Analyst: TV Everywhere Could Rain Ad Dollars

If several years ago, TV Everywhere seemed like a cute technology play, offering distributors some extra advertising copy -- watch your favorite programs anywhere, anytime! -- it's now shaping up to be big business for networks. Content owners have an opportunity to stiff arm cable operators into tossing them more in affiliate fees, while a Wall Street analyst suggested Friday there are huge ad dollars awaiting them.

What's cool for them is -- much like Netflix checks -- the dough looks to come from playing with house money.

Cable operators are rolling out TV Everywhere, which allows mobile access to customers who prove they pay for TV service. This is low-hanging fruit for networks, maybe the easiest incremental revenue they’ll ever get.

Hey, if Comcast wants to make our content available ubiquitously, we love it. Just pay us to make you look good.

Once that payment amount is settled, networks have more easy money in the ad dollars collected from the digital platforms. And, it appears that bounty might be bigger than expected.



In a report Friday, Needham & Co.’s Laura Martin suggested TV Everywhere distribution could bring an additional $5.6 billion into the ad market each year. Undergirding the bump would be the Nielsen "extended screen" ratings system that melds TV Everywhere viewing with the linear feed.

If the exact commercial structure appears in both, the ratings produce a single C3 currency that allows networks to charge for the aggregate viewing. The AMC network has already begun charging advertisers for the unified number for series such as “The Walking Dead."

The math Needham's Martin uses to get to the $5.6 billion is complicated – and frankly a bit ambitious, since a lot has to fall into place – but the suggestion is sweet music for networks. Check out this tune: TV Everywhere could take a hacksaw to the DVR.

Martin’s theory holds that over time much of DVR viewing will shift to TV Everywhere venues, “since a consumer doesn’t have to plan ahead” to use it.

And, if the fast-forward button is disabled, revenues lost from ad-skipping could be recaptured.

The AMC example, however, indicates the flood of ad dollars might be some time off. TV Everywhere viewing of the November premiere of “The Walking Dead” brought a 1.7% bump in ratings for the 18-to-49 demo. Still, at the time, only three distributors were making AMC available via TV Everywhere. So, when millions more homes have access, the number will go up.

If TV Everywhere can take a saw to the DVR, Martin suggests it might do the same to consumer expectations that Web content comes with minimal ads. With the TV-style load, it "does not train consumers that premium content viewied online should have fewer commercials," Martin wrote.

That would be another example of reeducation efforts. The likes of Comedy Central are dropping more commercials into their online streams, while broadcast networks have been refusing to make shows available via video on demand unless the ad-skipping functionality is turned off.

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