Tag Archive: streaming

  1. Netflix with Ads: room for improvement

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    It’s been six months since Netflix launched its ad-supported tier. The streaming giant announced that it would introduce ‘Netflix Basic with Ads’ following a string of disappointing results in terms of subscriber numbers in 2021 and 2022. Despite vowing in years gone by that Netflix would never have ads, CEO Reed Hastings announced the move in the spring of 2022, and the new, lower-priced tier, launched that fall. There was great excitement amongst advertisers that the notoriously difficult-to-reach Netflix audience would finally be reachable. So how’s it going?

    An encouraging reaction from consumers…

    Whether through sheer luck or clever forecasting, Netflix’s cheaper ad-supported tier launched just as the cost-of-living crisis hit households in many countries. Many people view streaming platforms as a necessary expense, with entertainment providing a release valve for the strains of living through an economic crisis. What’s more, the proliferation of streaming platforms means that people are eager to spend less where possible. Young people in particular are switching to ad-supported tiers, driven by financial pressures and perhaps a greater tolerance of advertising. All this means that, two months after its launch, Netflix with Ads had one million subscribers in the US; it plans to increase that figure to 13.3 million by the third quarter of 2023. This will be music to the ears of advertisers; how times have changed since the early days of streaming when advertisers feared that consumers would be lost to ad-free environments.

    …but a lukewarm reception from advertisers

    While consumers have been relatively enthusiastic about Netflix’s ad-supported tier, the streaming giant had a more difficult start on Madison Avenue. Advertisers and media buyers were frustrated by the high CPM, which started at $65. While it is now lower, complaints centered around the fact that Netflix’s targeting capabilities and audience numbers did not warrant this price level; indeed, Netflix was forced to issue rebates after missing viewership targets. In December, it was reported that they had only delivered 80% of the expected audience.

    While Netflix’s CPM has now been lowered to around $55, many believe that $45 would be fairer given the platform’s current targeting capabilities, which are not yet up to par with those of other streaming providers, although to be fair, the likes of Disney+ and Max already had advanced ad sales operations up and running from their linear and cable set-ups. But advertisers are understandably not interested in ‘fair’ – they need to know that every dollar is being spent in a way that drives value, especially in the current economic context. For that, they need better ad targeting and third-party measurement. Campaign delivery was largely manual in the early phases of ads on Netflix and third-party measurement wasn’t available, but it is gradually opening up to third-party measurement in a signal that it will increase bidding volume.

    Netflix will host its inaugural Upfronts presentation next week (although it has pivoted from a live event in New York to a virtual, streamed one – likely because of picket lines for the WGA strikes), and will be eager to assure advertisers that innovations in the pipeline will bring its ad product up to scratch. Advertisers who attend Netflix’s session will be looking for three key things: ad capabilities on a par with those of its competitors, lower pricing and a larger audience. Because, despite the difficult start, brands know that once the creases are ironed out, Netflix’s ad product has huge potential. That’s why they haven’t abandoned the streaming giant just yet.

    What’s Netflix doing to address advertiser concerns?

    Netflix is acutely aware that improvements need to be made, and there are changes being made both to how it runs its ad sales operation and to its product offering. To address the former, it has hired Jon Whitticom, formerly the CPO of Comcast-Freewheel, to consult on whether it should build its own ad tech, or acquire a company with existing, high-quality capabilities. Netflix is currently partnered with Microsoft, but the issues that its ad offering has experienced so far, alongside Whitticom’s role, suggests that this partnership may not last much longer as Netflix seeks to in-house its ad sales operation.

    A few weeks ago, Netflix’s VP of global advertising sales teased some of the features that the streaming platform will soon launch. These include more advanced ad targeting capabilities; at launch, advertisers could only target by country, but more categories have been added including age, gender, state and designated market area (in the US). More interestingly, Netflix now also supports targeting by eight content genres, such as comedy, romance and action, as well as targeting by first impression, which guarantees a brand will be the first ad shown to a user during their viewing session. This product is likely to be sold at a premium.

    Advertisers will also be excited about the ability to buy inventory against Netflix’s Top 10 list, which is generated on a daily basis and ranks the top shows and movies by total hours viewed, and is displayed to viewers when they log in. This would give advertisers the ability to reach millions of viewers in a concentrated period of time.

    Netflix with ads has huge potential

    Although the launch of Netflix with Ads was a bit rocky, the streamer seems to have recognised that and is implementing solutions and features to make its ad sales operation worthy of its content. But there’s still more potential, for example creating a data clean room. Layering in first-party data, incorporating conversion-attribution and allowing for measurement of reach and frequency beyond the Netflix buy would be an extremely exciting proposition for advertisers.

    Netflix is home to some of the best streaming content in the market. If it can complement that with market-leading targeting and measurement capabilities, it will be a hard proposition to beat, and then, for many advertisers, worth the premium price.

    value@ecimm.com

  2. What does 2023 hold for the advertising industry?

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    December is traditionally a time to look back at the year gone by, but also to predict what the year ahead might hold. We at ECI Media Management will be releasing our own predictions for the advertising industry in 2023 next week, and it is fascinating to see how they compare to predictions from other organizations. Of particular interest has been YouGov’s annual report on the global media landscape, which seeks to analyse consumer survey responses to understand how media behavior has changed over the last 12 months and what the media landscape will look like in the year ahead.

    The YouGov report covers a number of topics, but the ones that particularly grabbed our attention for the advertising industry in 2023 are how Generation Z is transforming the media landscape; the challenge faced by streaming platforms, and sustainability in advertising.

    Generation Z are disloyal but are fuelling growth in non-linear audio and visual media

    Despite the upheaval to our lives over the last few years, it appears that global consumers are creatures of habit when it comes to media consumption, with more than eight in ten intending to either increase or maintain their consumption of all media types in the coming 12 months. There is, however, one group that are less likely to stay loyal to a media type. Generation Z – those aged 18-24 for the purposes of this survey (it did not cover children, who make up the younger half of this age group) – are less likely to stick with their media choices than older generations. This is especially the case for more traditional media activities on traditional channels such as TV, radio and print.

    This may be worrying for marketers, but it is counteracted by a brighter finding. Young adults who have maintained or increased their media consumption of each media type in the last 12 months are much more likely to increase their consumption of all media activities in the coming 12 months, compared to older generations. This is especially the case for digital media: growth driver scores for 18-24-year-olds are at 46-48% for streaming music, accessing websites and apps, streaming video and social media, compared to just 15% to 24% for over 55s. The key takeaway for marketers is that, while inspiring loyalty amongst younger consumers can be more challenging, if they can be attracted and retained, they are highly engaged and are more likely to spend more time with the channel in question.

