Todd Juenger, media analyst of Bernstein Research, writes: “We believe viewership, TV advertising and pay TV subscribers will not recover to their pre-crisis levels, and rate of decline will increase as SVOD [subscription video on demand services] substitution continues.”
Traditional linear TV, which saw a 5% rise in total day persons 2+ viewership in March and April versus a year ago, has now fallen to 15% to 20% decline levels in July, versus the same time period in 2019 -- per Bernstein Reserach analysis of Nielsen data.
During the same early pandemic period, prime time was only down 5% in mid-April, but is now seeing 20% declines in July viewing versus a year ago.
“COVID-19 brought audience declines to a halt, but the effect didn’t last,” he writes.
Though sports programming is coming back for some major sports -- Major League Baseball, for example, and soon the NBA and NHL -- cord-cutting issues will probably get worse.
While Juenger says there is no clear picture of how the April, May and June period performed in terms of cord-cutting, AT&T recently said it lost 954,000 subscribers (DirecTV, U-Verse, AT&T TV) in its second-quarter reporting period.
Pandemic issues were compounded by the lack of sports from March though July.
“This has been exacerbated by the fact that, due to production shutdowns, there is a small and declining amount of fresh entertainment content being offered by the TV networks. Pretty soon, that will trend down to ‘zero,’ ” he writes.
This has forced viewers to move more to in-home video on-demand services, like Netflix, which continues to offer fresh programming.
At the same time, lower traditional TV viewership has forced advertisers to do “zero-based budgeting” when it comes to linear TV, with more money going to “digital platforms -- some of which will be captured by the TV network companies themselves, but not most of it.”
He added: “Our belief is that both viewership and advertising spend will recover to a new normalized rate significantly below pre-pandemic levels.”
At present the TV networks are easing their way into the AVOD spectrum with only Comcast ( NBCU ) going ful tilt and only just beginning. However, if and when Comcast attains its fairly modest AVOD subscriber goals, this will force Disney and CBS as well as other "establishment TV" players to move in aggressively. So it is not a lock to assume that most streaming audience time will be to ad-free services. Maybe now---but I doubt that this will be what the future holds a few years hence. What advertisers need to grasp is that TV GRPs are going to cost them a lot more---like double or even triple what they are used to paying---and not only on SVOD but also in the rump of "linear TV"---which, by the way, will still account for 50-60% of all ad GRPs in four or five years. As the supply of "linear TV" GRPs shrinks the sellers are sure to demand significant rate hikes---and advertisers who have been so CPM-fixated in the past will have no choice but to pay---as the alternatives--- AVOD and various forms of "addressable TV"---- will charge even more.