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Sir Alan Sugar says advertising has had it
Sir Alan Sugar, the chairman of consumer electronics company Amstrad, one of the suppliers of the Sky+ personal video recorder, believes that television advertising has had its day.
I’m a great believer in sticking to what you know: I know about business and the electronics industry. I appear on television, my company makes equipment which enables people to watch television, and of course I watch it myself. But I don’t claim to be a broadcasting guru.
But as an outsider with a little bit of inside knowledge, I can make some observations about the kind of changes I see in the industry, particularly in the way technology is beginning to impact on the way television is organised and funded.
What is interesting is how satellite and cable have hardly managed to weaken the grip of the Big Five terrestrial broadcasters: BBC One and Two, ITV, Channel 4 and Five. This is in spite of the fact that – in theory at least – there is far more choice out there for the viewer.
Over the last couple of decades the major change in television has been the creation of extra channels through satellite and cable. With the advent of digital TV, we should see an ever-expanding range of choice, as more and more new channels come on air. It gets easier every day to set up as a broadcaster.
Given all that, increased competition should mean it becomes tougher for the individual broadcaster. But the Big Five don’t seem to be seriously challenged. They’re not even breathing heavily yet.
None of the ten or so ‘secondary’ channels, as I consider them, is especially popular or could survive in its own right. So I believe in the short term – by which I mean the next ten years – the Big Five have little to fear from the new kids on the block. Their major concern will be fighting amongst themselves.
But I don’t want to give the impression that the Big Five can sit back smugly and assume that everything will carry on for them just as it has for the last 20 years.
If I headed any of the commercial channels, what would worry me right now is the kind of device my own company makes, which is beginning to revolutionise the way we watch television in this country: the PVR, Personal Video Recorder, essentially a set-top box incorporating a hard disk drive.
The people who are buying these so far are what I call the techno-clique, and right now you might not know why you would want one: but as soon as the cost begins to drop, you’ll find out. Within ten years PVRs will be as ubiquitous and as cheap as the DVD player is today.
Once you have tried one, you are never going to go back because you can pre-programme what you want to watch; you can store programmes, advance them, and even make up your own television channel if you like. We are close to the tipping point where they will become mass market.
But why are they so revolutionary?
One of the main reasons I own a PVR is so I can skip adverts. I haven’t watched an ad spot for over a year now – of course, apart from my own Premium Bonds one.
Everybody is going to be doing the same soon. Digital devices make it easier than ever to programme out the ads, and what kind of brain-dead viewer is going to sit there solemnly watching them go through if they have the option of jumping? So in my view, advertising has had it, on television.
It is going to be a huge problem for broadcasters. How can you fund commercial television without advertising?
My warning, if you work at a commercial television channel, is to get another job, because at the moment it is advertising that pays your wages.
In eight or nine years’ time, the advertisers will not want to pay you because no one will be watching the adverts. It is as simple as that. Defect to the BBC now.
Advertisers and broadcasters are going to have to learn to be cleverer, and to persuade the regulators that sponsorship and product placement are in the long run essential for the survival of television as we know it. The only alternative is cross-media ownership. Broadcasters could buy themselves a newspaper title or a magazine empire because it is a means of getting revenue from advertising. Then television becomes a bolt-on activity subsidised by your other media interests. Your newspapers will promote your programmes and vice versa.
Whatever the solution, my personal opinion is that the days of adverts on TV are numbered.
You can’t put the bunny back into the hat; you might not like it, but you cannot stop manufacturers producing high technology devices to record programmes in a digital format.
Before long, people will be watching television downloaded or live streamed, on their mobiles. A different kind of television, perhaps, tailored for the viewer on the move, and offering another kind of direct marketing opportunity.
So my advice to those who make or broadcast programmes is to wake up to what is going on around you. Otherwise commercial television as we know it will close down.
Sir Alan Sugar is the chairman of Amstrad plc. This is an abridged extract from UKTV’s new book, The Next Big Thing, a collection of essays about the future of broadcasting, published by Premium Publishing.
Copyright © 2005 Premium Publishing. All rights reserved. Reproduced with permission.
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