In broadcasting, the cost of providing any given program is relatively fixed – regardless of the number of viewers. Thus emerges the need to draw in a specific number of viewers – when viewership falls below that level, the broadcaster suffers operating losses. Dallas W. Smythe, in 1951, recognized that audiences were subjected to programming which was produced, distributed, and promoted to meet the interests of advertisers who support these private broadcasting companies and developed media technology for profit. Let us take an example to understand this.
A Balaji Telefilms comes to a decision on which program to produce based on the need to minimize the cost of production of audience for sale and profit. A critical point to understand here is that a production house like Balaji Telefilms merely produces a program, it does not really sell the program. The aim of production is to sell its audience to the advertisers. If this audience is alluring enough to an advertiser, the network earns substantially as advertisers pay crores of rupees to reach out to their desired TG via broadcast media. The production house profits when the cost of producing the audience is less than the income that is generated by selling that audience to advertisers. This is the answer to the ever-popular question: why do serials like Kyunki Saas Bhi Kabhi Bahu Thi and Naagin run for years and make money, despite being poorly produced and rather frivolous? Producers don’t produce TV content for viewers like you and me, they produce content for the middle-class Indian households whom their advertisers – the likes of HUL’s Surf Excel and Lux – want to sell to.
The Virtuous Circle of Profitability in Broadcasting is based on the idea that when a programme or channel is doing well, their revenues and audience viewership increases, as a result of which so do profits which are invested back into improving programming content which of course results in even more viewership and higher profits. On the other side, the Vicious Circle of Profitability (or Loss-making, as the case is) is based on the idea that when a programme or channel is doing badly, it just does worse and rarely picks up: low programming spends leads to low viewership for which the channel earns less revenue and little to no profit which when invested back is a lower programming budget with which it is difficult to improve content and as a result even the current audience base wilts away resulting in even lesser revenues and greater losses.
The implication is that when a broadcaster tries to avoid catering to the masses that give them the high ratings that bring in advertisers and target niche audiences, they are usually unable to create quality content due to the limited programming budgets available. Thus we realize that audience and TV broadcasting economics have a close linkage. The fortunes of a channel are dependent on programming that results in high BARC ratings. As a community, broadcasters wanted a true and clear system of audience measurement, but now they are trapped into it because advertisers blindly look at BARC ratings every Wednesday and take decisions worth crores, leaving no space for innovation in programming.
The audience is ‘a key uncertainty’ that influences the economics of advertiser-supported broadcast media. We say this because the audience experiences a lack of information and uncertainty about the quality of content that are about to tune into. It is believed that they make imperfect decisions about what content to consume which poses a risk to producers and advertisers alike. Despite this, marketers are far more willing to pay for consumers than consumers are to pay for content. An ever-expanding array of channels, platforms, devices, experiences, and choices makes consumers less than willing to pay a premium for content.
The attention that viewers pay to the content that is playing on their television sets is information that is next to impossible to collect, quantify and verify. This makes it difficult to turn abstract “attention” into tangible data that can be sold by a broadcaster to prospective advertisers. The economics of audience revolves around the prediction and measurement of the behaviour of media consumers. Audience measurement is far from being an exact science, but the industry functions on just that. In fact, advertising deals are based on the Prediction of audience viewership, which is far from being infallible. Business transactions are done on historic reports that are published about educated guesses regarding the size and composition of the audience that is expected to view a programme being broadcast.
The problem with Measuring audience viewership is the technique of measurement: most broadcast audience measurement agencies take small sample sizes whose population characteristics might be inaccurate, are usually are not representative of all segments equally, wherein the participants are human and thus their responses are not perfect or always truthful. While a valuable demographic is only valuable if it is measured in a way that advertisers consider reliable, these measurement agencies use statistical instruments such as confidence intervals to prove the accuracy of this data and that is why there is a clear monopoly in the business of audience measurement.
The elusive, mysterious and basically unknowable Actual Audience of any broadcast content is really an entirely different number. To bridge this gap, the world over, efforts to improve the audience measurement processes are being taken via increasing the sample sizes and using as much automation as possible through technology. But this is being met with resistance as it may intrude on the privacy of participants and again the data’s reliability will go down if we do not have an extensive sample size.
With the inter-media and intra-media fragmentation that has taken place (variety in terms of both channels and media) along with the growing availability of pay TV, on-demand content, and subscription-based TV, media audiences are increasingly able to seek content that interests them specifically rather than being ‘programmed to’ whatever broadcasters and cable-operators choose to broadcast. This puts consumers in a position where they can direct the fate of television: a control that has significant consequences for the future of television – for storytelling and monetization.
Unlike a traditional TV network, on-demand subscriber-based broadcasters like Netflix, Amazon Prime Video, Hotstar, etc. have the unique ability to put content in front of clearly targeted, interest-based viewers within a very short time. These OTT platforms have better taste profiles and matching algorithms than Balaji Telefilms, Dharma Productions, MRUC’s BARC or big advertisers could ever dream of. Non advertiser-supported platforms are in a position to produce pilots of content and test them out with real viewers before fully committing to them. Without the pressure of delivering to advertisers and distributors, they can simply let the market decide if they like the content or not.
Through their built-in audience distribution frameworks, such platforms have an audience whose content-viewing patterns and preferences are known, can be segmented, and who would probably love to participate in such a process of developing content. A direct-to-consumer approach is by all accounts the way forward for broadcasters as it would save time and costs as well as significantly reduce risks. In addition, it empowers the audience to give feedback on the content they are consuming. Rather than attempting to make supposedly-informed guesses at the viewer’s interest levels, broadcasters need to tap into them in real-time. Remember: today’s viewer’s have more than just a remote control; they have multiple devices and a plethora of content to choose from.
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