    Streaming platforms will face a challenge winning and maintaining subscribers

    The streaming companies profited from the stay-at-home orders and lockdowns around the world during the pandemic. However, life has more or less returned to normal for most people around the world, and many of them are facing a cost-of-living crisis, so it’s perhaps unsurprising that consumer intentions to subscribe to streaming platforms is challenged. What’s more, while throughout the pandemic Netflix and Disney+ ruled the streaming roost, they now have a plethora of competitors vying for consumers’ attention.

    The YouGov report found that while the growth of streaming services is plateauing – 26% of consumers are likely to increase their viewing in the next 12 months, compared to 35% last year – 37% of consumers currently plan to continue using their SVOD services next year, a higher figure than other types of paid-for content. 13% of consumers don’t currently pay for streaming services but would consider subscribing next year, while a similar proportion (14%) are considering cancelling their current subscriptions. Interestingly, subscribers aged 25-54 are more likely to continue with their subscription services than those aged 18-24.

    Those who plan to continue their subscriptions are influenced by different factors than those who are considering subscribing in the coming year. The ‘continuers’ will continue to subscribe as long as their SVOD provider caters to their entertainment needs; ‘potentials’ need assurance that they will make full use of the service they pay for, and that the content offering they receive will provide them with something they cannot get for free elsewhere. They are also eager for flexibility and to avoid being locked into a long-term contract.

    As we discussed in a recent blog, the launch of ad-supported tiers by Netflix and Disney+ is a big move for both consumers seeking to save money, and for advertisers seeking to reach them.

    A new era in green advertising

    Echoing a blog post we published a couple of weeks ago about how the advertising industry can reduce its carbon footprint by addressing the impact of online advertising campaigns – and this is an issue that is raised by the YouGov report as well. It found that 67% of Americans cite sustainability as an important issue, while eight in ten UK consumers consider it to be a key topic of concern as well. More than half of British and American consumers state that sustainability in advertising is important to them – so advertisers and publishers need to be able to address the increasing concern around the impact of the ad industry on the environment. While the most obvious culprit might be the print and OOH industry’s use of paper, it is in fact the digital ecosystem which is potentially more problematic, as it requires a huge amount of energy to power the internet, making it a significant contributor to greenhouse gas emissions.

    The environment is an issue that isn’t going away, and what brands are doing to protect the future of the planet is an increasingly important consideration for consumers; it remains important to them even when they have other issues such as the cost of living on their minds. In 2023 the advertising industry should take this as a directive and opportunity to communicate and validate their environmental credentials, both at a product and supply chain level but also in their advertising practices.

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    Early next week, ECI Media Management will be releasing a whitepaper with our key predictions for the advertising industry in 2023. The paper will focus on issues that are of particular relevance to how media budget is allocated, including streaming, online advertising and the role of TV. And we will of course explore each of those issues and many others in more depth on our blog, ECI Thinks throughout 2023.

    value@ecimm.com

    Image: Shutterstock/xalien

  3. Will AVOD create a brighter future for Netflix?

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    Between April and July 2022, Netflix lost nearly a million subscribers, the biggest loss in its history. It was the streaming platform’s second consecutive quarter of declining subscriber numbers; after years of what seemed to be unstoppable growth, this was a dramatic change in fortunes. The decline is largely down to a shift in lifestyle after the pandemic, alongside the introduction and development of competitors such as Amazon Prime and Disney+. Whilst Netflix subscriber numbers remain significantly higher than those of its competitors, its share price plummeted by more than 60% as a result of falling confidence in the platform. It was apparent that it needed to take action in order to remain a leader in the sector. In an attempt to achieve this, the platform introduced an ad-supported membership tier, the first time Netflix ventured into AVOD since it began streaming in 2007.

    What can I expect from the new Netflix AVOD tier?

    Netflix Basic with Ads is an ad-supported subscription which comes at a lower cost to the consumer but means that ads will be shown before and during most shows. Ad load will average approximately four minutes an hour, and roughly 5-10% of TV shows and films will not be available on this tier due to licensing restrictions. Downloads are also unavailable. In the US, the Basic with Ads membership costs $6.99 a month ($1 cheaper than the Disney+ ad-supported platform launching next month), in comparison to the standard membership which costs $9.99 per month. The ad load is lower than Hulu’s, which has around five minutes of ads in a single 22-minute episode, and is on a par with HBO’s.

    Cheaper for consumers, expensive for advertisers

    At launch, Netflix claimed to have almost sold out all ad inventory following ‘overwhelming interest’ from global advertisers. Some media agencies have been hesitant when discussing buying space to advertise on Netflix. Ad space on Netflix’s AVOD platform does come at a premium, with a CPM of $65. This price point is around the same as that of a premium spot on broadcast TV. That makes Netflix one of the most expensive platforms on which to advertise, although its pricing is expected to drop once the initial launch period is over. Not only is it expensive, but Netflix is also asking for year-long contracts upfront and for advertisers to commit quickly, which is off-putting for some.

    Room for improvement

    Agencies have also suggested that the platform is not yet sufficiently well developed to warrant these price levels and that seeing how well the service works will be imperative prior to committing to placing shows. Whilst Netflix has ‘very tight frequency caps’ that will restrict the number of times an ad will appear for an individual viewer, the platform’s targeting and measurement still need work.

    Many industry insiders have remarked on the fact that Netflix’s targeting capabilities are not in line with the prices they are charging. In response, Netflix has confirmed that in the coming year they will begin working with BARB and Nielsen in order to gather the more detailed data that advertisers demand, such as show ratings and detailed information on who is watching them. Once this information becomes available, it is expected that many more brands will be interested in Netflix’s advertising opportunities.

    Based on the results of a survey conducted by The Harris Poll, there is a great opportunity for Netflix and other streaming services to ensure that they are optimizing the advertising experience they are able to offer. A clear trend in the survey was that currently, ‘streaming-service ads are boring, repetitive and unpersuasive, with an overwhelming 81% of respondents stating they see the same ads repeatedly. 55% are of the opinion that streamed ads are less interesting than aired ads. Questions around interactive ads and ads tailored to the content being watched caused a more even divide across subjects. However, younger and older millennials, as well as Gen Xers, who are the most likely to be using a streaming service, were in favor of interacting with an ad if it meant the rest of the show would be uninterrupted. Since these demographics are likely to make up a large proportion of audiences, this may be a factor for Netflix to consider.

