Legacy national TV networks' distribution systems continue to see lots of cord-cutting. Who's next?
To give you an indication of how traditional pay TV business has declined in the recent third-quarter period, legacy pay TV services -- including new virtual pay TV services -- are now in just 61% of U.S. households, according to MoffettNathanson Research.
That level has not been seen since 1993.
Imagine if this dropped to a 40% level -- as last seen in 1987. That was a period of extreme U.S. financial instability, where the stock market had a major crash with the Dow Industrials falling 22% in one bleak October day.
Programmatic trading gone wrong was a major reason. Still, in the U.S., The Federal Reserve immediately cut interest rates.
Cable TV distribution was still in its ascendant stage. Satellite TV distribution arrived in 1994. All that meant much TV viewing was still via over-the-air TV antennas.
The big issue then was young TV consumers gravitating to a new technology: cable TV.
Now young media consumers are searching for and finding a new way to get their entertainment. And it is not just the wide-reaching premium video streaming platforms.
Much of this can be around social media and other digital platforms, including gaming -- a diversity of new competing media technologies.
And that is where the likes of all-important live sports and news is headed, both major existing content drivers on broadcast and cable.
Increasingly, it has found a home on streaming services -- NFL games on Peacock, Paramount+, Amazon; Major League Baseball on Apple TV+. For live news, we have NBC News Now, Fox Nation, ABC News Live, and CBS News Live.
Can sports and news continue to find ways to survive on legacy TV live, linear TV systems? That seems impossible now. So what remains?
Look backwards a bit for answers. When cable was growing, it started to program off-network sitcoms and dramas -- as well as growing sports and news. Analysts wondered about the survival of sports and news content on broadcast, but it is still around -- especially for sports.
On cable networks, there is a great deal of non-scripted entertainment that supports many channels, as well as scripted entertainment shows.
If networks can hold onto some legacy live TV content this time around -- again, sports and news being a major factor -- then they have a chance to keep all this moving. No doubt to a smaller degree.
Young kids may, however, have other ideas. And the marketplace will move with them. But what if they eventually turn their back on premium streaming video as well?
Wayne, it's not fair to trend "pay TV" subscriptions as a percent of all TV homes without considering over-the -air reception. In the early and mid 1990s it's true that about 60% of all TV homes had cable---aka "pay TV"---however the remaining 40% watched the broadcast networks and stations via over-the-air reception and their viewing also generated lots of ad dollars. The current situation as regards total U.S. TV home coverage is that when you commbine the two kinds of reception---"pay TV" and over-the-air---- plus "linear TV" content viewed by streamers via apps "legacy TV" accounts for the overwhelming majority of advertising dollars and "impressions". And "legacy TV" remains highly profitable---though down from past peaks, of course.
All of this is subject to change, of course, however, it is not a lock that advertising GRPs attainable via streaming---AVOD,CTV, FAST----will exceed those offered by "linear TV"---broadcast and cable--anytime soon. What will develop will be a gradual blending, with much more "linear" content available via streaming, but a substantial amount still being consumed the old fashioned way---mostly by older folks and those who can't afford either "pay TV" or streaming and opt to rely only on antennas.
Putting it simply, the dream that many digital enthusiasts have, that "linear" will simply disappear---along with "legacy" audience measurements like Nielsen's meter panels ----and be replaced with a world where virtually every advertisier becomes a direct marketer---connected to each customer---or might be customer---directly---isn't in the cards. For some, yes---or maybe---but hardly for all. In like manner many TV time buying decisions will involve the use of both streaming and linear TV, not just the former.