Preparing for Streaming’s Growth & The Future of TV Buying
Abby is PMG’s senior managing editor, where she leads the company’s editorial program and manages the PMG Blog and Insights Hub. As a writer, editor, and marketing communications strategist with nearly a decade of experience, Abby's work in showcasing PMG’s unique expertise through POVs, research reports, and thought leadership regularly informs business strategy and media investments for some of the most iconic brands in the world. Named among the AAF Dallas 32 Under 32, her expertise in advertising, media strategy, and consumer trends has been featured in Ad Age, Business Insider, and Digiday.
The news that Warner Bros. would be releasing its 2021 movie line-up in theaters and via HBO Max came as quite a shock to the media and entertainment industry last week, crystallizing just how fast 2020 has accelerated trends in media consumption and technology. The decision was unexpected and reportedly left prominent movie stars and filmmakers furious, with many claiming that the effort was a “bait and switch” to boost HBO Max subscribers. Regardless of the initial fallout surrounding the studio’s “unique, one-year plan,” there’s no question that the sheer scale of this pivot will make it difficult for the film industry to return to its pre-pandemic normal anytime soon.
Related: A recent Variety survey reports that most Americans are unwilling to go to the theaters in the next six months.
While this particular change-up was just the latest in a long list of similar announcements, it’s apparent that when combined, these developments are shaping the future of the media industry, one that’s focused on the winner of 2020: Streaming.
TV and film played a more substantial role than ever before this year, with streaming-led programming like Tiger King, The Mandalorian, Cheer, Schitt’s Creek, The Last Dance, and The Queen’s Gambit serving as an escape from the pandemic and all the challenges of 2020, influencing both pop culture and online conversation. The shift was also marked by big movie releases via streaming platforms, including Trolls: World Tour, Greyhound, and Mulan defying Hollywood norms and setting the stage for a shift in how movies are released in the future.
In 2020, time spent with traditional cable and satellite TV continued to decline, hastened by viewers cutting the cord as economic uncertainty grew and live sports — TV’s biggest viewership draw — remained off the air for most of the year.
Early reports estimate that cable providers have lost more subscribers this year than ever before. MoffettNathanson estimated that the traditional cable TV industry lost 1.8M net subscribers in the first quarter alone, with losses only mounting into the second and third quarters as economic volatility and the pandemic continued. It’s estimated that roughly 48M to 52M U.S. households don’t have cable or satellite TV while OTT viewership has grown from 181.1M in 2019 to over 207.5M in 2020.
As homebound viewers flocked to streaming platforms, advertisers followed suit with ad-supported streaming outlets making their debut in countless media plans. NBCUniversal’s Peacock was a notable contender, now boasting over 15M subscribers since its July launch and housing a strong back catalog of films, TV shows, and original programming that advertisers could buy direct.
2020 saw a 25 percent increase in U.S. CTV ad spending ($1.61B in total), while political ad spend buoyed cable TV from steep YoY losses. Net revenues from YouTube, Hulu, and Roku reportedly collectively account for half of all CTV ad revenues.
As such, U.S. cable TV ad spending is estimated to decrease by $11.18B in the next six to 12 months ($71.18B to $60B), with an estimated $7.83B less spent in the TV upfront market in 2021, according to eMarketer.
Many analysts are bullish on how pandemic-induced behavior and pre-COVID normalcy will co-exist, assuming that once vaccines are out and the pandemic is under greater control, pent-up consumer demand will make up for lost time in the entertainment sectors hit hardest by restrictions, including cruises, theme parks, and live events. Simultaneously, streaming, podcasts, and gaming will continue to rise and orbit the home, as many pandemic-induced behaviors stick around. Streaming subscribers are expected to outnumber traditional cable/satellite TV subscribers as soon as 2024, though it’s worth noting that improved accessibility and incentives have been key growth drivers.
For example, an AppleTV+ subscription is free for up to one year after the purchase of an Apple device, American Express offers unique kick-backs on streaming subscriptions, Peacock (with ads) is free to subscribe, and Disney+ was available for free to all Verizon customers at launch.
Because many of these trends (cord-cutting and curbside pick-up being obvious examples) were already in the process of widespread adoption, a rapid shift back to pre-COVID living isn’t expected. Instead, we can anticipate a gradual merging between pre- and mid-COVID lifestyles. In other words, we don’t expect people to return their Pelotons or cancel their Hulu subscriptions, which means the adoption of in-home lifestyle behavior across fitness, entertainment, and work is likely here to stay.
Coupled with fierce competition (and deep pockets) from the likes of Netflix, AppleTV+, and Amazon Prime Studios, these viewership trends have launched Hollywood studios and big media companies into a frenzy as they make plans to go all-in on streaming. In recent big media earnings calls, investors were primarily concerned with future streaming and DTC strategies, rather than short-term COVID-induced financial impacts, with Disney as the most noteworthy example.
As Disney+ becomes a cultural force via both content (The Mandalorian claimed 15 Emmy nominations and seven Emmys wins, including Outstanding Drama Series in 2020) and technological innovation (Disney+ was named Apple’s App of the Year), it’s not surprising that the entertainment giant is undergoing a massive restructuring to focus “squarely on Disney+ and the streaming services as the future of the company’s creative efforts.” The news follows WarnerMedia’s reorganization this summer to align business units under HBOMax, which officially launched just months before to a rather cold (and confusing) reception. NBCUniversal has also restructured.
All signs point to streaming as the future of media. However, most of these media firms’ business operations are still fastened to sectors in decline, including theaters and cable/satellite TV, making these corporate shuffles that much more interesting to follow.
For advertisers looking to capitalize on digital video and streaming’s staggering growth, a strategic shift from TV buying that’s historically focused on Live, Prime, and Premier content towards the concept of personal primetime is fundamental, especially as TV and digital video continue to converge.
Though Linear TV still drives the greatest reach, advertisers will continue to struggle with impression waste against viewers outside their target demographics, a frustration that advanced TV and its measurement capabilities can help solve. Depending on a brand’s needs, third-party agnostic measurement partners, brand lift studies, and more are essential to measuring all channels and tactics as one complete campaign, helping determine success and inform future opportunities.
To power a truly robust video strategy that effectively reaches the right viewers across digital video and advanced TV at scale, advertisers will need to prioritize premium, brand-safe content environments and incorporate unified targeting approaches that eliminate overexposure, taking full advantage of the latest capabilities within the digital video and advanced TV ecosystem.
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Above all, adopting an innovative approach to digital video and TV buys that moves beyond Linear TV will be critical to success as viewers can — and do — watch from anywhere, whether it be a mobile or tablet device, CTV, or content-rich TV everywhere streaming platforms. As video consumption continues to evolve and new distribution partners, and thus, ad solutions arrive onto the scene, effective advanced TV opportunities are everywhere and can be effectively tailored for current and upcoming creative and media strategies.