Commentary
"Irrevocable Shift" From TV
- by P.J. Bednarski , Staff Writer @pjbtweet, September 8, 2015
Two reports today from Moffett Nathanson Research today exhaustively emphasize the radically changed media landscape — and mock the idea that “everyone is gaining share” across the board.
According to its data, the market capitalization for media stocks has declined a collective $80 billion since 2013. Only Disney, which has added $59 billion, and Netflix, which has added $24 billion have seen their market caps, rose.
Here are some amazing stats from the reports:
--Google’s U.S. advertising revenues between 2010 and 2015 will have grown by $14.4 billion. That’s greater than the entire TV industry during that same period.
--From 2010 to 2015, CBS, Viacom and 21st Century Fox will probably not show U.S. ad spending growth
-- 18-49 TV viewership will continue to drop, 5.5% - 6.5% per year through 2019-20, and Moffett Nathanson says “it’s getting harder to see how CPM inflation in TV and print doesn’t continue to cool.
--Digital advertising will outstrip TV advertising in 2017.
--It expects national TV ad spending, including dollars spent on TV fare shown online, to decline by a percentage point a yet through 2019. The decline is 3.3% per year on broadcast, 2.5% a year on cable, lessened by the mid to high-teens increase in advertising from TV shows seen on digital platforms.
--Disney and Time Warner are the only companies whose digital dollars represent 10% of their cable dollars; Viacom and Scripps networks are trying, and digital represents 7%. of their cable ad revenues. Everybody else--Fox, AMC, NBC Universal and Discovery, are just at 3% and don’t appear to have a coherent strategy.
--Sports is the advertising revenue driver across the board. Companies that have built sports and/or mobile structures able to show full episodes like Hulu, stand to do best. Those are Turner, Viacom and Scripps.
The firm called one report, “U.S. Internet Launch: Real & Spectacular,” and the other one centering on traditional electronic media, “U.S. Media: Real and Less Spectacular.”
Emphatically, Moffett Nathanson says, “the changing nature of video consumption is no longer debatable. It can be seen in the data. According to Nielsen’s monthly time-spent data, there has been a massive shift in behavior. Over this period in time (2012-2015), ‘new media’ consumption is up triple digits, time-shifted TV viewing is up double-digits and linear TV usage has bifurcated by age group. Among viewers 12-34, there have been double-digit declines in traditional TV viewing with the greatest weakness seen in consumers 18 to 24.”
The reports also show the rise of mobile viewing. Coupled with sports viewership, it’s easy to calculate why Verizon, possibly as early as today, will formally announce its Go90 mobile service that will eventually give customers access to full-length TV and Web-based content. Last week, it also announced a feature that will give users the ability to watch local NFL games in their entirely on their phones without charge.
The reports say that while Moffett Nathanson have spent years zeroing in on traditional media, rhetorically joking that it tried to “pay no attention to the man behind the curtain” that the growth of digital now so evidently represents.“We conclude there is little doubt that both behavior and advertising have shifted irrevocably away from TV."
HELLO, I MUST BE GOING: I'm taking a short break from the Online Video Daily blog. I'll be back next Monday.
pj@mediapost.com
P.J. Bednarski has written for MediaPost since 2012 on media and marketing topics. He can be reached at pj@mediapost.com
I suppose, once one calms one's nerves after reading these scarry pronouncements, that the shift away from "TV"---by which, I assume they mean the broadcast networks and, maybe, basic cable, is gaining momentum, especially among light viewing "millennials". But where are they going---to radio, magazines, newspapers?. Nope.Actually, they are going to----you, guessed it--to TV. in this case, to ad-free forms of TV---but guys, it's still TV.
As far as this trend being irreversable is concerned, that's a matter of opinion. It is unrealistic in the extreme to assume that the entire nation is in "revolt" agianst the "low" quality of the programming or the "barrage" of ad clutter one finds on broadcast TV and basic cable---though some people are. It's also unrealistic to ignore the fact that subscribing to SVOD services costs money that many households will not be willing to spend----especially as more and more SVOD services arrive on the scene and outfits like Netflix upgrade to "premium" status----which likely means higher costs to subscribers. What will probably happen---just as it happened to pay cable after its heyday--- is an intensified "churn" with people dropping in and out of the subscriber base of various SVOD services and overall penetration of the genre peaking not at 100%, but at 55-60%. It's not only the cost of the SVOD services, it's also their program content. Unless they get into the news, sports, documentary, game and other genres and fill the need that many of us have for them, most of us, including SVOD subs, will have to continue getting such fare from the broadcast networks, the stations and cable.
