Tuesday, November 04, 2008

Viacom's Slump Should Serve as Warning For All TV Networks

Video killed the radio star, and online video may kill the TV star.
Judging from MTV's dwindling ratings, younger viewers are staying away from living room TV in favor of the PC. As a result, MTV's parent company,Viacom must develop alternative methods to recapture its coveted young audience. Viacom, one of the world's largest media conglomerates, saw $400 million dollars of net income disappear during the third quarter, and its profit is 37% lower than it was at this point in 2007.

During an interview with adweek.com, Viacom CEO Philippe Dauman used the opportunity to blame the overall economic condition, but he also conceded that Viacom has lost its ability to preserve viewer loyalty. He has mentioned several remedies for the slump, with an emphasis on interactive applications that would help heighten viewer engagement with shows demo-specific programming blocks for MTV.

The softness lies in repeat viewership and we’re attacking the issue on multiple fronts.We have to create more compelling reasons to get people to watch.Viacom, like every company, has had to adjust to the realities of a serious economic downturn.There was a general pullback in spending by marketers as they responded to lower consumer spending.The ad market has clearly changed

MTV fell out of the top 20 in the third quarter with 865,000 prime time viewers, which is almost a fifth lower than the 2007 average. Younger viewers weren't the only ones tuning out. VH1, the grownup version of MTV, (and another one of Viacom's jewel networks),  averaged 630,000 prime time viewers, which marked a 16% decline from last year.
Viacom's numbers raise a big question on the minds of executives in the other major media corporations: "Who might be next?" Overall, third-quarter viewership was higher for cable and broadcast networks than in 2007, but those numbers could be skewed for NBC, when you consider the major bump NBC received from America's love affair with record-breaking swimmer Michael Phelps and the summer Olympics in China.

ABC,NBC and CBS should consider a similar approach to their marketing efforts,because the shift to online video will eventually impact on their viewership numbers as well.

Posted By Matt O'Hern at 04:24 PM
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