shapiro announced that he was transitioning from his role as President of IFC and Sundance Channel to become President of Participant Media’s newly created television division. In his new position (which he just started this week), Shapiro will be charged with the conception, development and production of original programming that will follow the company’s mandate of producing socially relevant entertainment. We sat with Shapiro and asked him why he feels television isn’t dead and to explain how marketers can attain the most value from this evolving medium. Brandon Gutman: Many 16 year olds haven’t actually sat in front of TV in months or years; no one under the age of 11 understands that something is actually ‘on’ TV – with web connected TV’s, Hulu, Netflix, Boxee, iPads, what the heck is Television these days, anyway? Evan Shapiro: Every eighteen months or so, someone declares that TV is dead. And to a certain extent, they are right. The TV we (anyone over 35) knew as kids IS dead. You may not remember, but in 1972, each and every week, 67 million people sat down, at once, and watched All In The Family. I’m not talking about a very special post Super Bowl episode – it was every week, for an entire season. The show averaged a 54 share. What I love even more is that the number 16 show was the Partridge Family – with an average audience of 44.5 million people and a 37 share. Today, the five or six national broadcast networks usually don’t earn a 37 share – combined. As a point of reference, the ‘mega hit’ American Idol averages about 21 million viewers, Modern Family 14 million. But the death of your father’s TV does not mean that TV itself is not alive and well. In fact, TV is more of a creative and cultural force than it’s ever been – more influential and better made than at any point in its history. True, cable, DVRs, online streaming and electronic downloads have fragmented viewing into tiny niches, redefining the very idea of a hit show. Consequently, unlike many films, TV shows, their producers and their networks, can now cater to smaller, more targeted audiences. Freed from having to appeal to the lowest common denominator, TV has become more varied, more ambitious, more targeted and far more satisfying to its audiences. It’s impossible to imagine a show like Mad Men or Game Of Thrones or Jersey Shore lasting even a week or two on TV 20 years ago. Now, these shows are not just hits, they are cultural phenomena. What’s more, the technology that everyone sees as a threat to TV’s throne as cultural king is the very thing that enables its dominance. While Nielsen reported that TV viewership and pay TV connectivity went down in the 4Q of last year, they only counted ‘traditional’ TV sets. Forrester showed last year, that in the past 5 years, we, as a culture have added 25% more TV viewing to our lives – an hour more per day and 15 days worth per year. That’s because of things like Netflix, TiVo/DVRs, Apple TV, not despite them. And, those gadgets and services have allowed tiny shows to find and build audiences – allowed audiences to find shows they never would have seen otherwise. Shows like Louie, Portlandia or RuPaul’s Drag Race, never would have had a shot at survival, had it not been for iTunes, Hulu, TiVo and DVRs. And while technology and delivery are important, it is still the quality of the content that matters most – perhaps more than ever. A few years ago, conventional wisdom was that the pipes would be king. But something happened on the way to the coronation. The TV distribution business got way, way more competitive. Verizon and AT&T got in the game, Netflix was invented, then reinvented (then re-reinvented), Hulu was born, the iPad dropped, YouTube launched 100 channels and now everyone from Vevo to HuffPo is doing ‘TV’. To a certain extent, it is distribution that has been commoditized, whereas good content is in higher demand than ever. Distributors and aggregators need the best content to satisfy their customers. Advertisers need the reach TV offers (despite fragmentation), but also the high quality impressions it delivers. Web may be new and sexy but advertisers still come back to TV. As I’ve said elsewhere, TV is not a box, nor prime time just a time slot. Unlike radio, which TV replaced as the most important medium, nothing – not the DVR, not VOD, not mobile, not even the Internet – has replaced television. In fact, they have all served to make it stronger – they have increased our appetite for great TV. How else can you explain the idea of Binge Watching? Content is still king. And I submit that TV is the best, most valuable and most relevant content on earth right now. So, while the television you and I grew up with may be gone, TV has evolved into something even bigger. Television is Dead. Long live TV. Brandon Gutman: Ok, then. So TV is alive and well. But isn’t all TV going online at some point? Aren’t the kids in college simply going to get all their TV from iTunes, bittorrent or Netflix? 