    Peter Naylor, Netflix’s sales VP, has spoken out about the new path for the platform and has confirmed that this is just the beginning. Co-CEO Ted Sarandos even stated that ads on the platform would be ‘better than TV’. Shoppable ads, multi-screen viewing and collaborating intensely with Netflix creators are some of the ideas on the table for the future.

    A change in fortunes

    According to AdAge, Netflix is expecting its foray into AVOD to generate 500,000 subscribers by the end of the year. The introduction of the cheaper subscription has come at the perfect time: with the cost of living rising globally and the festive season around the corner, households are certainly looking for ways to cut spending. Having gained 2.4 million subscribers in the third quarter as a result of strong new content, in particular ‘Stranger Things 4’, Netflix share prices rose by 14%.

    A change in focus

    Going forward, Netflix is eager to steer investors towards focusing on revenue rather than subscriber numbers; to encourage this, they will stop forecasting subscriber numbers. The rationale behind this is that whilst focusing on subscribers during early growth was helpful, now that there is such a wide audience who can be paying a range of fees, the economic impact of a consumer can vary, so revenue is a more important metric. It is no wonder that Netflix is trying to shift the focus to revenue, with potential new subscription fees coming in as well as a predicted $830m from ads next year.

    AVOD will help Netflix to reinforce its leadership

    Alongside the introduction of the ‘Basic Ads’ membership, Netflix is planning to crack down on password sharing as we go into the new year. It will now allow people sharing their accounts to create sub-accounts to pay for family and friends to use theirs. So whilst this may not increase the number of subscribers, revenue will increase. Netflix continues to lead the streaming industry by innovating and discovering ways in which to maximize viewership, whilst remaining as accessible as possible. This should help to future-proof its business model and allow it to remain a worthy competitor of the likes of Disney.

    Content is still everything

    Embracing AVOD will undoubtedly help Netflix to bolster its bottom line, but it’s not the be-all and end-all. For Netflix and all its competitors, a successful future lies in the quality of the content it creates. The content is the product, and subscribers will only pay the subscription for content they enjoy – with or without ads.

    value@ecimm.com

  4. Disney versus Netflix: The AVOD battle

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    For years, Netflix was the king of the streamers, enjoying a near-monopoly of the streaming market and steady growth of its subscriber growth across the world. Recently, however, it has come against increasing competition from the likes of Amazon Prime, Peacock, HBO Max, Apple TV and especially Disney+. Disney+, The Walt Disney Company’s streaming platform, has enjoyed stratospheric growth over the last few years, and its results so far this year far outshone Netflix’s. With both platforms taking their offering to the next stage later this year by launching their ad-supported tiers within weeks of one another, we look at the state of play and explore what the war between the platforms means for advertisers.

    2022: The year Disney’s long-term plan paid off

    The growth of Disney+ into one of the biggest streaming platforms in the world may seem like a recent phenomenon but it is the result of a carefully thought-out, 15-year-long strategy to reinvigorate the Disney empire. Of course, there were other factors at play; a global audience primed by Netflix for streaming, and the serendipitous launch of Disney+ just as the world went into lockdown and people were eager for entertainment and relief. But content is king when it comes to winning in the streaming industry, and that has been Disney’s relentless focus since the mid-2000s. Major acquisitions have included Pixar in 2006, the Marvel Comics superhero universe in 2009, George Lucas’ Lucasfilm (including the Star Wars franchise) and 21st Century Fox in 2019 (which included operational control of Hulu). The resulting content base was ripe for the launch of Disney+ and, with content that was so much more famous and abundant than Netflix’s, it’s not surprising that Netflix is struggling to keep up.

    The rise and rise of Disney+

    As already mentioned, Disney+ benefited from the fortuitousness of launching an on-demand streaming platform precisely at a time when people needed at-home entertainment more than ever before. But even taking that into consideration, its growth has been remarkable. It had reached 100 million subscribers just two years after launch, far exceeding its goal of 60-90 million users by 2024. By comparison, it took Netflix a decade to reach 100 million subscribers, despite a much less competitive market – although it was also creating that market as it went along. Recently, there have been concerns among investors that the streaming industry is slowing down – concerns that were fuelled by Netflix’s results in the first two quarters of this year. But Disney has defied these worries: subscribers to Disney+ reached a new high of 152 million in the third quarter of this year, having added a remarkable 14.4 million in the second quarter. When the Disney+ tally is added to subscriber numbers for Hulu and ESPN, the total number of subscribers for platforms owned by The Walt Disney Company amounted to 221 million, surpassing that of Netflix.

    Netflix’s struggle to stay ahead

    Netflix is still the single biggest streamer, with just over 220 million subscribers, but 2022 has been a difficult year for the company. Their numbers seem to be following a pattern of stagnation, losing 200,000 in Q1 and a huge 970,000 in Q2. They are of course at a different developmental stage to Disney+, and at least part of Netflix’s stagnation is down to saturation as well as other factors such as the rising cost of living and the end of lockdown restrictions. However, content is also an issue: Netflix does not have a back catalogue of the scale of Disney’s, and Disney and many other media companies are ending the licensing of their content to Netflix so they can use it on their own platforms.

    Netflix’s challenges and its disappointing results earlier this year prompted it to announce that it would be introducing an ad-supported tier to its platform. This caused ripples of excitement across the advertising industry, which has always been eager to target audiences which can otherwise be hard to reach. Netflix had been planning to launch the new AVOD platform in early 2023 but when Disney+ threw its hat into the ring with a launch date of 8th December, Netflix brought its launch forward to early November.

    Disney versus Netflix AVOD: The clash of the titans

    So, Netflix and Disney+ are going head-to-head with launches of their AVOD platforms within weeks of one another. This will be an exciting and transformative time in the advertising industry: a sizeable proportion of Netflix’s audience, for example, is notoriously difficult to reach via other channels. So, what will advertising on these platforms entail? As things stand, we know more about Netflix’s proposed offering than Disney+, although we do know that both are anticipated to have a light ad load, with about four minutes an hour for TV series. Disney is expected to start with 15-30-second spots, but will expand to a ‘full suite of products’ over time.

    While Disney+ executives will be able to rely on the company’s past experience with advertising, both on cable TV and on other platforms it owns. For Netflix, however, this is fresh territory – although they have hired experts with plenty of advertising experience, and have partnered with Microsoft to build their AdTech capabilities.

    There has been more reporting on Netflix’s proposition. In early September, ad buyers were asked to submit initial bids, with a ‘soft’ CPM of $65, well above the industry average CPM of under $20, and similar to premium NFL CPMs. Netflix is asking advertisers to make a $10 million annual commitment, but with limited targeting: during the first phase, brands will be able to buy against top viewed series and some content genres, but not against geography (except country), age, gender, viewing habits or time of day. Movies are expected to have pre-rolls only, and frequency capping will be low by industry standards – one per hour and three per day.