One way or another, TV with ads will be a part of most people's lives for a long time, though the amount of our dosage will, no doubt, change somewhat.
I agree with Ed. The author of this article has taken the fable of Chicken Little to heart. The sky is not falling on TV. My premise has always been that once the major TV network fare (and cable for that matter too) is actually broadcast via the internet, providing the ultimate technology for hyper targeting and programmatic buying, TV will be just as if not more powerful than ever.
To Ed's point, too many of the doomsday crowd thinks only of TV as it is today instead of as it will be tomorrow.
Content is king and while the big 4 (and many of the big cable providers) have ceded ground to other players, they still (I beleive) will ultimatley control a large segment of the TV viewing audeince as they always have.
The broadcasting technology may change and the playing field will expand but it's premature to talk about "irrevocable shifts".
Ed,
TV has been defined for decades as a curated user exepereince over a closed distribution system. That is the definition of your TV.
Where and what peoiple are viewing, the shift, is towards a user control over the content over an open distribution system- that's not TV.
Netflix is not TV. It's a user controlled libarary of content available 24/7 with a sophisticated user interface for search/discovery and analytics that replaces the upfront business model.
What say you?
Michael,
Content is king but the cost of producing quality content has let the Barbarians through the gate of the legacy players over an open system of distribution.
Traditional TV will not go away....but those layers of management and bloated balance sheet costs will need to be trimmed to account for a very competitive landscape where supply of content is overwhelming.
The big elephant in the room, Piracy, is a global warmning trend accelerating which makes payTV look expensive to younger generations. Finding a college student signing up for a cable box with payTV bundles is like finding a unicorn.
So far, we see competition from different viewing choices....until it will be too expensive for an independent entity to begin and it fall back to a very few delivery systems dependent upon a couple of major servers. Give it a few years. Less variation with more control over creative is choo chooing behind the greed.
Leonard, once again, we seem to be saying the same thing but not agreeing on degree. If we use method of transmission to define a medium, I would say that cable is different from old fashioned broadcast TV, to say nothing of the SVOD services. I believe that the "viewer"--and that's what he/she is--- doesn't draw the distinction you are making but regards SVOD, when it offers something more interesting than CBS or CNN, to be a more palatable TV "viewing" alternative. The fact that a SVOD subscriber can select whatever show he wants at a time of his choosing, is one of the appeals of this form of TV. The ad-free part is another of the appeals. But, as I have tried to point out, primetime entertainment fare is only part of a typical viewer's TV diet---not all of it.
Unless SVOD gets into news, sports, and many other genres, "linear TV" will continue to fill that huge gap. Also, not everyone has joined "the revolution". We---and I mean all of us----must learn that everyone isn't like us. There are a lot of folks who are just happy as they can be watching "Judge Judy", "Today", the local "talking head" news on their favorite TV station, "The Dear Housewives of Podunk", Mama Leona"s Italian Cooking Show", ESPN's stuff, and reruns of "Gilligan's Island" or old Daffy Duck cartoons.
My story notes, and MoffettNathanson says, that broadcast and cable will lose ad revenue that will ony be lessened by increased ad revenue they receive from viewership of TV shows via digital platforms. Still, the combined effect is a decline.
Oh. I forgot to say: Thanks for reading and commenting.
This is an engaging discussion. What do you folks think of the following? The CPMs for broadcast TV are, in my opinion, to high for audience delivery numbers. I will concede the reach advantage.
Media congloms are too protective of certain program vehicles in an effort to maintain some sense
of channel exclusivity, particularly when they own multiple platforms. As long as they are in "your house" what real difference does it make which room they sleep in? Rumors of broadcast TV's death circulated with cable's growth...it's still with us and making money. Admittedly, TV audiences have been growing older...but these boomers control a huge chunk of the wealth and discretionary dollars, and they watch broadcast TV. Just fuel for the idea-factory fire.
