Broadcasters, BDUs and regulators, don’t forget your Jim exercises

Jim seems like a regular guy. He went to university, found a job after graduation, pays rent and would like to own a home someday. But in spite of his regularity, Jim does not have the patience, money, or need for our regulated broadcasting system.It's not that Jim doesn't like TV. On the contrary, he never misses his weekly favourites. He just doesn't pay for them. Jim realized when he was a poor student with no TV - and certainly no premium cable package - that he could watch his favourite shows via the broadband Internet connection he subscribed to for school purposes. After graduation, the combination of rent and loan payments left Jim with little disposable cash, so paying $50 a month to watch the few shows a week that interested him made little sense. Indeed, it made even less sense considering he'd already become accustom to watching TV a la carte online. So Jim left the broadcasting system, and it's hard to argue that it wasn't because of that system's own failings. The idea of Jim as the model TV-to-Internet-shifter comes from Nordicity Group Ltd.'s Terri Wills, who presented the idea at the Insight Telecommunications and Broadcasting Conference in May. It stems from her time working in strategy at BBC where they would use focus groups and create case studies to better understand media consumption habits. "I think it's something that's really lacking ," says Wills. "In particularly the regulatory approach in Canada hasn't really thought through how individuals will consume media in the future, and then how people in the regulatory regime should respond to people like Jim. We just tend to look at research, research, research and data." Her presentation in May, titled "Keeping Jim in the Broadcasting System," was just one of a series of "will-the-Internet-kill-traditional-television" discussions the industry has had lately - the most recent case being the town hall session at the Banff World Television Festival based on Nordicity's own Banff Green Paper 2007: The Future of Television in Canada (CCR, June 22/2007).Wills says focusing on specific individuals who are opting out of our broadcasting system gives insight into what the future might hold for those currently staying within the regulated industry. While figures may show that only a small percentage of the population are watching less traditional TV and consuming more programs online, this percentage represents a group of early adopters that traditionally signal more widespread future behaviours. But just because Jim has left the broadcasting system, it doesn't mean he can't be brought back into the fold. Unfortunately for broadcasters and BDUs, however, his time away will shape his attitudes if and when he does return. "Jim may grow up and he may change his habits slightly, but there are certain habits that will be formed," says Wills. "He may be more willing to pay for things in the future, but will have a willingness to pay for content only that he watches." Services such as video on demand, for instance, will hold greater appeal for Jim.Of course, this helps explain why Jim left in the first place: price, and the regulatory requirement that he pay for so many channels that he would never watch. Even though on-demand and pay-per-view offerings from BDUs are constantly increasing in Canada, customers still have to pay a minimum of more than $40 a month for a basic cable package of about 40 channels before they can access any of the pick-and-pay content.Wills admits that, upon returning to Canada from her time in the UK, she was turned off by this all-or-nothing TV proposition. "I tend to enjoy the CBC, a few programs on CTV and the BBC, and I'm not going to spend $50 a month on that," she says. She also points out that part of the problem facing Canada's broadcasters and BDUs stems from Canada's own history of television distribution. Because 88% of the population watches TV through a BDU subscription, it's only natural consumers will shift their habits when content is made available to them online for free. In contrast, in the UK where free, over-the-air has television has always been the market leader, five broadcasters - BBC, BSkyB, Channel 4, ITV and National Grid Wireless - launched Freeview, a free-to-air digital TV service in 2002. With a one-time purchase of a set-top box for around $40 - along with the UK's ubiquitous annual television license fee of approximately $270 per household - viewers can receive about 40 channels. Subscription services are still the domain of sports and movie packages, and online content offers catch-up potential for those who missed a show during the linear broadcast schedule. Further proof of Freeview's success is that former specialty channels available only through subscription services, like movie network Film4, converted to the free-to-air model to increase their viewership and, subsequently, advertising dollars.Unfortunately for Canada, we have about half the population of the UK spread across 40 times the landmass, making a substantial free-to-air distribution model a tricky proposition. However, with the industry considering adding a sub-basic cable package as part of a future over-the-air shutdown, our regulatory landscape may be altered in such a way to allow for a situation similar to the UKs. If consumers can install a digital set-top box in their home for the minimal price of a sub-basic cable package - say less than $10 a month - then entry to a pick-and-pay TV model becomes much more affordable. But would that be enough to bring the strays back into the broadcasting system? Instead of speculating, I went straight to the source. We've got a Jim (at least one that I know of) working in the Decima office. Since moving into his own apartment he's been watching television - about four or five shows a week - online. Most programs, he says, are available within an hour after airing on TV and in some cases, such as with Battlestar Galactica, episodes are available online up to six months in advance of when they air here on TV because the show first runs in the UK. Exactly why does our Jim choose to skirt our regulated broadcasting system? "There's just not enough value there for me for $40 a month," he says. "I can go online, get only the shows that I want and it's free." But he says he would definitely re-enter the fold if he was given the chance to pick-and-pay without a high monthly cost. "As convenient as it is watch shows on my computer, the quality is terrible compared to TV," he says. Of course, the policies of regulators, BDUs and broadcasters would all have to align before we move to a easy access, pick-and-pay universe. "For a BDU, they would have to see the potential in the up-sell," says Wills. "And I think as we go on people are spending a lot of money on DVDs for shows like 24, so that signals people are possibly willing to spend on on-demand content." In other words, time to pay closer attention to the Jims.

Broadcasters, BDUs and regulators, don’t forget your Jim exercises

Broadcast | July 5, 2007

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