    Challenges ahead

    By launching their ad-supported tiers within weeks of each other, the two biggest global streaming platforms are going head-to-head in a new field. They are facing a difficult market: with rising inflation and the growing cost of living, consumers will be looking to make cuts, and streaming subscriptions may be seen as a luxury. Of course, the streaming giants will be hoping that the introduction of their AVOD platforms will help to mitigate this, but it won’t be easy, especially if they are to avoid cannibalization of their premium, ad-free tiers. It will be fascinating to see who plays the AVOD cards better.

    This is an exciting moment for advertisers – not only will they be able to reach new audiences, but investment in the infrastructure around advertising in streaming will create exciting new opportunities and capabilities. The industry will look on with interest as the two companies lands on a defined pricing strategy – we will come back with analysis when it is available.

    value@ecimm.com

  5. Is this the end of the entertainment mergers?

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    Last week, AT&T announced a $43 billion deal to combine its content unit, WarnerMedia, with factual TV network Discovery. The telecommunications giant will unwind its acquisition of Time Warner, which it renamed WarnerMedia, to create with Discovery a new media company that could be worth as much as $150 billion. The move is a sign that the huge conglomerates which resulted from a flurry of mergers just a few years ago are no longer big enough to contend with the major streaming giants Netflix and Disney. 

    What’s the context behind the deal?

    The much-discussed streaming wars are currently being won, by a large margin, by Netflix and Disney who both enjoyed significant growth during the pandemic. But even Disney is struggling to keep up with Netflix. Netflix has a huge 206 million subscribers and is still growing, albeit more slowly than Disney, which had 106.6 million subscribers as of early April. Netflix had a significant head start over the other streamers, and has a huge international footprint – crucial for continued sustainable growth in this competitive landscape. What’s more, Netflix is finally able to sustain itself financially, and no longer has to borrow money to fund its programming.  

    The American media conglomerates anticipated this situation, leading to a raft of mergers and acquisitions in recent years, such as Disney’s acquisition of Twenty-First Century Fox and AT&T’s purchases of DirecTV and, of course, Time Warner. These deals created huge entertainment companies, but the WarnerMedia/Discovery news suggests that even they are not big enough.  

    But the new company created by WarnerMedia and Discovery just might be. 

    Teaming up to win the streaming wars

    The Economist neatly summarised the four key things that a streaming service needs to compete successfully in the streaming wars: scale in the domestic market, high-quality content, a flexible balance sheet and the ability to expand globally. WarnerMedia’s HBO Max meets the first two criteria, but falls down on the third and fourth. Parent company AT&T’s financial woes made it difficult to keep up with Netflix in terms of programming spend, while the decision to licence content to foreign companies, such as Sky in the UK, means that its international footprint is very poor. The merger with Discovery will help WarnerMedia to address both of those problems: it will no longer be held back by AT&T’s revenue sheet, and Discovery+ already has a significant presence in Europe and India.  

    The resulting company will present a significant headache for the current winners Netflix, Disney and Amazon. WarnerMedia and Discovery’s combined content library will be huge and diverse: it will include HBO’s critically acclaimed dramas, Warner Bros’ blockbuster films, Discovery’s unscripted shows and a variety of sport and live news services. It will be very interesting to watch how the company unfolds. Will they merge their streaming services, creating a ‘one-stop shop’ that would compare favourably to Netflix but would undoubtedly have a high price point (HBO Max currently charges $15 a month, significantly more than competitors)? Or will they ‘bundle’ existing services and new ones for a discounted subscription price? 

    An admission of failure by AT&T

    The merger between WarnerMedia and Discovery is a de facto admission by AT&T that its foray into entertainment has failed. When it acquired Time Warner, which it renamed WarnerMedia, just a year after its purchase of satellite service provider DirecTV, the plan was to vertically integrate the businesses of content creation and content distribution – but that plan has been shelved. AT&T’s CEO John Stankey said that the telco giant lacked the global reach necessary to build a successful streaming business that could match the likes of Netflix and Disney. DirecTV will be sold to TPG. 

    What does this mean for advertisers?

    The question on every advertiser’s lips is ‘how many unique individuals can I reach through as few companies as possible?’. By merging, WarnerMedia and Discovery may provide the most convincing answer yet to this question. They will aggregate more inventory than the separate companies already do, and will provide advertisers with a huge, diverse audience. This will put them in a very strong position, particularly as Netflix does not currently host any advertising on its platform. 

    Interestingly, however, WarnerMedia’s ad tech arm, Xandr, is not part of the merger, and will remain under AT&T’s ownership. This is likely because it would take a lot of time, effort and money to disentangle Xandr from AT&T’s customer data, but given the importance of targeting and measurement in TV and streaming, and of mining media companies’ first-party data, it is would certainly be an advantage for WarnerMedia/Discovery to have its own tech stack. 

    A scramble to create more mergers

    With the streaming landscape now dominated by three giants – Netflix, Disney and now the company formed by WarnerMedia and Discovery – the rest of the industry is now scrambling to form mergers of their own. One of the most significant is Amazon’s purchase of Hollywood studio MGM, confirmed this week for a price of $8.45 billion. The deal will bolster Amazon’s TV and film library for its Prime Video service, and the jewel in MGM’s crown, the James Bond franchise, will help Amazon to compete in the streaming wars, even though it will only own 50% of 007. 

    AppleTV+ is yet to take off, despite giving away a huge number of free subscriptions – more than 60% of its 40 million users are thought to be on a free trial. However, it does of course have plenty of money to spend on acquiring another media company if it chooses to do so.  

    The other giants of American entertainment, NBCUniversal and ViacomCBS, themselves the products of huge mergers a few years ago, have found themselves in a difficult position. The very fact that WarnerMedia and Discovery have decided to merge is a sign that even NBCUniversal and ViacomCBS aren’t big enough to compete with Disney and Netflix. The problem? There isn’t really anyone left for them to merge with. They have too much competing content to merge with each other and anyway, the Federal Communications Commission prohibits such a move. That is unlikely to change given the current White House’s stance on antitrust. They could purchase smaller media companies, but this wouldn’t give them the global scale they need. 

    The race to grow and consolidate audiences continues

    As the world opens up again after the pandemic, people will be spending less time in front of their televisions. Many may decide to unsubscribe from some of their streaming services as TV no longer plays quite such a central role in their entertainment schedules. The race to grow and consolidate audiences – and therefore advertising dollars – continues, and the company resulting from the WarnerMedia/Discovery merger will be well-positioned to catch up with the current leaders. 

