Are pay TV channels like specialist magazines ?

Last year B&T magazine (20/9/04) asked if Australian pay TV channels are like specialist magazines.

And the representatives of these channels replied YES. This is not surprising because they typically pitch pay TV to Australian advertisers as delivering both targeted and highly involved audiences. The argument being that specialist channels attract specialist audiences. And because viewers have chosen to pay for the channel, so the argument goes, they must be interested in the content and they must therefore ‘watch more intently/closely’.

While this sounds plausible, it’s actually a load of nonsense. Australian pay TV doesn’t deliver different nor more involved TV audiences, it simply delivers smaller TV audiences.

The analogy with specialist magazines is inappropriate because TV channels are typically sold in bundles of very many different channels. So most subscribers of a particular pay channel are not people who deliberately selected to buy this particular channel – it just happened to come with their bundle. Whereas, in the case of specialist magazines, a person who buys, say, Decanter magazine undoubtedly has a serious interest in fine wine, so this magazine does deliver its advertisers a targeted (but also very small) audience. In contrast, viewers of Foxtel’s FashionTV are not fashion enthusiasts (a few are, but most aren’t). They are normal people with pretty much a normal interest in fashion and a tendency to occasionally watch FashionTV a bit.

Accidental viewing represents a huge part of the audience for all small TV channels, including genre specific pay channels. In Australia the reach of a typical pay channel halves when you count those people who watch for at least 10 minutes rather than for 1 minute. Or, put another way, in any given week more than half of a PayTV’s audience watched for less than 10 minutes – not a lot of involvement there!

As Erwin Ephron in New York pointed out to me, because the average US household can receive close to 100 channels “accidental” viewing tends to dominate the viewer composition (and audience value) of smaller cable channels (Food, House and Garden TV, Fashion, MSNBC Business, Lifetime for women, etc.). Considering that their average rating is typically 0.2 and the average amount of people-switching at any time is closer to a 5.0, this is effectively a tsunami 25 times as large constantly washing over the channels. The result is that even narrow-casting channels tend to collect undifferentiated (ie normal people) audiences.

Regardless of what PayTV operators say in marketing trade publications, they do know that their small specialist channels do not deliver targeted audiences. Indeed they have testified before US congress that they can not sell unbundled channels because they would then deliver audiences so small that no advertiser would ever be interested in buying space on them. They know they need channel surfing to deliver much of their ratings and, indeed, survive.

It is a common misconception that a genre specific channel must skew to a targeted audience. But in actual fact, the skew is far less than is anticipated. For example, in the UK the pay channel “Men and Motors” runs with the tag line “fast cars and women” – unashamedly targeting men. And yet, 30% of its viewers are women. But more importantly (and this point is frequently overlooked, or omitted from the sales pitch) is that hardly any men at all actually watch it. Only about 5% of male viewers who actually subscribe to the channel watch it at all in a week, and of those who do watch, they devote less than one hour to it (out of their 30 hours of weekly TV viewing). These same men in these pay TV households spend many more hours (18 !) each week watching the big Free-To-Air channels.

The story is the same throughout the world. But is particularly true here in Australia because as yet we have no high rating pay TV channels. Unfortunately many marketers make decisions based on industry mythology & sales patter rather than fact. They need to get (start seeking) the facts.

Byron Sharp

Dr Byron Sharp is Professor of Marketing Science at the University of South Australia where he directs the Ehrenberg-Bass Institute. The Institute’s research is financially supported by major advertisers as well as both FTA & pay TV networks such CBS, ABC, CNN, ESPN, Network Ten, and TVNZ.

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