An Expanding Universe of Choices The digital network is becoming the complementary alternative to the television delivery model we’ve known for decades, since it isn’t limited to a fixed number of daily timeslots. The digital network is also free to create new programming models that appeal to smaller, but more loyal viewers, who are able to view as many episodes as they wish and when it is convenient. The traditional linear network television model is not disappearing, or even losing its prominence, but it will be one of many choices in an expanding viewing universe.

The TV Set: Central to the Viewing Experience There is, and will continue to be, one constant in the television medium: the TV set. Regardless of size or picture quality, no desktop computer, tablet or smartphone can compete with the TV in the home or anywhere people are watching. Nielsen reported in its 2015 Advanced National TV Household Universe Estimate that the number of US TV households increased 0.4%, to 116.3 million, compared to the 2013–2014 estimate of 115.6 million. This number is only expected to increase because 1.66 million new households were formed during 2014, the largest increase since 2005. As more Millennials become homeowners during the next few years, the number of new households – and TV households – is likely to increase even more.

TV Viewership Shrinks Slightly, But Not Its Dominance According to Nielsen’s December 2014 Total Audience Report, daily television viewing of all adults, 18+, did decrease 4.4% from Q3 2013’s 4 hours, 44 minutes to Q3 2014’s 4 hours, 32 minutes. Other viewing options continued to register increases: DVR viewing, +7.1%; using the Internet on a computer, +9%; and using a smartphone, +32.8%. Despite these gains, TV viewing still represents 42% of the total of 10 hours, 52 minutes that Nielsen measures for 8 media activities or devices used during an average day.

Digital Choices Still Follow Radio Radio was second to TV usage throughout an average day, at 25%, and most of that occurs when people are commuting when TV or any form of video viewing is not an option. Smartphone usage is only 14% of the day; followed by using the Internet on a computer, 10%; and watching time-shifted TV (on a DVR), 5%. It’s important to remember that these devices are often a companion and complement to TV viewing, as people search for information about the shows they are watching and the products being advertised.

Young Adults Still Watch TV It may be a fact that traditional TV viewing for adults, 18–24, decreased 19%, comparing Q3 2013 to Q3 2014 and 33% of them were watching TV shows and movies via online TV services and 29% were watching live TV broadcasts during March 2014. Concluding that young adults don’t watch TV would be a mistake, however. During Q3 2014, adults, 18–24, spent 91 hours, 32 minutes watching traditional TV; 15 hours, 5 minutes watching video on the Internet; and 3 hours, 6 minutes watching video on a smartphone. Even when young adults are viewing content via online TV services, they are still watching a TV set, which makes it very easy to switch from a digital to a traditional network.

Millennial Men Haven’t Abandoned Television Another myth is that Millennial men are particularly difficult to reach on TV. The facts certainly reveal that Millennial men watch less television per week, 20 hours, than Millennial women, 23 hours; Gen X men, 28 hours; and Baby Boomer men, 38 hours. Millennial men also spend more time watching videos on the Internet per week, 2 hours, 15 minutes, than any other age group; HOWEVER, that is still just a bit more than 10% of the time they spend watching traditional TV.

The Inconsequential “Cord Cutter” Some people have certainly “cut the cord” to their cable, satellite or broadband Internet service, but during 2014, they were only 5.5% of all US TV households. It now appears that cord cutting was a function of the Recession, especially among 44.4% of adults younger than 35 and 41.2% of those living alone. As more young adults are able to find the jobs that weren’t available just a few years ago, form new households and buy homes, they are more likely to have the discretionary income to reconnect the cord...or never cut it in the first place.

Meet the “Local Digerati” Nielsen has dubbed those TV viewers that are more likely to be watching digital networks and paying for the privilege as the “Local Digerati.” According to Nielsen, there are more than 27 million US adults who qualify as Local Digerati. They are defined first by their tendency to use the Internet and apps to access local news and find community events and turn to social media for local information. The Local Digerati are typically younger and female, educated, employed and with above-average annual household incomes. More important to retailers is that larger percentages of them, compared to all adults, 18+, shop major local retail sectors, including car dealerships.

What the Local Digerati Are Digesting Nielsen also found that 46% of Local Digerati are primarily light TV viewers while one-third of them are heavy TV viewers and 21% medium viewers. Despite not being avid TV watchers, 86% of Local Digerati said they had watched broadcast TV during the past week and 65% watched local news. 50% of Local Digerati visited any local broadcast TV station’s Website during the past 30 days of the Nielsen study. In addition, 46% watched the local evening news, 41% local morning news and 27% late local news.