    Header image: atk work / Shutterstock

  6. Advertising and media: key developments in 2021

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    2021 is finally here, its arrival gratefully welcomed by many across the world glad to turn their backs on a 2020 full of hardship and challenges.

    But we are still living with the coronavirus pandemic, and its impact has permanently transformed how brands and consumers interact. Stay-at-home orders for billions accelerated the digitization of our everyday lives, and brands have responded by ramping up the digital share of their marketing strategies.

    So, what developments will dominate in the year to come and what do they mean for advertisers?

    Point of sale will shift with consumption patterns

    2020 accelerated the digital revolution and forced brands to reconsider their priority advertising channels. Streaming and social advertising were obvious winners, while OOH and cinema have inevitably suffered because of their ‘out of home’ nature. But another less obvious victim is point of sale (POS). POS has always been an important channel for brands, convincing consumers as it does to make an impulse purchase or to make a last-minute decision in favour of one brand over another. The move online means that the power of this valuable opportunity to reach consumers at a critical time in the purchasing funnel has been diminished, and this is likely to have exacerbated the impact that the pandemic has had on sales. Many brands will be looking to shift their POS investment into alternative channels – and vendors such as Amazon will benefit, with their ability to reach consumers while they are in the ‘buying mood’, echoing the power of POS. In fact, all retailers with strong online sales capabilities will benefit, as retail – and therefore POS – increasingly moves online.

    Big Tech will face its big reckoning

    With so many people forced to stay at home, the services offered by the tech titans dominated another year: keeping in touch with Facebook, shopping with Amazon, collaborating with colleagues using Microsoft’s tools, and seeking entertainment via YouTube and streaming services. This inevitably sent their revenues soaring, with the big four each posting remarkable results whilst other companies floundered in the midst of a global recession. This dichotomy did not go unnoticed: it did nothing to quell suspicions that Big Tech is too powerful and that its monopoly on the marketplace is too large. They stand accused by lawmakers across the world that they have engaged in anti-competitive behaviour, using their power and scale to choke the ability of their smaller rivals to compete with them.

    2021 could be the year that Big Tech finally feels the ramifications of these accusations; regulatory authorities in the US, the EU, India and the UK are all clamping down on Big Tech in different ways. The EU has revealed the drafts of two digital services laws that would create a powerful apparatus to temper the power of Silicon Valley, complete with threats to break up companies that repeatedly engage in anti-competitive behaviour. Meanwhile, the federal government in the US has launched antitrust cases against Google and Facebook, accusing them of pursuing strategies to throttle competition.

    But it might not be these regulatory moves that pose the greatest threat to Big Tech. It could actually be its employees. The current employees of the Big Tech firms are becoming increasingly comfortable with expressing their concerns about their employers: in an internal poll, only 51% of Facebook employees said they believed the social network was having a positive impact on the world. The ‘badge post’ – a traditional farewell note for any departing Facebook employee – has been weaponised against the social network on a number of occasions in recent months, with one data scientist saying it was ‘embarrassing to work here’ thanks to the amount of hate speech on the platform. Meanwhile, more than 200 US Google employees have formed a union, the first group at a big tech company to do so as the industry faces a ‘reckoning over years of unchecked power’, and Google employees also recently protested over the departure of ethics researcher Timnit Gebru.

    For advertisers, this reckoning will likely lead to a wider dispersing of their digital ad dollars. Many are already asking their agencies to pull investment out of Facebook and direct it to other platforms such as TikTok, Snapchat and Pinterest, or even ad-supported streaming platforms, because they no longer trust Facebook enough to place 100% of their investment there. There is also a risk that consumers will react negatively to brands associating themselves too closely with the big tech companies – as we saw during the Facebook boycott in the summer of 2020. With trust in all the tech giants dissipating, it seems inevitable that this diversification trend will affect them as well – and that will be a good thing for the industry.

    TV will tip from linear to streaming

    Services such as Netflix, Amazon Prime and their newer competitors like Disney+ and Peacock have attracted new viewers in their millions in the past year – and ad dollars are following those eyeballs.

    At the US Upfronts, advertisers were increasingly demanding more streaming options as part of the packages they were purchasing, and vendors were obliging in an effort to offset losses incurred by the lack of live sport and investment from sectors hit hardest by the pandemic. Combined linear and streaming packages were common, and this focus on streaming by both vendors and buyers will likely tip the balance in streaming’s favour this year, particularly as restrictions seem set to be with us for the foreseeable future.

    US marketing executives say CTV already represents 18% of their advertising spend, with almost 39% of sports viewers watching live sports content through their CTV devices. This is significant because, up until recently, one of the key reasons to not cut the cord was due to live sports. As advertisers are increasingly including CTV into their mix, and cord-cutting is increasing, the need for measurement is amplified.

    Most people have probably heard about, or experienced, being inundated with the same ad over and over while watching a show on CTV. Not only is this frustrating, but it can also have the opposite to the desired effect: overserving ads can turn a potential customer off buying a product.

    For linear TV, it has been standard practice to measure certain quality KPIs to determine advertising effectiveness. We can tell where and when an ad runs – measuring the efficiency of daypart mix, competitive separation, double-spotting, to name a few – to ensure that the quality of the buy is delivering to set communication goals. Even with these measures in place, we too often see inefficient impression delivery, leaving valuable reach untapped.

    Within the CTV world, issues of measurement, management, and transparency are working to catch up. Even with frequency capping in place, it can be hard to implement, so a lot of waste is created. Some also speculate that, as usage of streaming increases, frequency will lessen due to more advertisers being present on the platform. While this may occur, it will still be important to have a bearing on where and when your ads run, and that frequency is being managed.

    With CTV’s share of media plans set to grow at an exponential rate in the coming years, more focus must be on measurement and reporting, to ensure that impressions are effectively building towards communication goals.

    Flexibility will be key

    2020 has shown that even the best-laid plans are not infallible. Which airline marketer, for example, put provisions in place for a pandemic that essentially shut down the travel industry?

    One of the many consequences was that the favoured model of large, long-term advertising commitments took a fatal blow, with a multitude of advertisers worst hit by the pandemic desperately trying to disentangle themselves from their advertising commitments. At the TV Upfronts in the US, flexibility was every advertiser’s number one priority, with cancellation options non-negotiable; as TV networks were desperate to bolster their bottom lines, buyers could negotiate options that suited them more, such as committing dollars by quarter, and the ability to cancel a certain percentage in a longer time frame. These must-haves are likely to remain in 2021 and beyond.

