Who's Still Watching TV?

The always informative Brian Wieser reported in his newsletter that “By the end of next year, it’s likely that only around 50% of households in the U.S. will have pay TV subscriptions as we have historically known them.”

That’s bad news if you are in the linear TV or cable TV business. Cable companies and traditional TV networks draw income from subscribers to their traditional offerings, as well as from subscribers to their owned-and-operated streaming platforms. Their second income source is selling ads on these options. A third revenue stream is the data business that they create, just as retail media owners have discovered.

The challenge that linear TV operators and cable companies are facing is that audiences are not only cutting cords, but also cutting platform subscriptions. This means that two of their main income sources are challenged. Smaller audiences mean less subscription income, and also mean they can’t sell as many ads or can’t sell them at super premium prices. That’s a double-income whammy right there.

This in turn influences how much these companies can pay for content which (in part) explains the current labor disputes between writers, actors and content creators. It probably also explains why Disney is thinking of selling its traditional TV assets such as ABC and/or ESPN. And it explains why sports are migrating to streamers and owned-and-operated league platforms. The traditional broadcasters can’t afford the rights anymore – and longer term, it is doubtful that streaming platforms will be able to afford them either,  

These developments are equally challenging for marketers who depend on video advertising to reach consumers. I say “video” on purpose, as the triple whammy of cord-cutters, platform-defectors and lighter ad loads means there are less video advertising audiences for sale across these channels.

The top TV ad categories  are the ones you see ad nauseam, such as automotive, insurance, pharmaceuticals, phone companies, fast food and politicians/issue campaigns. Notes Wieser: “As streaming services are unlikely to be primarily ad-supported, and contain lighter ad loads when they do, accelerating cord-cutting in the US is set to permanently impair growth.  In the most recent quarter I estimate that US pay TV subscriptions -- including virtual MVPDs -- fell by 7.3% year-over-year, the industry’s fastest pace of decline ever.”

The alternatives are video reach on short form platforms such as those from Meta, X, Alphabet and TikTok. These platforms are certainly growing in audience importance and ad loads. But they are very different in how they work. Watching a show or sports event on your big screen at home is, despite the many distractions available, still a very impactful and often shared experience. Watching snackable clips on your phone from professional content creators as well as homegrown or mom-and-pop creators is a very different experience. And your ad is viewed with the same level of attention and appreciation (or lack thereof) as the snackable content is.

The impact of this type of advertising on consumer impact versus traditional TV/cable spots is not well understood. Thanks to organizations like EGTA, the U.K.s Thinkbox, the Advertising Research Foundation and others, we know and understand a lot about the impact and strengths of the old TV world. But the new video world, and especially the combined old and new world, is very much not understood. Let’s hope that advertisers will push as hard for understanding the new video world order as they did for the traditional model.

12 comments about "Who's Still Watching TV?".
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  1. Ed Papazian from Media Dynamics Inc, August 18, 2023 at 12:06 p.m.

    I couldn't agree more, Maarten, about the need to understand the new ways of reaching consumers with TV commercials. However, I don't buy the idea that we should write off "pay TV" ---which people often confuse with "linear TV"---just yet.

    To begin with, just because only half of all households are paying cable systems or satellite distributers to get broadcast TV or cable content, that's not the extent of linear TV programming's reach. Add to that 50% the viewing that takes place in 15% of the homes that now get over-the-air reception, plus those who watch via apps, plus those who are reached away from home, and, last but hardly least, those who watch the AVOD and FAST services---whose content is mostly 'linear" ---and you get a lot of both reach and frequency.

    I'm talking about content---content that often carries ads---not whether the consumer pays certain tyes of distributors to get the content. As the future is shaping up, it seems likely that linear TV content ---often with ads----will continue to be a major  if not a dominant part of our "TV" diet. It will just come to us in more ways than cable or by satellite. I also believe that the best aspects of "linear TV, including independent audience sourcing, control over scheduling, etc. will become standard in CTV as well  while "TV" advertisers will gradually lern how to use the superior targeting capabilitiies that are often offered by CTV.

  2. Leonard Zachary from T___n__, August 18, 2023 at 1:40 p.m.

    Someone does not understand Content, global reach and pricing. Someone does not understand mobile. Someone does not understand VOD and personalized experiences. Opposite of curated linear TV. Said it 5 years ago and now, Bob Iger says falling off a cliff is the future of Linear TV.

  3. Ed Papazian from Media Dynamics Inc, August 18, 2023 at 2:23 p.m.

    It will, indeed, be interesting to see if Iger sells off all of Disney"s "doomed" but money  making linear TV assets or only some probably doomed cable channels---not ESPN, of course.

  4. Maarten Albarda from Flock Associates (USA), August 18, 2023 at 3:41 p.m.

    Thanks everyone for sharing your thoughts. I don't think I said to write off TV, in whatever form. Consumers love TV... in whatever form. But consumers are having perhaps a bit of a reality check moment with all that they pay for, and are beginning to make choices as to what is "must have" versus "nice to have". This has real financial implications for the industry as a whole.

