Will the TV industry survive in an age of online convergence?

The performance of the TV industry has improved since early 2010, with stronger economic activity and political party advertising associated with elections boosting revenue.

For instance, $15 million was spent by the main political parties in the five weeks before the 2010 federal election. Much of this was allocated to TV, given the industry’s ability to reach an average national daily audience of 13 million people. IBISWorld anticipates that revenue will increase 0.5% in 2012-13, to reach $4.98 billion. However, over the five years through 2012-13, revenue is expected to decline at an annualised 3.8%.

The industry comprises three components: commercial free-to-air operators (over 75% of revenue), public TV operators such as the Australian Broadcasting Corporation (ABC) and Special Broadcasting Service Corporation (SBS), and community TV station operators that rely on sponsorship and some government funding, largely operated by volunteers.

The commercial segment of the industry is sensitive to advertising revenue allocated to free-to-air TV services relative to other media such as radio, newspapers, magazines and new digital media. Revenue is also influenced by the penetration of pay TV services into households, as this affects available audience size, an important consideration for advertisers. A more recent competitor to the industry, the internet, is quickly becoming recognised as what will be the most dominant form of video provision in the future.

Industry at a Glance

Over the five years through 2017-18, industry revenue is forecast to grow at an annualised 4.0% to $6.06 billion due to growing consumer sentiment and demand for advertising services. However, a decline is expected in the national audience watching free-to-air TV, despite further developments in new digital media for commercial TV. Advertising will continue to be diverted away from the costly main media in favour of direct promotional activities.