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.
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.
Wayne, Bernstein is overstating the importance of live sports to "linear TV". It's important---of course---but hardly the "last stand" of "linearTV" whose audience is not "collapsing" but is gradually shifting to streaming. But what about national and local news? Isn't that also a pillar of strength for"linear TV"? Of course it is. Indeed, when you combine the two---news and sports----they aggregte somewhere in the vicinity of 25-30% of all linear TV viewing time but attract about 45% of the ad revenues. And let's not forget that the median age of your typical TV sports viewer---in terms of average minute audience---- is about 50-52 years while the corresponding figure for news is more like 60-65 years. Which means theat these kinds of viewers are least likely to dump "linear TV" to get their sports or news fix via streaming unless these program genres are only available via streaming. And we are a long way from that.
So, of course, Amazon may pull away some "linear TV" sports dollars---but not a lot--until it gets its hands on the prime sports features and on an exclusive basis----not out-of-market football games which the league cobbles together to grab some extra viewing time---- and incomes from Amazon.