At the end of 2016, Chapter 42 updated an article - "The Future in My Eyes", which mentioned the changes taking place in the video field and the opportunities that still exist in the video industry. The article I share with you today is of the same type of thinking. Many people may have discovered that the traditional TV industry is in a huge crisis. But we still can't help but ask: How did all this happen, and who will be the next winner? A few weeks ago, I participated in the recording of a live show of Cheddar (a new media company), and discussed topics such as venture capital and VR technology with Jon Steinberg and his team. Cheddar is building an Internet-based news website: live broadcast on Facebook through a new live broadcast tool, and then publish the edited clips on social platforms such as Medium, aiming to provide a new form of financial news broadcast for millennials. After the broadcast, I wandered around the New York Stock Exchange, browsing the Fox News, Ga Ga Box, and other TV booths. I began to think about the future of television and how much Cheddar's model would overlap with the next few years. 1) Ratings dropped sharply, facing trouble Over the past seven or eight years, the proportion of American households using pay TV has gradually decreased. Overall audience numbers are not very encouraging either, with only seniors watching more TV now than they did five years ago: The managers of the TV industry are not stupid. Some of them have found that over-the-top (OTT) is changing the entire TV industry. But they mistakenly believe that when over-the-top (OTT) becomes the mainstream, they can adopt their own strategies to restore the decline of the TV industry. They imagine the future of the TV industry to be like this: However, the TV industry is unlikely to reach a point where customers are downloading apps endlessly. In fact, research shows that the average customer downloads zero apps per month. Furthermore, the first five apps on a customer’s phone account for 84% of their app usage time, and their minds can no longer accommodate the information provided by other apps, even if they want to watch them, they will not pay for them. 2) Power law problem In the next 5-10 years, the traditional TV model supported by network effects will gradually break down. The business model of the TV industry shows that the more viewers there are, the better deals companies can make with advertisers and publishers, and the more profits they will make. This relationship is not linear. The TV industry, like other businesses that rely on network effects for marketing, distributes rents through power laws. Here is a power law diagram for TV: Video sites with more than 10 million hits per month (such as Fox, NBCU, and Time Warner) take the lion's share of the $73 million in profits in the domestic U.S. television advertising industry, while other small companies can only compete with each other for a fraction of the profits. However, the power law that once benefited traditional TV media can only lead to its drastic decline. If the number of viewers continues to decline, even the largest offline TV media will soon find themselves on the cusp of a struggle for the profits they once took for granted. Once this happens, the profits earned by TV media will soon decline. 3) Who will benefit from the collapse of traditional television media? The biggest beneficiaries are the major social networking sites that publish videos, such as Facebook, Snapchat, and Twitter. These new sites are highly active based on the power law, and in most cases are larger than traditional TV networks and have a stronger global influence. They can use data statistics to accurately locate users' video needs. If operated properly, these video sites can transform audience-based platforms into video program-based platforms, further expanding the $73 million TV advertising market. The second group of beneficiaries are the video aggregation platforms that emerged from the new trend: Netflix, Amazon, YouTube, etc. These offshoots will continue to accumulate users, form collections of a range of video content, and establish direct connections with customers. Only a few of these video sites will survive. In terms of time and money, these sites will encounter bottlenecks in the number of subscriptions per customer. Netflix's site has grown dramatically, which shows that users prefer a stable supply of streaming content: The third group of beneficiaries are Internet-based news sites such as Cheddar and potential companies such as Vice, Buzzfeed and Mic. These companies can continue to attract a certain number of viewers on new platforms by focusing on the unique needs of millennials and optimizing new social information distribution channels. The decline in the number of offline viewers in the next 5-10 years is a huge crisis for traditional TV networks. We hope that TV industry founders will not let the crisis happen in vain, because this is the best time to establish a new media company. As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity. |
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