Over-the-top (OTT) has emerged as the fastest-growing segment of video advertising views, according to the latest edition of Magna Global’s Media Economy Report. The report, which is being released today by the Interpublic Mediabrands unit, makes the case that OTT is the most dynamic segment of a rapidly expanding universe that now includes linear, non-linear and OTT viewing.
In fact, OTT now represents a “new galaxy” within that universe, Magna Chairman David Cohen says in the introduction to the report. The study, which is chock full of data from Magna and other sources, makes the case that television has reached a tipping point that might require a redefinition of what has long been Madison Avenue’s apex medium.
“One of the things we’re thinking about is whether TV channels go away and become apps,” Brian Hughes, senior vice president-audience analysis and practice lead at Magna, told MediaDailyNews during a preview of the report.
Hughes added that while the way consumers and industry practitioners think about television may be changing, its vitality as a medium remains as important as ever. It’s just becoming more complicated to track, understand and manage.
“The message you keep hearing from the industry is that TV is dead, but I think we’re finding that it’s a lot more complex than that. It’s the fact that OTT usage has exploded. TV is not, in fact, dead. It’s just changing. But it remains a central experience for most consumers and a vital medium for most advertisers,” he explained.
Asked what it’s changing into, Hughes said it’s part of the same meta theme that has been transforming much of the traditional media marketplace: a shift to an “on-demand world, where content is at your fingertips and you can get it where you are on the devices you are on.”
That fundamentally is what OTT is, and the Magna report does a good job of organizing it into its core components, while also raising some fundamental questions for the medium’s traditional platforms and gatekeepers -- especially the cable, satellite and telco (MVPD) providers that have long controlled the flow, distribution, and monetization of the medium.
In fact, one of the charts projecting the erosion of the MVPD universe seems reminiscent of the trend lines for the erosion of the broadcast-only universe when cable penetration first became a meaningful source for television.
MVPD penetration, which is currently in about 86% of U.S. homes, could fall to as low as 76% in the next four years, according to Magna’s most aggressive scenario. But it’s not just so-called cord-cutting that is disrupting conventional TV viewing, but “cord-shaving” and the shift to “skinny bundles” of television services that are changing the sources of TV viewing, as well as the corresponding rise of OTT sources.
Hughes said Magna will continue to track the shifts, and that in the meantime, it is recommending its advertising clients “shift with that behavior.”“Let’s experiment more with some of the underutilized areas,” he advocated.
The changing distribution patterns have new implications for the concept of national TV and require more than ever a markety-by-market understanding of impressions delivery and the consideration of local broacast and hyper-local cable system buys to match local business goals. Enter the opportunity for programmatic linear TV.
OTT providers should take care to avoid ad overload, which has lead to the rise of ad blockers. Outdated blackout rules have already lead to the proliferation of workarounds.
P.S. MediaPost could use some comment spam countermeasures.
TV has changed and the new ways to watch TV are just the start. Think how much the phone has changed in five years. TV has started down that path to major change and utility. TV is becoming interactive and personalized. TV and TVE is providing a better value and will become more interactive as the space moves to a hybrid IPTV standard and embrace the use of dynamic data services that will provide an optimal entertaining experience.
Think Search (Google) and Watson (IBM) come to your TV.