    I also know that consumers consume video across a wide spectrum of platforms, many ad supported. However, each of those touch points carry a very different value and have - I think - very different brand impact delivery implications. We know that linear (including cable) delivers less of the goods that brand marketers rely on. We also know that streamers and online platforms carry less of what marketers need, and probably deliver something that is not of comparable value to TV. But we simply do not know how to plug the delivery gaps created by the new video world, neither in reach/frequency or in brand impact.

    Work to do!

  5. Michael Bell from Epsilon replied, August 18, 2023 at 6:02 p.m.

    great summary -- and I agree.

  6. John Grono from GAP Research, August 18, 2023 at 8:29 p.m.

    What has traditionally been called 'TV' is now a meld of a plethora of methods and ever-changing technology to provide entertaining content.

    However the 'entertainment pie' is not growing as fast as the 'players' which are viraciously looking for their bite which means advertising costs will increase, yet the slice of the pie will be smaller.

  7. Ben B from Retired, August 18, 2023 at 11:14 p.m.

    I like to watch TV live other than sports I watch primertime shows live and if I can't watch it live for another show I watch that OnDemand, I'm old school like that.

  8. Bruce McDermott from Atom Valley, August 20, 2023 at 7:29 p.m.

    Entertainment has completely lost touch with what viewers want to see. It continues to get worse and worse as time progresses. The cheap reality TV crap is just not going to cut it. The Bud Lite fiasco should have immediately "WOKEN" the networks up that the public is just not interested in politically slanted brainwashing anymore (their target markets are less than 10% of the general population!). I predict that real entertainment will be created on platforms like YouTube by people that don't have a political agenda to push. The creators will be rewarded by hits and advertisers running their way. Simple software will be downloadable where you can select what evening entertainment you want to it to a storage device...and play it at your leasure on your home TV. Eventually, everything from Home Schooling to cooking classes to you name it will be easily accessible ending the horrendous woke BS that none of us out here have any interest in. It is easy to predict that Network TV is a thing of the past.

  9. John Grono from GAP Research, August 20, 2023 at 7:44 p.m.

    Very interesting Bruce.   AU has similar TV entertainment issues.   Our problem is that the broadcasters are not telling Australian stories but are overly reliant on off-shore content and seem to be relying on cheap shows, and is detrimental to local production.

    But oddly the issue of 'woke' in the US imported content is not creating coniptions in AU and it doesn't seem to be a major global issue but just pockets of resisters.

  10. Ben B from Retired replied, August 20, 2023 at 8:46 p.m.

    Network TV isn't going to be a thing of the past in my opinion entertainment hasn't lost with the viewers either and it also hasn't gotten worse TV is no worse than what it was 20 or 30 years ago, I can find almost anything on TV. I doubt that the homeschooling show isn't going to get advertisers and I doubt it would get many views either. Disney, Netflix, Discovery/Warner Bros, NBC, Paramount/CBS, etc are to stay they aren't they aren't going away as you say, Bruce.

    Just like reality TV has a market if it didn't would go away and it isn't crap. American Idol is pretty good, like most of Gordon Ramsey's shows Masterchef, Kitchen Nightmares glad it is returning next month, etc, and American Ninja Warrior I go on and on that their is a lot of good reality TV Shows. Raw Travel is also a pretty good show only watch it if it is aired at 12PM on the weekends on WXMI Fox17 which didn't air it all that much at Sat 12PM like last year on very early morning Sat at 4AM and Mon at 3:30AM. 

  11. Bruce McDermott from Atom Valley, August 22, 2023 at 6:29 p.m.

    What I'm describing is kind of like the difference between Netflix/Amazon Prime and Network Television. In one version you can get up, pause the show, grab a bite to eat, etc. or switch programming to something else on the menu. In the other , you sit there being indoctrinated into whatever that Network wants to pour into your brain with countless ads driving you crazy. We have reached a point in society where we are realizing that there are a lot of bad actors involved in trying to shape our perceptions of reality. This "Awakening" is what will bring about the mass migration away from Network viewing to original content produced by talented individuals not stifled by Network gatekeepers. The only area where this will be problematic is in Sports. But who knows? If Venues insist on recording rights, where will the events be held if the NFL can't get a Venue to cooperate?

    If you have youtube access on your TV try this segment.
    Stop it if you have to take a break. Finish it at some other time. Read the comments to see what others think. Enjoy the lack of annoying ads and the full control over your viewing experience, and then judge if this isn't the future. All that is required is universal access to download the whole of youtube's content, and the ability to plug it into the back of your television and watch it whenever you like. Content is now created by people that know what you want to see.

  12. John Grono from GAP Research, August 22, 2023 at 6:38 p.m.

    Good point Bruce.

    A slight difference is that we don't 'plug in' ... we have all sorts of things Wi-Fi connected ... and we pick and choose what we want to see.   We're finding that the more there is to search through the less we use that entity.

    It just shows that we are all different in our needs and wants.

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