Local Digerati Are Local Shoppers A greater percentage of Local Digerati, who use the Internet for local information, shopped at 17 different retail store categories than all adults, 18+. In addition, Local Digerati were more likely than all local adults, 18+, to visit major auto dealers and/or their Websites and shop for the purchase or lease of a new or used vehicle. 17% of Local Digerati visited any Toyota dealership Website, compared to 13% of all adults, 18+; any Ford dealership Website, 15% and 13%, respectively; and any automotive Website, 15% and 10%, respectively.

The Future Is Now During 2015, HBO will reportedly launch a separate online digital channel. It will be one of a number of digital networks able to compete and attract large enough audiences to be successful, just as CBS, NBC and ABC have been doing for decades. During January 2015, Dish introduced Sling TV (not be confused with Slingbox), a streaming digital service that will include the most popular cable TV channels: TNT, TBS, CNN, Food Network, HGTV, Cartoon Network, Disney, ESPN and ESPN2, among others – and only $20 a month. Sling TV subscribers will also be able to choose from “add-on packs” at an additional $5 per month to access HLN, Cooking Channel, DIY Network and others.

People Want Both Traditional and Digital Networks A December 2014 study found that 49% of multiplatform TV viewers had subscriptions for both multichannel (cable, satellite or Telco) and SVOD (streaming video on-demand). Only 29% had SVOD only and 13% multichannel only. During Q3 2014, 34% of US households had streamed video, 26% had paid for streaming video and 9% had paid for streaming video from multiple providers. By comparison, 81% had a traditional pay TV subscription. As of October 2014, Google Chromecast moved into second place, with 20% of the streaming media device market; however, the Roku Streaming Stick maintained a comfortable lead, at 29%.

4K TV Is Coming…But Slower 4K TV will eventually replace the standard HD of today; and Parks Associates estimates 4K will reach 225 million units sold worldwide by 2018. The Asia-Pacific region will account for 57% of those sales while North America is only likely to be approximately 6%. Consumers in Japan and South Korea can already receive 4K video service; DIRECTV reportedly will be the first US 4K video service provider. The obstacles to a more rapid transition to 4K TV in the US is that it uses four times the data of HD. Content production must change to process all that data and the bandwidth that most US households receive is not adequate for the streaming of so much data.

On the Horizon: An Apple Digital Network According to various reports, Apple is exploring the possibility of creating custom programming packages for its customers, which will likely be received through a 4th-generation Apple TV box. To date, Apple hasn’t made much headway as a player in digital networks because the major multichannel subscription-based carriers, such as Comcast, Dish and Verizon’s FIOS, want to maintain their relationships with consumers. As established digital networks, such as Netflix and Hulu, and new players, HBO and Sling TV, enter and succeed in the market, it will be more difficult for content providers and carriers to keep Apple from grabbing its share of the pie.

On the Horizon: Automating the TV Advertising Model The old system of manual, labor-intensive of TV ad selling and buying is giving way to automation, which is required to continue to support the traditional linear TV network and add the proliferation of digital networks. There will be so much audience measurement data and channels for TV ad buys that brands and agencies will need an automated system to reach narrower audiences with custom messages and know that ad dollars are still being spent effectively and efficiently.

On the Horizon: New Digital Network Ventures The former CEO of Hulu has reportedly received 75 million dollars from a top list of investors to start Vessel, a video subscription service that would include the kind of content on Hulu as well as YouTube.   TAPP, a streaming video on-demand service, has already launched. It consists of individual channels for personalities with huge numbers of fans that follow them on social media. A former YouTube vice president will be launching Victorious, which reportedly will allow people who have become “online stars” to create a mobile app branded with their personality.

Don’t Fear the Future It’s clear that the Future of Television will be further fragmented, providing consumers with more content sources, offering new, original and daring programming unavailable for the mass audiences of broadcast and cable TV. What seems equally clear is that the TV set will remain the dominating and central device for video viewing and that the traditional linear TV network model is not about to disappear, or even lose its #1 position, anytime soon, or ever.   Advertisers will have to adjust, as TV evolves, but they are likely to benefit from these changes and find new ways to reach their specific and unique audiences with more efficiency and effectiveness.