Commentary
Streaming Apps Make Inroads Into TV's Dominance
- by Wayne Friedman , Staff Writer, March 28, 2018
Media disruption is a tired yarn now. Media-cutting streaming apps may just be starting.
Thousands of TV-like streaming apps are growing, even though key metrics -- viewers, new audience standards, engagement, and other ROI issue -- can be wanting.
Suffering for the long term?
Decades ago, media agency buyers worried about hundreds of new cable TV networks cutting into big broadcast network platforms. That didn’t happen. Through the 1990s, 2000s, and even into the current decade, broadcast networks -- despite weakening viewership -- maintained advertising revenue growth. (They are having a harder time now.)
New streaming apps may ultimately have a major effect because TV consumers could get exactly what they want: an a la carte selection of networks.
Now, for their part, broadcast networks have survived a key factor in the previous growth cable network phase. Lots of TV consumers still like the big broadcast networks a lot. (Witness “skinny” TV bundle efforts to focus heavily on big networks.)
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Decades ago, media buyers wondered what ratings might look like in the future -- that new TV networks (as well as growing U.S. syndication on local TV stations) could result in every TV show getting nearly the same low-level viewership.
Still not there yet.
Broadcast networks average higher numbers in prime time than cable networks. But new network streaming apps muddy the waters even further -- putting all network streaming efforts on the same “box”-looking app level.
Old school stuff: Right now, broadcast networks are still in the “lower” channel position numbers on most traditional pay TV systems, while cable networks are in the higher-numbered spots.
Traditional TV network advertising time still carries a lot of weight -- on brand marketers' TV media schedules -- especially more with live programming, heavily focused on sports.
In the near term, many new TV streaming apps will lose a lot of money.
Key for traditional TV networks’ is how to position their streaming efforts to look bigger than ever. On-air TV program promotion will continued be challenged, especially as more on-demand programming -- including traditional DVR, ad-supported VOD, and subscription VOD -- makes it harder to get out that message.
Can social media for TV networks works harder to make up the difference? Or, will we see media death by 1,000 streaming app cuts?
Wayne Friedman is West Coast Editor of MediaPost. You can reach Wayne at wayne@mediapost.com.
Wayne, I'm a bit surprised by your comment that decades ago media buyers were worried about cable channels cutting into "big broadcast network platforms"---"But that didn't happen". Yet that is exactly what happened in terms of average minute rating declines for the broadcast TV networks. What saved their bacon was the willingness of time buyers to pay double the CPMs for broadcast network viewers, relative to cable viewers--plus the huge increase in primetime ad clutter that the networks orchestrated---going from 6 minutes of in-show primetime commercials to 9.5-10 minutes. The two factors, in combination, are the main reason why network ad revenues held up.
Totally agree with this takeaway: The key for traditional media is to leverage their incumbency to build social, mobile & on-demand streaming experiences that give their audiences even more of what they love today!
Ed, I agree with your analysis of saving broadcast’s revenue bacon. In the past, you’ve made defensible arguments why network broadcast is still worthy of investment (prestige, additional reach, etc) but doesn’t this all sound highly irrational? Paying double to get sometimes less than half the bang for your client’s buck? In an even more cluttered ad environment?
And what about a media agency acting as fiduciary for client budgets? How long would you keep your stock broker if they worked off the same principles…paying 2x or more for what something is worth?