James, if the broadcast networks reduced their CPMs to, or close to, what cable is getting, they would be unable to sustain their primetime dramas and sitcoms as well as any reality show that got decent ratings, whose stars, producers, etc, demanded higher pay. All they would be able to put out---and I'm talking primetime---is "talking head" shows, scheapo reality fare, game shows, low budget varieties, etc.. Also, they would have to increase their rerun ratio. Both of these developments would not only drive away more viewers but also many of the high ticket, image-conscious, advertrisers.
If one stands back and takes an industry-wide view of the broadcast networks---and, Leonard, I, too, am very critical of their programming directions----they are functioning as the first stage in an ever lengthening pipeline of entertainment content that once it exits the networks' schedules fuels independent stations ( syndication ), basic cable and now, SVOD services with a seemingly endless stream of "quality" entertainment programming which is consumed by post-network audiences. In fact, it is estimated that upwards of 40% of basic cable viewing is generated by "off-network" programs. If the quality of these shows was compromised, this percentage would drop dramatically. Where would the syndicators, cable channels, etc. get replacement shows of comparable quality?
There's lots of talk about digital taking away most of TV's ad dollars. Maybe so, but digital has tremendous problems regarding viewability, reach ceilings due to ad blocking, how ads are scheduled, ad and other clutter, etc. If one compares the CPMs of network TV with those of digital video on exactly even terms, TV is, by far, the better bargain---at present, anyway. All of this may change, but it is important to view the broadcast TV networks in their current, not their past role. Then, they were the absolute leaders, now, they are "loss leaders"---but still providing a useful function for many advertisers as well as the stations and many cable channels.
Make that "cheapo" reality shows, above. Drat!
P.J. -
Was there any mention of local stations in the equation? What is happening to their bottom lines? What do you believe their future is going?
Joe, the report seems to be dealing only with primetime, though most other time periods are affected by rating fragmentation. The TV stations are also hurting, as evidenced by amlost zero growth in national spot spending and much more competition locally, from spot cable and digital. Not surprisingly, most stations have severely trimmed back their news daeaptment staffs, which represent, along with technical charges, their primary costs. The main problem is in the mid-sized and smallder markets where there is very little or no national ad spending on a local basis. Here, many outlets customarily lose money each year, but recently the amounts in play are probably rising.
Typo alert: make that "almost" not "amlost" in the second sentence in my most ecent post. Maybe I am lost after all----what say you Leonard?
Second Typo Alert: can't even do a correction properly. Sigh! Of course, it's "recent" not "ecent". Joe, any hope for an editing option? Please??
Great discussion as to "what is TV". So if a TV programme - let's say it is Friends - is broadcast FTA we agree it is a TV programme. But if the self-same content - the same episode of Friends - is viewed online it suddenly becomes "not a TV programme". That doesn't make sense (but in a way it does).
As Ed notes we're mixing content source and distribution method. The key distribution difference is linear vs. non-linear. For example, fibre internet is much quicker than ADSL internet so the viewing experience is different (better). Digital broadcast is better quality than analogue. Where do we draw the line, or do we just dump it all into the "video" bucket, then segment it by distribution method and type?
To add to this "TV networks" also host their own catch-up video services, plus sell their content to cable and SVOD businesses. Does this no longer make them a TV network?
Does any of it really matter?
As for the traditional TV networks, I am sure they don't really care - as long as they can continue to sell ads on whatever viewing platform the consumer wants. This is where I think this article misses the boat.
John is getting the point here. the real difference is if its linear or non-linear irrespective of the device or medium we view the contnet. Tomorrow, the same linear schedule will be available directly in mobile (like how we receive FM signals) and there would be personalized PVR functions to be invoked from the mobile. that doesnt still classify as non-linear. so the question here is will the Ad spend be better then!? I think it depends on the content thats served. while the same program shown on TV is coming up on mobile it becomes more personal. So becomes Ad viewing as well. If you are able to go along with the consumer personally, i do not think the ad revenue is going to decline..