    The drive for flexibility to be able to better weather storms is likely to manifest in a gravitation towards media placements at the lower end of the sales funnel. These channels offer the flexibility to halt spending quickly, so advertisers are likely to choose programmatic spend rather than committing a fixed amount to a publisher, or social media channels as opposed to large, inflexible TV investments.

    Successful advertisers will be prepared, but agile

    The pandemic has accelerated change across the world, at a societal, economic and individual level, and we will be feeling its ramifications for many years to come. The most successful advertisers will be those who are prepared, but also agile: able to bend, rather than snap, in the face of inevitable change. In order to be prepared and flexible, a deep understanding of your media activity and how it can be optimized is essential.

    If you would like to discuss how to optimize your media performance in 2021 and beyond, please feel free to contact us: value@ecimm.com

    Header image: atk work / Shutterstock

  7. The Upfronts: Is the old ship slowly changing course?

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    Our US Business Director Victoria Potter explores how the Upfronts format might finally be changing – and why that’s good for advertisers. 

    How did the pandemic affect the Upfronts format?

    A few months ago, I questioned in another of our ECI Thinks posts whether the pandemic would force through seismic changes in the Upfronts landscape. There has been a growing appetite for such changes in recent years, but it takes a lot to change the course of a huge, 60-year-old ship. Then the global coronavirus pandemic came along, and it seemed like the kind of storm that could expedite that change in direction: transforming consumers’ consumption priorities and their paths to purchase, and therefore affecting the media strategies of B2C brands. 

    But the change in direction didn’t happen as we anticipated. The Upfronts went ahead, and many advertisers bought their inventory. However, there are now indications emerging that some transformation is on the cards. Marketers are demanding changes to help them cope with the uncertain environment: 

    • Increased flexibility: Advertisers feel more comfortable committing to longer-term deals if there is greater flexibility and more options available to them 
    • More streaming: Many vendors managed to keep their revenue flat (rather than dropping) thanks to a shift in investment from linear to streaming. Streaming now accounts for one-third of ad dollars invested in TV. 

    Just a couple of weeks ago Marc Pritchard, Procter & Gamble’s Chief Brand Officer, declared that fundamental changes must happen, and must happen by next year. This is particularly important because P&G is such a key player in the Upfronts, and indeed has been a driver of the ‘FOMO’ (fear of missing out) that other advertisers experience, and which has been fundamental to the continued existence of the current format. Pritchard said the Upfronts are ‘inconvenient at best’ and that the system must change because ‘a level playing field means planning and negotiating when it fits the business – that’s calendar year for most.’ 

    So, what exactly is behind the desire for change – and the apparently increased willingness of the Upfronts system to accommodate that change? 

    Timing

    As Marc Pritchard observed, the Upfronts have long adhered to a schedule that suited the TV networks best, from October to September. Most advertisers work to a calendar-year agenda, so having to purchase TV inventory in a different schedule is disjointed. What’s more, the Upfronts format obliges advertisers to purchase inventory for almost a year away; as pandemic has laid bare, plans can change dramatically just a few months into the future. The old format was therefore driving inefficiency, with the purchase of too much inventory driving frequency and waste.  

    This year, however, was a buyers’ market, thanks to the deflation in media pricing (see our recent Inflation Report Update for more details) and a lack of content. Buyers could negotiate options that suited them more, forcing TV vendors to introduce more flexibility. Buyers were able to commit dollars by quarter, and to negotiate better conditions such as the ability to cancel a certain percentage in a larger window.  

    Traditionally, streaming and linear ads were sold in two separate packages, with the former offering more flexibility than the latter. However, vendors are increasingly selling the two as a combined package, again because of advertiser demand. This has resulted in less flexibility for streaming but more for linear – and that benefits most advertisers because the majority of investment is still in linear. It will be interesting to see if and how this changes in the coming years, as streaming becomes increasingly prominent.  

    Control

    Linear TV used to be the foundation of any media plan for the larger advertisers, but TV budgets are now divided across a number of areas, including linear, streaming, programmatic and addressable. Committing spend so far in advance, as per the ‘old’ Upfronts format, limits the opportunity for advertisers and their agencies to adjust to the rapidly changing landscape and optimize their buys. 

    It’s no secret that the media landscape is fragmenting, and that the most effective ad campaigns are optimized across all channels. Buying advertising separately, at the Upfronts, NewFronts and the podcast upfronts means that optimization is more difficult to achieve. Merging them, as 39% of media buyers favor, would help them to better understand measurement and research across screens, which would intern improve performance. The IAB’s new CEO, David Cohen, pushed for this ‘coming together’ to happen over the summer. 

    Optimization and measurement are key factors in the combined linear and streaming packages that vendors are increasingly offering at the Upfronts. Viewership is changing dramatically, particularly this year as more and more consumers have subscribed to streaming platforms during lockdown, and this is leading to an increase in streaming dollars at the Upfronts. However, a recent Wall Street Journal article highlighted that measurement problems are holding back advertising in Connected TV. Keeping track of who is watching what, and where, as well as how many times they see the same ads, is becoming a source of frustration for advertisers seeking to move their dollars into the medium. Ad-supported streaming from the likes of Amazon.com and Roku is attracting more and more viewers, but a fragmented media-buying landscape can mean that viewers are hit repeatedly with the same ad. Ad inventory purchased from multiple sellers often shows up in the same ad break; the problem is exacerbated by the fact that there is a smaller pool of advertisers in streaming than in traditional TV. There is a lack of transparency on when and where ads run within streaming platforms and apps; while it is slowly improving, the situation is far from resolved and this is causing significant wastage for advertisers. We’ll be exploring this in more detail in an upcoming post on ECI Thinks. 

    So, what’s the bottom line?

    Advertisers are demanding transparency and that their media buys work together to drive maximum efficiency and effectiveness. The old Upfronts format is without doubt in need of an update so that it aligns more closely with the current media landscape. Furthermore, the vendors have work to do to ensure that measurement is unified and keeps up with the pace of change. The times they are a-changin’, and the Upfronts need to change accordingly. 