1.5 million people ‘cut the cord’ in 2011. Can the Pay TV model survive? There are three categories of Cord Cutters – cord cutters, who have broadcast TV and get other programming from broadband; cord shavers, who keep some level of Pay TV subscriptions, but who cut back and use OTT suppliers to supplement their TV habits; and cord skippers, who are young people leaving their parents’ home and who never get a pay TV subscription. Of all of these, the biggest worry for the TV industry is the latter. They are young, educated, upwardly mobile and tech savvy enough to create a TV package, without subscribing to pay TV. For marketers who rely on TV for their business, it is smart to be worried about cord cutting and the loss of revenue and reach. Cable costs have increased more than 6% per year for the past five years. Surveys show that many people would like a much cheaper alternative than the current pay TV subscription offerings. Deloitte predicts that somewhere between 8 and 10% of homes will cut the cord one capacity or another. I actually think it might be north of that eventually. But I also I believe that if the industry is creative and flexible in how they package pay TV, the loss could be slower and shallower. It’s doubtful someone graduating from college in the next few years will be willing to pay $150 for their cable and broadband. Not when they have other choices. That being said… as Deloitte also said in the same report – Choice is Precious, but Choosing is a Chore. Have you tried to create a satisfactory TV experience in your home with a combination of EST and OTT providers? It’s a huge pain and it is not as cheap as is mythologized. This past weekend, the NBA and NHL playoffs, the Yankees game, Game of Thrones, Mad Men, Real Housewives and SNL were all on TV. Try watching all of those by subscribing to IP providers. It would cost you a small fortune, you’d get a less than adequate quality of picture, you’d be dealing with at least 6 different providers – and you still would not get all of that content (just try getting GoT without a pay TV subscription). What’s more, web TV services like Netflix, Hulu and iTunes wouldn’t have any content to provide if it weren’t for the subscription fees and advertising revenues that support the networks that pay to create those shows in the first place. It’s swell that Netflix is ponying up a small fortune for new episodes of Arrested Development – seriously, we all owe them a debt of gratitude for bringing that show back. But it wouldn’t have existed in the first place, if FOX hadn’t paid to develop and produce the three, very under-watched seasons. Portlandia, a show that I helped create, does incredibly well on iTunes, Hulu and Netflix. There is no way it would have existed if IFC weren’t supported by MVPDs and advertisers for years before it came into the world. The same is true for The Walking Dead, Justified, Awkward, Pawn Stars and every other one of the most watched shows on those OTT providers. Should that economy break down, so will the supply chain of the best content. No one wants that. Brandon Gutman: It seems that the TV advertising model would be under pressure though – with time shifting, is advertising on TV really viable long term? While 67 million of us rarely sit down to watch the same thing at the same time, society still craves that type of shared experience. They want to sit around a campfire, with their community and hear a story. And yes, people (of all ages) still want to watch TV – live, together. The Super Bowl proved that. So did the MTV VMAs, and the CMAs and The Grammys. But so does Jersey Shore and Portlandia and Girls. In 2012, more than 90% of TV will be watched live or ‘near live’ (within 24 hours). Why? While we may not all be watching the same thing at the same time on a couch – millions of us watch TV with our community of friends and strangers, via Twitter, Facebook, GetGlue, Miso, etc. 75% of those who post about a TV show on social media, do so while the show is playing on TV. Yes, these viewing parties and conversations are fragmented and niche. But they are happening. Time shifting and ad skipping are huge worries for those of us in the TV industry. We must strive to make the marriage of content and marketing less cluttered and more enjoyable. Who wants to watch 18 minutes of ads in every hour of TV? Certainly not me. Personally, I think Hulu has a great model – the viewer cannot skip the ads, but there’s a low level of clutter and the viewer actually gets to choose their own ad. Personalized, relevant and cool. While it’ impractical to customize a TV network that way, there are ways to improve the average viewing experience so that audiences won’t mind watching the ads. Adult Swim does a nice job of this. Their breaks are curated incredibly well to be relevant and entertaining. Their advertisers know the audience (young guys, who I am guessing may be high) and they cater their ads to speak directly to them. The entire channel is designed as a piece of Branded Entertainment, where the programming and ads blend together incredibly well. As a result, the network has a very strong live viewership and one of the best C3 retentions on TV. People like TV ads – during the Super Bowl, they tune in specifically to watch them. They just want them to be good and relevant. Yes, it’s more work than it used to be – but the ability to hyper target an audience and be ever more creative with your message allow an advertiser’s dollar to go further and be better spent than ever before as well. Brandon