Why the Digital Conversion Will Destroy TV Tokyo and TBS

Yesterday I wrote about why the conversion in Japan by television stations from analogue to digital is going to wipe out a bunch of FM radio stations. Today I will write about why this will also kill off some of the poorly rated TV stations too (good riddance!).

The digital conversion that is scheduled to occur on July 24, 2011, is going to kill off a bunch of FM radio stations in this country (especially Tokyo) because you will no longer be able to hear FM radio in your Toyota or Nissan without special equipment. The digital sets are not compatible with analogue.

Also, the economic consideration that analogue equipment is not manufactured in Japan anymore plays a big part. It may not be so much a matter of what the consumer wants, but what the manufacturer wants.

From that blog:

After July 2011, on your dashboard, you will have a digital GPS, Internet, digital TV and digital radio. Want to do Social Media, YouTube, Twitter, U-Stream, blog? Got you covered. Need to Google or Yahoo search? Sure. When you need traffic conditions, just a click on your GPS will give you up to the minute details on traffic and road conditions. All the TV channels? No problem. Throw on top of that 6 digital radio channels and, of course, a CD player and probably an iPod connection, and you have the next generation of car entertainment system. 

Read that entire blog here.

Today's blog will show you why I think this digital conversion is going to kill off TV stations like TV Tokyo and TBS who are consistently last in ratings.

It is important that you good folks have an understanding of the Long Tail to fully grasp this. For a brief explanation of what the Long Tail is, read here and here.

When the digital conversion happens in July of 2011, suddenly there is going to be massive choice on your television. The playing field will be evened quite a bit. Instead of being able to receive just 4 ~ 6 channels like today's analogue TV does, your system will be able to receive hundreds of TV channels.

Now, what happens to people when they are given a choice? Do they stick with watching the same 4 channels, or do they TV zap and try many channels?

History shows us that when people are offered a choice, they will let their own personal tastes dictate what they decide to consume whether we are talking about TV programs, restaurants, clothes, or even  jams and jellies for toast.

Let's use jam and jelly for our example.

Go to any convenience store where shelf space is limited. How many jams and jellies do they offer? 4? 5? Go to any grocery store. How many jams and jellies do they offer? 18? 20? Go to Amazon.com, how many jams and jellies do they offer? Over 1,300.

Now it makes sense that if Joe-blow is buying the lemon-tangerine marmalade made in Holland, that is one less purchase of the generic brand "STRAWBERRY JAM" that he is going to make, right?

Get it? Having more choice doesn't mean that people will buy more jam; it means that people will diversify their tastes. The more people are offered, the more wide-spread their choice becomes, the more dispersed their spending will be. More choices will result in a displacement of time and money from the old choices that were dictated simply due to lack of choice (caused by limitations due to time, money and space).

When people have wide choices they will exercise more discretion 

and more personal taste and freedom of choice

It is the same with TV.

When there are 300 TV channels competing for your attention and sponsor's money - both of these critical factors to the survival of TV (audience and money) will be more widely dispersed.

Think of it this way: You are the maker of, say, outdoor goods like tents, bicycles and barbeques. Say, the price for 25 TV ads on a TV station like TV Tokyo is about $150,000 (USD). The price of 35 TV ads on the sports channel is $14,000. Sure there are more viewers on TV Tokyo, but Sports TV offers a targeted audience of men who like sports (and, by the way, many are probably are married, have families, and like the outdoors).... TV Tokyo's audience ranges from 10-year-olds to 80-year-olds; Sports TV target audience is mainly 30 ~ 50-year-old men.

Now, where would you spend the money if you were the sponsor?

It is obvious that you would go for the Sports TV. It will be the same for all manufacturers whether they make diapers or women's fashion brand shoes. The diaspora of audience will make targeting even more important as time goes by.

But there will still be a place for the catch-all, wide audience accepted platform to advertise hit products; say the new Hollywood Blockbuster or the new Disney Park attraction that appeals to the entire family. Those will still be handled by the old style TV stations. The old style TV station thats target a wide audience will be amply served by today's #1 rated (by far) TV stations: Fuji TV and Nihon TV (at #2)... The stations like TV Tokyo and TBS, who fight it out for last place, will find it more and more difficult to find buyers for their ad space and are headed for very tough times and difficult decisions.

Sports TV can sell TV ads for 1/10th the price of TV Tokyo because they only have about 60 employees... TV Tokyo has over 700! TV Tokyo group has over 1,000!

Guess what? When the playing field is evened, then everyone will have to tighten their belts, but guess who is going to have to fire 50 ~ 70% of their employees and probably merge with another company? TBS and TV Tokyo.

While today, the stations like TV Tokyo and TBS are all crowing about their new digital channel... The content is still the same. Only the broadcasting platform has changed. What makes them think that just by changing platforms that their ratings and income are going to increase? Good question. If anything, their viewership is going to decline due to more choices being offered and some people opting out of buying an expensive new TV (at my home, we opted out of TV over seven years ago and haven't missed it once. I wrote about not having a TV and the benefits of that here and here.)

Today, TV Tokyo's ratings are dead last and they are losing millions of dollars a year and having to borrow massive amounts of money from banks to stay afloat. How long will banks keep lending them money? (Their FM radio subsidiary, InterFM alone is losing somewhere in the neighborhood of one million dollars a year!) What makes TV Tokyo management think that, when digital goes online, and the competition increases one-hundred fold, that their fortunes will get better?

Fuji TV consistently #1 in ratings by far.  

Strong on branding and image and logo is the same each and every time.

I think that they are in for a quite rude awakening, in spite of their current bravado and high hopes that digital is going to save them from their current conundrum... (I've mentioned before that "hope" is a very poor business plan).

I also think that their poorly designed Digital 7 TV logo is a sign of things to come for them. Of course my opinion here is very subjective but I think this logo looks old-fashioned, cheaply designed and not "cool" at all. It looks old-fashioned but not "retro" and looks like a design that wasn't made by a world-class professional. Like I said, it looks very poorly thought out and very cheap. Also, in typical TV Tokyo fashion, every time you see it it is a bit different.... Why don't these guys take classes in Marketing and Branding 101?

This is TV Tokyo's Digital Logo. 

Sorry, guys but this looks really cheap. 

How about some shadows or gradation? 

Why don't you hire a professional designer?

Let me get cute here and say that, I think, in this case, "7", for TV Tokyo is not lucky. In this case, 7 is their second number (on analogue they were channel 12) and if you've ever played Craps, you know that 7 on your second number means, "Loser."

This is why I say that the times they are a changin'... Look for no TV Tokyo and no TBS TV by 2030!

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