     

    Image: Andrey_Popov / Shutterstock

  8. AT&T’s digital advertising ambitions

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    Rumors have been swirling in recent weeks about AT&T’s plans to sell off parts of its business, and even whether it will pull out of its media play altogether. In recent years, it has purchased a number of companies – including, most famously, Time Warner – in order to become a major player in the digital advertising sphere. Pursuing a line of business outside its traditional telco remit has become increasingly important in order to ‘keep up’ with key competitors Verizon and Comcast, who have both expanded their offerings: Verizon invested in a fiber-optic network for high-speed internet, while Comcast has focused on bundling content, mobile, internet, cable and landline. AT&T’s proposition, on the other hand, was seen by many as somewhat antiquated; this could only be remedied by upping its technological capabilities through investment or acquisition. AT&T chose the acquisition of companies that would make it a major player in digital advertising. This, said new CEO John Stankey, would allow it to ‘compete with companies that are incredibly strong and capable, like the Googles, Amazons and Apples of the world – and so we’re playing big’.

    Rumors that DirecTV will be sold off

    AT&T started its journey into advertising with the acquisition of DirecTV for $49 billion in 2015; however, it made the purchase just as the TV market started to change dramatically and irrevocably. It was a time when the likes of Netflix and Amazon Prime started to make cord-cutting a viable option, and new live TV players like Hulu Live and YouTube TV have since made inroads into the appointment viewing arena. Subscription numbers have been falling, so it is perhaps unsurprising that AT&T is under pressure from shareholders to offload the unit, even though it is now reportedly worth less than half what AT&T paid for it.

    Digital advertising moves

    Having acquired a source of inventory for its digital advertising capabilities, AT&T then purchased AppNexus to serve as the foundation of Xandr, its programmatic marketplace for targeted TV and digital video advertising. To complete its digital advertising triumvirate, the telco giant famously acquired media titan Time Warner in 2018, giving it access to assets such as HBO, the newly launched streaming platform HBO Max, Warner Bros and CNN.

    Expanding digital capabilities

    So have these big purchases, which have left AT&T in a large amount of debt, paid off? AT&T’s rumored sale of DirecTV led to speculation that it was also seeking to offload Xandr (this was later dismissed by CFO John Stephens) and that led some to wonder if Warner Media (as Time Warner was rebranded) was also for the chop. As far as we know, AT&T is not entertaining these ideas at all; WarnerMedia is an important revenue-driver for the telco giant, and Xandr has recently partnered with the Dentsu Aegis Network (DAN) in Asia to create Dentsu Curate, which leverages Xandr’s tech platform to create a new programmatic supply solution. Xandr was struggling to make its product offering appealing as it was unable to pull together inventory from enough platforms to make it interesting to advertisers; the Dentsu move could help address this issue and increase Xandr’s reach. It will also be enhanced by the launch of HBO Max’s advertising-supported tier in 2021.

    Could bundling streaming services be part of AT&T’s future?

    With the uptick in the streaming wars at the start of this year, many consumers are likely wondering whether they want to pay for several subscriptions at once – the cost could start to look like the high cable costs that led to so many cutting the cord. AT&T’s ownership of WarnerMedia, particularly HBO Max, could make it a viable option to start ‘bundling’ streaming services. These streaming bundles could be used to incentivize consumers to stick with AT&T’s telco services and will, of course, create an even richer inventory list for Xandr – a win-win situation for AT&T.

     

    Image: Connect World / Shutterstock

  9. The streaming wars part two: Pandemic

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    Until late 2019, Netflix was the undisputed king of the streaming sector. It had competitors, notably Amazon Prime, but its subscriber base, content catalog and accessibility were almost unrivalled. 2020 heralded the much-anticipated ‘streaming wars’, with many media companies such as Disney, NBCUniversal, ViacomCBS and AT&T releasing their own streaming services. The competition was always going to be fierce, and then coronavirus came along. The global pandemic forced billions of people indoors for weeks and months, and many turned to the streaming services – old and new – for entertainment. A lack of live sport also drove many fans into the arms of the streaming services.

    Strong Q2 performances

    The streaming platforms’ second-quarter results reflected the millions of new subscriptions, with particularly remarkable performances from Netflix and newcomer Disney+. For the big media companies, streaming performance was a bright spot in balance sheets dominated by bad news in the form of closed movie theaters, canceled sporting events and major advertisers slashing their TV budgets. But as the world slowly transitions into a post-pandemic landscape, can the streaming services maintain their success?

    Let’s start with a round-up of the major players’ performances over the last two quarters.

    Netflix

    Netflix had an incredible Q2, adding 10 million subscribers to end the first half of the year, to a total of 193 million subscribers across the world. That was on top of an unprecedented addition of 15.7 million subscribers in the first quarter of the year. However, Reed Hastings, Netflix’s co-CEO, warned that this kind of growth couldn’t last, suggesting that the pandemic had pulled subscriber growth into the first half of the year. He predicted that the platform would attract just 2.5 million new subscribers in the third quarter, a prediction which caused Netflix’s share price to plummet.

    Disney+

    Many argue that Disney+, The Walt Disney Company’s much-publicized on-demand streaming service, is the big success story of the pandemic. It is the biggest streaming launch on record, with a huge 10 million subscribers in the 24 hours following its launch, and more than 60 million subscribers by early August – four years ahead of their target of 60-90 million subscribers by 2024. This is particularly impressive given that they have yet to complete their global roll-out. Including Hulu and ESPN+, both of which it also owns, The Walt Disney Company’s streaming subscriptions now top 100 million.

    Peacock and HBO Max

    It is still early days for NBCUniversal’s Peacock, which is ad-supported, and AT&T’s HBO Max, which is the premium version of cable channel HBO. Peacock launched in the US in mid-July, and at the time of writing has attracted 10 million subscriptions – a third of its 2024 target. Meanwhile, HBO Max launched in late May and has grown the pool of HBO and HBO Max customers by 1.7 million in the first half of this year, to a total of 36.3 million subscribers. It is helping AT&T to mitigate the effects of cord-cutting, although there are signs that HBO subscribers don’t yet fully grasp what the new service offers, or how and why they should get it.

    Is brand-supported streaming the future?

    It is indubitable that the coronavirus pandemic has created extremely favourable market conditions for the streaming platforms, both new and established. But, as Reed Hastings said, it’s possible that it has simply pulled 2020’s – and possibly 2021’s – entire pool of new subscriptions into the first half of 2020. To date, the streaming companies have focused on the production of high-quality content to lure new subscriptions and maintain revenue. But content by itself isn’t enough – Quibi’s unsuccessful launch is testament to that – and, what’s more, supply far outstrips demand: consumers in the US subscribe to an average of three SVOD services. The streamers will need to find new ways to deliver increasing value to shareholders.