Gutman: You mentioned Branded Entertainment. Did I? Brandon Gutman: Yes. I didn’t mean to. Brandon Gutman: Well you did. Damn. Well then I guess it’s fair game then. Brandon Gutman: Do you not want to talk about it? I just think it’s an overused term. But then again, I used it. Brandon Gutman: It has become a buzzword. Can I ask, what is Branded Entertainment? You just said – it’s a buzz word. Brandon Gutman: Anything else? Bad Branded Entertainment is like dinner theater – neither part is any good; not the Brand nor the Entertainment. Done well, and the audience comes away with a better feeling about Brand, and having been truly entertained – enriched. The early days of TV did that. I Love Lucy is a good example. The show’s opening has two cigarette butts, making the shape of a heart. Ricky and Lucy smoke in the show – a lot in the first couple of years. Remember, this is before we knew that smoking was bad for you. Well, before the public knew it was bad for you – I can’t speak for the cigarette companies. They were the couple all of America loved, and they looked so cosmopolitan, living in New York, making their way in show biz, smoking their cigarettes. Not many people know this, but Phillip Morris helped create that show. Brandon Gutman: Really? Yes. Desi Arnaz got the slot on CBS – well Lucy got it, and she had to convince CBS to let her Cuban husband produce and star. Desi wanted to tape the show, rather than just do it live. He thought it would look better and that there was value in having copies of the show for the long term. But CBS wasn’t going to pay those costs. So Desi got Phillip Morris to put up a big part of the cost. That’s why they’re in the opening and in the show. Even better, Desi and Lucy retained all the rights to the show. They created Desilu Studios and kept all the rights to everything they made. They went on to produce The Andy Griffith Show, Gomer Pyle, Mission Impossible, I Spy and even Star Trek. And they kept all the rights to everything. Years later, they sold to Paramount – for a lot – and then Paramount sold to CBS. That’s why Paramount gets to make Mission Impossible and Star Trek Movies, and why CBS just made a fortune licensing the rights to the Desilu library to Netflix. It all started with Phillip Morris. So, there are Branded Entertainment tactics, like product placement – Coca-Cola in American Idol and Pepsi in The X Factor – or Branded shorts, like what Bravo does in their podbusters – and these are quite effective. There’s a ton of research that shows that Brands that do this type of integration, along with traditional advertising, have higher Brand Awareness and intent to purchase than those that don’t. But, to me, that’s not Branded Entertainment – it’s smart marketing; it’s good advertising. To me, true Branded Entertainment is when a consumer brand and an entertainment brand come together to create something wholly new, like Texaco Star Theater, like I Love Lucy – like Iconoclasts. Grey Goose and Sundance Channel created a brand new type of talk show. Grey Goose is actually a producer on the show – and it’s a good show. And it helps sell vodka, because Sundance made sure that the series was not just good, but also effective. Fashion Star does this well too. That show really doesn’t work without the buyers from the brands. There’s an opportunity in TV right now that hasn’t really been available since the very early days of TV. There are dozens of talented producers working in TV right now, whose entire business is making great TV and selling all the rights to the networks. They work on what’s called a cost-plus model – they make a show for X and sell it to a channel for X+25%. They give up all the underlying IP rights and move on to the next show. On the other hand, consumer brands in this country pay hundreds of millions of dollars to create advertising content that has an incredibly short shelf life. If the two communities got together, they could create enormous leverage in the industry. Great content and the advertising currency that makes TV run; combined. Independent TV production is the most under-merchandised sector of the American media economy – just look at the revenue it produces, worldwide, each year. With networks, OTT providers and new digital channels all clamoring for the best, new TV programming, the right brand or agency, joined with the right producers could do something very special – they could create a next gen Desilu. Brandon Gutman: You clearly see a bright future for TV. Yes. Brandon Gutman: So, with all this opportunity, what is it you are building at Participant? There’s a multi generation community of 15 to 30 year olds that are always starved for new, original content. Their thirst is insatiable. They want quality storytelling, simple access and no bullshit. At the same time, there are businesses that want to reach and serve those audiences, but are struggling with the best way to do it. So, at Participant, we’re building an engine for authentic content, tailored to next the generation’s tastes and consumption; and an open, transparent business model that helps TV continue to evolve. http://www.forbes.com/sites/marketshare/2012/05/09/evan-shapiro-on-why-tv-isnt-dead-and-how-marketers-need-to-see-it/?ss=cmo-network