Those who cover their eyes to traditional TVs demise are indeed in for a rude awakening. Live Streaming on smart phones is the future of TV, and the future is now. Imagine the one billion videos on YouTube had all been user generated live streams and you will see the future of TV. New Apps like Periscope, Meerkat, YouNow, and more make that scenario possible right now. Yes, the older population will still want to see Golden Girls, Gilligan, and local news. And some media company will figure out how to deliver that and make a profit. But the giants of Broadcast and Cable, with their CPMs,GRPs,Upfronts, and Hollywood produced prime time are dinosaurs about to be hit with a Live Stream comet!
Too bad this isn't the 1990s, in which case all of the doltish old viewers along with the half wits who run the broadcast networks, the stations and cable, could hop onto the Hale-Bopp comet, along with the Heavens Gate cultists, and depart the scene, leaving it to those wonderful millennials to consume nothing but live streamming content----hour after hour of it----as video rules the world.
Ed, l dissagree with you. I do NOT think the current executives that run broadcast and cable are, "half wits." Just like l do not think the telegraph executives were halfwits for calling the telephone a toy. Nor do l think those early adopters of live streaming Apps are millennial cultist. In fact, anyone that has spent an hour on Periscope knows that it's population is comprised mostly of post baby boomer business owners. Although YouNow is more geared to the teen population. The simple fact is there are an estimated 2 billion smart phones in use, and once the global population realizes the power in the palm of their hands, the power in the media consortium's boardroom will become greatly diminished, if not completely mute.
Oh, and all TV, is video.
Mark, my problem with all of these "TV is dead" or "about to die" pronouncements and, in your case the contention that smartphones will be the wave of the future---in effect replacing TV for most Americans --- except oldsters, I assume---is the gross overstatement of the predictions and their unrealistic foundations. Sure, I, too, expect increased video consumption on smartphones as well as tablets, however one has to consider the question of content, the size of the screen, and the attendant activities or location of said exposures. TV now consumes about 5 hours a day of a typical person's life, though, in all probablilty, only 60% of this viewing could be called "fully attentive". Furthermore, surveys that measure attentiveness of TV viewers who are reached by TV shows away from their homes indicate that levels are a great deal lower than when shows are watched in-home. Surely this is not surprising, but it raises the question about the attentiveness of cell phone "viewers" who are reached while shopping, travelling, at bars, on the beach, etc. How atentive will they be---even if the small screen, itself, and the jumbled on-screen clutter, isnt a factor? Also, as I mentioned,above, what kinds of content are we talking about and who will provide it? Certainly not one-hour dramas or shows like "American Idol" and certainly not newscasts or talk shows, or kid shows, or most sports or movies. Are "users" going to create the millions of hours of content that are needed, themselves? Is that a realistic expectation?
But this data isn't about viewers shifting. It's about the PERCEPTION by advertisers that viewers are shifting - perception that's fueled not by hard data but by massive investment in...convincing advertisers that TV's a dying medium.
Just hate it when survey's of advertisers or of media company income is used to say "see...so viewers ARE rejecting TV."
From what I can see... There has been a small percentage of total users who have left traditional TV - but these are light usage viewers and not the viewers that make up the valuable advertising portion of TV viewership. And we're only one company, but all of the client TV advertising work we do continues to perform at, or above, past effectiveness.
And THAT (effectiveness) is what really matters.
Curious. If they all had to cut back $ for stars, do you think the "stars" would be able to do better somewhere else making more than $1 million per episode for example ? The same goes for the producers and other off screen people.
Paula, if the networks had to cut back on expenses if they drastically lowered their CPMs, this would affect all of their enterprises, including news, daytime and certainly sports, which usually is a money loser, anyway. As for the primetime stars, a lot of them are relative unknowns who became stars by virtue of TV exposure. Such people could still perform in the low budget reality fare and other stuff that would replace the dramas and costlier sitcoms---for much less pay. The "established" Hollywood types, who demand the "big bucks"---most of whom are past their prime, anyway---would have to try something else---like becoming product/service endorsers for advertisers. I, for one, won't miss most of them.