    There has been some concern amongst advertisers about the growth of ad-free streaming, but many industry players now agree that brand support seems almost inevitable. With ad dollars always wanting to follow eyeballs, there are potentially billions of ad dollars up for grabs. What’s more, the consumer data that the streamers own will be of huge value to advertisers, allowing the likes of Netflix and Disney+ to compete with that infamous tech duopoly, Facebook and Google. Horizon Media CEO Bill Koenigsberg told AdAge earlier this year, ‘if they [the streaming companies] go that way, if they will be able to allow us to unveil the walled gardens and provide data back, then that’s an enormous competitor to the Facebooks and Googles of the world in terms of the audiences these platforms are going to attract and our ability to engage with them’.

    The big streaming platforms have huge tech capabilities which will allow them to create new ad models, formats and partnerships to drive revenue. However, they will need to prioritise consumer experience – part of the appeal of the streaming platforms is the low ad load, or total lack thereof, particularly for US viewers who often sit through more than 15 minutes of ads per hour on primetime TV. Brand partnerships will need to enhance rather than disrupt the consumer’s experience.

    A key moment in streaming

    While the streaming sector has been one of the few winners of 2020, it is far from certain that this success will continue. As the world continues to emerge from lockdown, the economic ramifications of the pandemic are becoming clear. Many countries, including the US, are in recession and unemployment is rising dramatically. Consumers will be looking for ways to make savings and non-essentials such as streaming subscriptions may well be among the first thing to go, particularly as restrictions on other parts of life ease. Netflix, Disney+ and their competitors will need to work hard to retain consumers and maintain their profit.

    Image: Metamorworks / Shutterstock

  10. TV in the time of coronavirus

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    Around a third of the world’s population has had their freedom of movement limited to a lesser or greater extent – these restrictions include recommended or mandatory social distancing, school closures and orders to work from home if at all possible. For the billions of people now spending the vast majority of their time at home, TV has become the primary source of entertainment and connection with the outside world. It is a trusted source of information and distraction, and even acts a social glue: it’s one of few things that we still have in common that isn’t the battle against the covid-19.

    TV is an industry that has seen huge change over the last few years: the pandemic will accelerate that change and, in some cases, even reshape it.

    People are watching more TV than ever

    It’s no surprise that TV viewing figures across the world have increased dramatically over the last few months. In the two-week period to March 29th, overall usage of TV among viewers aged 18-49 in the US increased by 25% year on year, compared to the same period in 2019. Streaming video on demand (SVOD) services have enjoyed similar gains: Netflix subscriptions are reportedly up 27%, Hulu’s are up 16% and Amazon’s 21% (according to NBC). In the UK, TV viewing grew by 17% year on year in the week commencing March 16th – and that was a week before lockdown restrictions were implemented. Meanwhile, Statista found that 43% of US adults are now more likely to watch movies from a streaming service, while 40% of adults are more likely to watch TV online.

    Primetime has shifted earlier as viewers turn to TV to alleviate boredom throughout the day. According to Conviva, daytime viewing jumped by nearly 40% in the week of 17th-23rd March, versus the week of 3rd to 9th March.

    A profound effect on advertisers

    Of course, the impact of coronavirus on brands has been profound: many are seeing decreased sales with customers unable to leave the house, and with financial concerns of their own affecting purchasing decisions. With decreased revenue, many advertisers have pulled back some of their advertising spend – American travel advertisers, for example, cut their spend by 50% in the first two weeks of March: that cut is likely to have increased significantly as more travel restrictions have been implemented in late March and in April.

    Advertisers are redirecting linear TV spend

    Sport is an incredibly important advertising opportunity for many brands, reaching as it does many hard-to-reach consumers, including young men. The fact that pretty much all live sports events have been cancelled or postponed for the next few months has left gaping holes in media plans and TV network revenues and has made premium audiences harder to reach. Advertisers are redirecting linear investment, particularly investment which had been targeted at sort, to other inventory controlled by the TV networks including digital inventory, as the latter attempt to make up for lost reach and hang on to ad revenue. However, brands are also increasingly redirecting linear TV spend to the streaming platforms, accelerating a trend that was already worrying the linear TV networks. It’s interesting to note that the streaming networks are unlikely to enjoy the same level of spend by advertiser as the linear TV networks do: ads on streaming platforms can be targeted to specific audience segments, allowing the advertisers to spend less money.

    With increased pressure on their bottom lines, particularly in light of an imminent recession, some brands may be tempted to remove their spend from TV and streaming altogether in favour of Google or Amazon, which are more likely to lead directly to product sales.

    Coronavirus will impact on all players in the TV industry

    The entire TV and streaming industry will be affected, but it’s likely that TV networks will suffer more than the streaming platforms, thanks in part to their reliance on live sport. Although TV viewing figures are up dramatically, this increased supply is being met with lower demand from advertisers, which is causing prices to decrease. Interestingly, when US network NBCUniversal announced that its viewing figures had increased sharply, it also shared that it would be cutting back on some of its advertising inventory in order to improve viewer experience. This is a laudable effort to stop prices plummeting, and is a trend we expect to see across the TV industry as a whole over the next months and years.

    A triple whammy of factors leading to a loss in ad revenue

    The loss of ad revenue will be a key implication of the coronavirus pandemic for the TV industry. The triple whammy of advertisers looking to make savings in their marketing budgets, a lack of live sports and the pause in production of new content leading to holes in programming, the outlook is fairly bleak, particularly for the traditional TV networks. The streaming services may fare better at least in the short term as advertisers shift their budgets to them from the traditional networks, but they will be equally affected by a lack of content down the line.

    The surge in subscriptions may be temporary

    While it seems so far that the lockdown has led to a surge in subscriptions, particularly for the streaming networks as mentioned above, the upward trend isn’t reliable. The coronavirus pandemic has caused huge increases in unemployment across the world: twinned with worries about a global recession, consumers may well be looking for ways to tighten their belts, and they might be willing to forego their streaming subscriptions, particularly when the lockdown is over and financial concerns kick in.

    Sports fans will resubscribe – but to which service?

    Whether or not they are concerned about money, sports fans in the US may also consider cancelling their pay-TV subscriptions while there is no live sport. They are likely to re-subscribe when sport returns, but could be tempted by the flexibility and lower prices of services such as YouTube and Hulu: this will be a true test of the theory that it is live sport that keeps people tethered to traditional TV.

    A lasting impact on traditional TV and the streaming platforms

    The coronavirus pandemic has accelerated and reshaped a transformation that was already happening to the TV and streaming industries. Some of the effects of the virus will undoubtedly be temporary – sport will return and advertisers will pay to reach the people that watch them – other effects, such as the shift towards the streaming platforms, will be more permanent.

    Image: Monkey Business Images/Shutterstock

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