Free to Air TV is already dead…
(listen to this post below)
The Paul-Tyson fight last week was a seminal moment, not the boxing match, but the fact that Netflix streamed it live to 60 million people globally. For context, that is half a super bowl. And to go retro, two most-watched shows in TV history (outside of global live events) are:
- MAS*H – final episode: 105 million viewers
- Seinfeld – final episode: 76 million viewers
It’s been nearly three decades since traditional linear TV set any viewership records.
Goodnight and good luck
This is the start of the next phase in how we view ‘TV.’ There are only two modes that will survive:
- On-demand.
- Live events.
Pre-recorded, scheduled content on free-to-air television and cable is already dead—we just haven’t had the funeral yet. Streamers are coming for the last piece of the puzzle: live events.
To sport, we’ll soon add morning shows and TV news, both of which are relatively cheap to produce. These will deliver the final blow to traditional TV stations.
Netflix Live is Next
Netflix—or any streamer for that matter—could set up live local studios in a heartbeat and run them 24 hours a day in every country. Sports channels would be cheap if they focus on game highlights, which could be licensed. For News, their reporters could literally be influencers live-streaming from their phones wherever news is happening. The market already has these people ready and waiting on TikTok and Instagram. Morning show content could be populated by vloggers and bloggers eager for exposure, also shooting content straight from their pockets. There’s no need for expensive TV camera setups. Netflix could use their ad-supported model for these channels alone, and just like that, local linear TV is over.
TV Reality Check
The financial struggles of our local free-to-air TV channels have been well-documented globally and in Australia. While Channel 10 ended up in receivership and in the hands of CBS, both Seven West Media and Nine Entertainment Company have done little to secure their long-term futures. They may soon struggle to stay solvent. I know this sounds alarmist for large businesses with annual revenues of $1.4 billion and $625 million, respectively. However, their main revenue source—TV advertising—is facing a harsh reality.
In media, attention is sold through a metric called CPM (cost per thousand viewers). Here’s the reality check: free-to-air TV currently commands a premium of 700% over social media channels. That’s not a typo. A thousand viewers on Instagram, Facebook, or YouTube (the TV in your hand) cost advertisers around $7. Meanwhile, free-to-air TV charges around $50 per thousand viewers in prime time, with top shows like The Block costing as much as $175 per thousand viewers for a 30-second ad.
The irony? Most people are staring at the small TV in their hand while these overpriced commercials run on the big TV affixed to the wall. Add to this the fact that TV commercials aren’t as targeted as digital ads (specific interests & micro locations) have no click-through potential, and disappear after airing. This imbalance in CPM pricing simply can’t last.
Why does this imbalance persist? Likely because the people buying ad space for large brands grew up before the internet and have a legacy mindset that TV is somehow superior. But it won’t be long before a new generation of CEOs and CMOs starts asking why they’re paying such a premium to reach the same audience, actually a far inferior audience. When that happens, expect free-to-air TV revenues to decline by at least 80%.
This paragraph alone should convince any investor holding these stocks to sell.
What could TV do?
Like all disrupted businesses, traditional TV is dripping with opportunities to extend revenue—if they only had the courage. Here’s where they could start:
- Realize the world no longer runs in 30-minute slots. Online videos range from seconds to hours, showing that flexibility is key.
- Lower the barriers to entry for digital catch-up TV. Right now, it’s too complicated, requiring registrations, and most shows disappear after a few weeks.
- Leave entire back catalogs of shows online indefinitely, share ad revenue with content owners, and even allow content to be remixed by creators.
Instead, free-to-air TV treats catch-up services like a departure lounge for missed shows. Meanwhile, platforms like YouTube and TikTok already thrive on this long-tail content. Just search for your favorite 1980s TV show on YouTube, and you’ll see it there—earning ad revenue for Google instead of the original network.
Simply embracing long-tail content, asynchronous viewing, and allowing user-generated reinterpretations could revolutionize free-to-air TV’s business model. But they won’t do it. I know this because I’ve proposed it to multiple Australian TV channels.
Even though my show The Rebound on Channel 9 ran for three seasons, I’ve had more people tell me they’ve seen me on TikTok, where my account has millions of views. We also offered them to keep it on their catch up TV indefinitely (as we own the rights) and they refused. Free-to-air TV is stuck in a Nostalgia Trap.
Hubris can be a powerful force that brings businesses down.
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Modern Mind hack
The lesson is telling for us and our career. It’s easy to get stuck in the past. If you want to remind yourself how quickly the world changes and you’re over 30, try this simple mental exercise: think back to how drastically things shifted for you between the ages of 15 and 20. In just five years, the music, fashion, trends, and even your own attitudes about what was “cool” could feel completely outdated. Remember how the difference between 1989 and 1994 felt enormous? That’s the speed of change through youthful eyes. As we age, we tend to forget this rapid pace—but revisiting how we perceived those shifts in our younger years can help us reconnect with the rapidly evolving evolving technology economy.
Keep Thinking,
Steve.