Is linear TV dying? Netflix executives have said this may happen in five to ten years.
However, for all the
complaints about live, linear TV -- around the increasing uncertainty of measurement as well as viewership erosion -- it still retains a strong level of national TV advertising dollars, something that
digital media platforms constantly look to loosen.
Bernstein Research says it comes down to live TV sports. “Amazingly, linear TV ad dollars have
remained mostly flat despite collapsing audiences, as increasing CPMs offset declining viewership. These dollars seem to be concentrated within live sports as the last stand of linear TV.”
But its time could be coming to an end.
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This just-completed NFL regular season had Amazon Prime Video streaming its first-ever exclusive
“Thursday Night Football” package.
More recently, YouTube just struck a major deal for NFL Sunday Ticket -- one of the league’s prized packages -- which consists of
out-of-market games subscribers choose to view.
Mark Shmulik, media analyst of Bernstein Research, says; “Over time, we feel that the main beneficiaries will remain
in CTV, specifically within AVOD platforms (Netflix, Disney+, and YouTube).”
But let’s not get ahead of ourselves. “2023 is likely to be
challenged for this space given the high cyclicality of brand-based video ads,” Shmulik says. “We could see significant pricing declines in the video market as the streamers all open a
glut of inventory and demand does not shift fast enough to fulfill it.”
He adds: “It may take a recession like the one we appear to be heading toward to be the
catalyst for shifting the stubborn TV ad dollars away from "Mad Men" to the keyboard jockeys, in a similar fashion to the death of printing ads back in 2008.”
Bernstein says that looking at the compounded average yearly growth rate from 2009 to 2022, there was a TV viewership decline of 2.6% per rate -- (Really, is that all?) while TV ad
revenue grew at an average 1.8% per year. That is stubborn, for sure.
What isn’t factored in here -- for those that matter -- is what advertising share legacy
TV-based media companies will have down the line, factoring in their streaming/digital businesses and what digital-first companies will pull away.
What play does legacy
TV networks have? They would say transitioning from live, linear TV networks to their owned-streaming and digital services -- coupled with their first-party platform
data -- are all reasons to keep sending advertising dollars in their direction.
Digital versus traditional media? It’s not either or. Look for a continued
synthesis of both areas.
A potential for some heavy-duty legacy/digital media mergers is probably on the horizon.
Will this come from the strong
sports TV factor? Game on.