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Don't Panic, Says CBS: More People Are Watching TV Now Than a Decade Ago And millennials will come around, too

August 18, 2015 By Jason Lynch

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On Friday, FX sounded the alarm about the state, and future, of television. But today CBS offered a counterpoint to FX chief John Landgraf's argument, as network execs made their case that TV's future is much healthier than many would believe.

That was the message that David Poltrack, chief research officer of CBS Corp. and president of CBS Vision, and Marc DeBevoise, evp and gm at CBS Interactive, kept hammering home as they met with reporters at the Television Critics Association's summer press tour.

Poltrack set out to puncture what he called three major "myths" about the industry and its future: that TV viewership is in decline (not true, he said), that millennials are moving away from TV content (only partly true) and that advertising in TV programs has lost value (also untrue, per Poltrack: "If executed effectively, advertising in TV programs has actually gained value").

When it comes to watching TV shows, Poltrack said, the audience for CBS programming has actually grown in the last decade. It's up to 12.3 million viewers in 2014-2015 from 12.1 million viewers in 2003-2004. The big shift, he said, is that live viewing has shrunk from 100 percent a decade ago to 61 percent now.

That's because 79 percent of U.S. households now have broadband, 65 percent of U.S. adults own smartphones and 42 percent of U.S. adults own tablets, all of which has resulted in a shift in how audiences consume content. While smartphones and tablets have been in existence for several years, the most recent major change in viewing habits, said DeBevoise, is the rise of "connected TVs," which are now in 60 percent of homes.

It takes "12 to 18 months" to figure out how to measure TV viewership on new devices and platforms, added DeBevoise. CBS predicts that viewership in 2020 will grow beyond 12.3 million, with 50 percent of that being live TV and 50 percent of it non-linear, with all non-linear viewing being measured by that time

As for millennial audiences, Poltrack said that while TV viewing among adults ages 18 to 34 declined 11 percent in the last year, some of that can be explained by how differently they watch TV content. Households with broadband-only connections (i.e., Internet and no cable) now represent 3 percent of all households measured by Nielsen.

And much of the content viewed by this audience is unmeasured. "We see a future where the opportunity to grab onto that measurement" is significant, said DeBevoise.

Poltrack said Symphony Advanced Media is one of many services trying to close that gap and has been beta-testing a solution using smartphone technology, which will be introduced on Sept. 1. Per their work, he said, Nielsen didn't measure 22 percent of millennial viewing in the past two weeks.

Poltrack pointed to data that showed that as previous generations grew older, their prime-time viewing increased. Millennials "clearly appear to be following the pattern of previous generations" as they move past 25, he said. "The difference in viewing levels has always been life-stage related."

Today, only two-thirds of adults ages 18 to 34 are living on their own, independent of their parents. And those who do still live at home often spend little time there, said Poltrack. As those audiences leave their parents' homes, settle down and start families of their own, "many of them will, like the generations before them, purchase the biggest-screen television they can afford" and start watching broadcast TV, said Poltrack.

For the third "myth," that advertising during TV programs has lost value, Poltrack discussed CBS' June study that TV trumps digital in spending and reach. CBS asked Nielsen to analyze the campaign reach of 315 major advertisers and found that "the average digital campaign added just 5 reach points to the 62 percent television-campaign delivery," said Poltrack.

While Poltrack and DeBevoise said TV isn't in such dire shape, after all, they also made sure to emphasize how CBS is paving the way to thrive in a new landscape. Its digital sites have more than 93 million multiplatform users per month, trailing only YouTube in the U.S.

CBS launched its new subscription OTT service, CBS All-Access, last fall, and found that subscribers "watch twice as much content as non-subscribers," said DeBevoise. Those users' average age is 43, with more than 70 percent of that audience in the 18-to-49 demographic. "We're delivering all of our ads essentially 100 percent on target in this service because we actually know all the users before they come and watch the video on our platforms," he added.

As the network monetizes these new platforms, "we're seeing revenue grow, we're seeing opportunity grow," said DeBevoise. "We make more money per view in digital than we do on air. There just aren't as many viewers at this point. It is a small percentage of the overall viewership pie."

CBS will also continue to stream the major sporting events it televises. And while DeBevoise wasn't ready to announce whether Super Bowl 50 will be streamed in February, he said, "You can read between the lines about where we're heading with that one."

Another important task for CBS and other networks in the coming years, according to Poltrack: weaning viewers off the DVR—which has stalled at 49 percent penetration and is "a non-monetized form of viewing" after seven days. The next step is shifting them over to VOD and other digital platforms, where the network can continue to make money off of them, even after that initial seven-day window.

And those viewers who do stick with their DVRs are fast-forwarding through fewer ads than they used to. While 50 percent of DVR users would routinely skip ads, "the number is declining now," said Poltrack, "because they're too busy on their phones to fast-forward through the ads," given that two-thirds of users watch TV while also engaged with a second screen.

To cap off his myth-busting panel, Poltrack also made the case that "people like advertising."

"They're not craving for a world without advertising," he said. What audiences don't like are "ads that aren't relevant to them. But they enjoy ads that are relevant to them."

Given his rosier-than-FX's outlook on the state of the industry, "we believe the future of CBS is bright," said Poltrack. And while "there's a lot more competition out there, our job is to remain on top. The best will survive."

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