Rich Greenfield, the analyst for BTIG, says TV advertising is falling off a cliff. The online print version of Greenfield’s dour assessment is headlined “How Netflix Is Eating Big Media’s Lunch.”
To the extent that that is true, a subhead would have been advisable that should have said something like, “And no one else need try to eat big media’s lunch.” Because Netflix and a few other ad-free (or quasi ad-free) online services have collected all the carving utensils and they won't share.
Television, to many of the analysts who follow it, seems close to tapping out “Mayday! Mayday!” Today, separately, analyst Todd Juenger, vice president, senior analyst, US Media at Sanford C. Bernstein reported that Viacom and A&E increased their ad loads as a way to keep their revenue about the same.
“The continued ad stuffing is an obvious and unsustainable (some would say 'desperate') action by the networks to prop up ad revenue in the face of declining audiences,” Juenger wrote. And of course, adding commercials is not a very consumer-friendly way to keep consumers friendly.
Last week, recall, Zenith Optimedia said that starting next year, television viewership worldwide will begin to decline with no upside coming. Broadcasting and cable are not getting their mojo back.
Analysts just following the fates and fortunes of media corporations don’t have to really care if Netflix prospers because tens of millions of people worldwide pay for it every month, or that other networks can still get sloppy rich selling advertising. But the trend at the moment is away from advertising and towards the kind of content provider that makes you subscribe.
That’s not very neat, either, as it turns out. People who subscribe also unsubscribe; if you blunder enough times, you’re toast. (I can’t believe, for example, that despite the obsequious reviews, that Netflix’s new “Wet Hot American Summer” is the kind of awesome programming that will get talked about in very glowing terms at the by-now mythical water cooler. It’s pretty solidly awful. That makes it worse than a bad "free" network sitcom; consumers don't like to pay for junk.)
Parks Associates noted last week that like cable’s Playboy Channel of the past, OTT services come and go pretty quickly; the churn can be profound. Parks found 9% of Netflix’s subscribers quit, a reasonable amount of churn. But half of the Hulu Plus subscriber base bolted, no doubt why Hulu is adding a lot more “plus” to its content even as it drops that part of its name.
There are smaller OTT services. The number of people who have quit one or more of them is equal to 60% of their total subscribers. Parks also notes, in what might be called the Warning to Lemmings section of the report, that it counts 75 OTT services, with another dozen planned in the months to come. It doesn’t quite say, “Don’t do it,” but it does try to point out that beyond Netflix, it’s a real gamble.