Commentary
TV Network Innovation In A Streaming World: The Good, The Bad, The Ugly And The Money
- by Wayne Friedman , Staff Writer, May 23, 2022
Ask yourself -- where is the true innovation coming from?
Sure, TV has been around for a long time -- pretty much doing lots of the same. Standard half-hour and hour-long programs supported by advertising via live airings.
For national TV advertisers, a big TV network is still the place to be -- perhaps in bigger-package linear TV streaming and digital media deals.
Linear TV can still be a pricey thing -- especially live TV -- for big sports content like the NFL, The Super Bowl, and the Olympics.
Even with the shift in viewing to connected TV (CTV) digital and streaming channels, advertisers still believe TV networks are among the few -- if only -- places that have value for reach and scale.
But what about the content itself?
Media companies continue to defer production content to their streaming businesses -- estimated to grow to anywhere from $7 billion to $12 billion for each of the major players in the coming years.
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The trend has been already been there.
The Hollywood Reporter says average major broadcast networks' pilot orders for ABC, CBS, Fox, NBC, and the CW have been reduced by half compared to ten years ago -- now at 35 from around 77. Full-season orders are in a worse state -- at 17 for this season versus an average of 40 over a ten-year period.
Recent upfront TV presentations highlight this trend, incorporating streaming and other businesses into the mix.
One year ago, many TV analysts were a little shocked when the likes of NBCUniversal and Walt Disney, among other companies, decided to tout all their TV networks -- broadcast and cable -- in their one upfront live event.
All this came as TV networks groups looked to scale down upfront presentations to around two hours in length.
This year, CBS went a step further, keeping the event to around an hour. The network offered up a "60 Minutes" theme presentation, associated with its longtime weekly news magazine brand.
For years, upfront presentations had been a mix of entertainment and business-focused, data-driven content. Now there is really only room for the former.
So what remains of the networks themselves?
Perhaps they are increasingly used as promotional vehicles for their own entertainment products and services and for big brand advertisers looking for any live programming -- sports, news, awards, musicals and other content.
Is that bad?
Wayne Friedman is West Coast Editor of MediaPost. You can reach Wayne at wayne@mediapost.com.
Interesting piece, Wayne.
While everyone keeps harping on the so-called streaming "wars", and how much is being spent to create "original" content for the network's new streaming ventures, the base for all of this activity continues to be the incomes earned by the broadcast TV networks and their owned cable channels via a combination of "linear TV" ad revenues, retransmission fees and profit sharing pacts with prime time sitcom and drama show producers. Even though there is continiued slow attrition in "linear TV" viewing time as well as its aging demos, the latest data indicates that the average adult now watches about as much linear TV content as he/she did way back when---in the early 1960s. And, instead of capturing 60-75% of all viewing time---as some have expected--- streaming now accounts for only 30-31% and may rise to 40-45% over the next three to five years.
As a result the TV networks are in an enviable position relative to a Netflix. Where the latter must keep gambling on new productions plus a dwindling supply of off-network fare to stock its library ---and will soon launch an ad-supported service---the TV networks have a still solid financial base consisting of their profitable "linear TV" national programming services plus their O&O stations in the larger markets---also profitable---and this allows them to gamble on streaming services which, if successful, will add ad sales as well as subscriber revenues. Also it's likely that original content developed by the networks as a means to hook streaming subscribers will also be recycled profitably via their "linear venues and in syndication---if this is planned properly. Finally, as I see it, , "the plan" calls for significant increases in the networks' "linear TV" CPMs, again exploiting the fact that "linear TV" remains the largest reach base for national advertisers---despite cord cutting, the rise of streaming, etc. It's a sound plan---but there is always the chance that the networks may louse it up.
Good points, Ed. Also to be considered in the equation should be geography, and demographics as linear TV is not dead to approximately 20% of the country that don't have broadband access to streaming services (mainly in the deep south, upper midwest and Rocky Mountains), and that the heaviest television users - older demos account for about a 25% share in that demo who do not have smartphones to view TV shows on streaming services. Of course, all of this might be moot during the upfronts, as famed ad executive Jerry Della Femina once stated, "To most marketers, consumers die the minute they turn 50. According to most marketers, 10,000 people die every day. These days, doctors don't pronounce you dead, marketers do."
Leo, it has ramifications much wider than the Rockies! It has a domino affect in that production in other countries such as Australia are affected. Our government (that was just booted out on the weekend) basiclly threw their hands in the air and reduced local production requirements.
There are two key things with media. Convenience. Content.
You can have the most convenient access, but if you are showing junk then the audience will quickly wane (which I think is happening globally for broadcast). If you have great content but hard to access you have a very happy but small audience numbers. Neither are ideal. Investing in content by the broadcasters, rather than conceding, is their best bet. Content generation rather than content acquisition is the best bet for streamers.