Reports that linear broadcast TV is going to die a slow but inevitable death now with the rise of streaming and VOD services have been overstated. Attendees of the “TV of Tomorrow” show in San Francisco last week discussed – and sometimes debated – that point, as well as what consumer adoption of smart TVs means for addressable advertising and the evolution of the TV industry.
Here are some of my takeaways from this year’s show.
Despite the rise of streaming and VOD services advertisers continue to buy traditional TV.
For years, our industry has talked about an uncertain point in the future when consumers would be able to access TV content from any of their internet-connected devices, whenever they wanted to.
The consensus at TV of Tomorrow was that 2015 has been a tipping point. As of this April, you can sign up for HBO Go without having cable – a development some people used to think cable providers would never let come to pass. And CBS’s All Access video subscription service now offers live local programming to 64% of U.S. households. Those are two of the more robust examples, but most content providers and networks have some type of streaming offering now. Millennial customers have come to expect it.
But while consumer adoption is taking off, the business side of these streaming platforms is still nascent. Cross-platform measurement, in particular, remains a considerable challenge that hampers advertiser adoption.
For all the talk of how over-the-top streaming services and video on demand are growing, what struck me is that the majority of advertisers still prefer to invest their ad dollars in linear, and they’re confident that it’s going to remain a dominant medium. The reasons are simple: scale and simplicity. The number of people sitting down in front of a television set in their home to watch cable or broadcast still dwarfs the viewership on those other platforms. Broadcast TV will continue to be the workhorse for brands and advertisers for the foreseeable future and beyond.
TV viewers want choice, but they may not like it when they get it.
There is constant chatter about breaking the bundle, and in many ways that process has started. However, it remains to be seen whether breaking the bundle is, in fact, in the best interest of the consumer.
Many individual offerings equate to many individual experiences that lead to even more fragmentation. Will consumers be willing to put up with the pains that come from having to jump from one app to another with a completely different UI in each in order to watch a different show?
Another concern with the bundle comes down to cost, the very reason why consumers have pushed for breaking the bundle in the first place. Viewers have shown that they want more content at their fingertips than ever before. Will the desire for more content lead to the broken bundle actually costing the consumer more?
There is a very real possibility that this push to break the bundle leads to a yo-yo effect. Consumer demand is breaking everything apart into an a la carte format without necessarily realizing the challenges that will come of it. Ultimately this push may lead straight back to a more traditional bundled approach with digital improvements such as time shifting, VOD, and streaming.
Evolution, not reinvention, of the broadcast TV model is needed.
Some take the position that television has to be reinvented for a generation that wants to watch video programming on smartphones, tablets and laptop computers. But the majority thinks that TV of tomorrow is just an evolution of what consumers have enjoyed since the 1950s. Broadcast TV has been, and will continue to be, a powerhouse in the media world because of its passive viewing experience. People are used to the ability to sit back and relax when they turn on the TV, and frankly they really like it. The evolution of TV, however, will contain more interactive elements enabled by smart TVs and second-screen devices. These interactive elements will help TV become more of a “lean in,” actively engaged experience instead of the “lean back” experience that older generations associate with watching TV. The evolution of TV is about creating for viewers that fit their individual needs.
The bottom line is that we’re still going to be applying the best of broadcast TV to these new digital models. And that extends to advertising. Marketers will still be able to reach consumers at scale, but eventually, ad enhancements and dynamic ad insertion enabled by widespread adoption of smart TVs, will vastly improve advertiser’s ability to target their desired audience.
The future of TV is going to be driven by data.
Over 80% of Smart TV owners connect their Smart TV to the Internet. And the number of Smart TV households in the U.S. is projected to reach 100 million in 2020.
So, smart TVs are no longer futuristic devices that people see at CES and then forget about. They’re reaching critical mass. And that’s great news for advertisers. Having device-level insight into viewing habits will enable programmatic buying of TV ads at scale.
That richer vein of data benefits content creators, too, since they’ll be able to see what resonates with viewers versus what causes them to tune out. It’s like having a massive focus group to test programming against, and that’s great for consumers, since higher-quality content will rise to the top.
The winners in this industry will be those that know where to get the data they need and how best to use it.
No one talks about local broadcast.
This is a glaring omission as opposed to a hot topic of discussion like my other takeaways.
But when considering the future of television from many different perspectives at the show, no one talked about the $21-billion local broadcast industry. Maybe that’s because the prospect of doing business with 2,000 different local stations seems daunting, given how fragmented the TV ecosystem is to begin with.
Given that such a large percentage of viewership on linear broadcast is of local programming, the industry needs to focus more consideration on how it can help local broadcast evolve toward the future. The fact that 91% of all retail sales came from in-store purchases in 2014 proves that there is immense value in TV advertising at the local level.
Marcus Liassides is president and CEO of Sorenson Media. He can be reached at @marcusliassides.
