For the first time ever, streaming’s Share of Viewing shot past TV in July this year.
Nielsen reported that the share of Streaming and Other (non-linear or cable) channels hit an all-time high of 50,3% versus broadcast and cable networks in the US.
People don’t mind watching ads if they save some money.
No one wants to pay to watch ads.
But when your budget is tight and your favourite content is be spread across multiple streaming services, what do you do?
You look to get more value for the money where you can.
In another report published in eMarketer, a majority of surveyed consumers in the US said that they prefer watching ads on streaming services if they can save 4-5 bucks per month.
In the article, Jeremy Goldman explains that as the streaming landscape evolves, advertising is becoming a vital part of the landscape offering a win-win situation: “Viewers get to choose their preferred video tiers at a lower cost, while advertisers have more inventory they can purchase to reach consumers.”
For broadcasters, media fragmentation is just one of the troubles.
According to Omar Oakes, “Broadcast doesn’t have a fragmentation problem. It has a TikTok problem.”
He writes, “it’s not so much that media owners are having to deal with a fragmentation of audience as more online players challenge fewer offline incumbents. Instead, what’s becoming quite clear is that all media is being threatened by the ubiquity of short-form, or snackable content.”
Quoting Media Nations, he reports that nearly 4-in-10 people aged 15+ in the UK watch short-form videos every day. This number starts to dwindle beyond the 15 – 25 cohort with 1-in-7 people aged 65+ watching short-form videos.
Oakes writes that while YouTube has been around for a while, online video has largely followed a TV-like format.
But with short-form videos “viewers are moving from meal eaters to ‘snackers’, then there is no more need for restaurants or fancy hotels that serve buffets. Just a load of vending machines and microwave meals.”
And TikTok is finding users outside of Gen-Z.
According to this post from Dean McElwee on LinkedIn, TikTok is the only social app to see user growth across all generations in 2023.
One way to look at it is that Meta probably doesn’t have much room to grow. Another perspective tells a story of how short-form video is attracting people from all generations.
The other problem is profitability.
Just this year alone, all major streaming services from Disney+ to Peacock have raised the price of monthly subscriptions, and Netflix ever so gently nudging people to their ad-supported tier.
As Alex Weprin writes, “The changes, put together, serve to make the ad-supported tiers more appealing to consumers. Even in the cases where ad tiers’ prices rose, the bigger hikes at their ad-free counterparts are meant to make the cheaper option look like an even better deal.”
This makes sense when you consider the sheer number of streaming services competing for a limited share of wallets.
According to Weprin, “Executives at every streaming giant with both an ad-supported and an ad-free tier (including Disney, Netflix, Paramount, Warner Bros. Discovery and NBCUniversal) say that total revenue per user is higher on the ad-supported plan than it is on the ad-free plan.”
Broadcasters are struggling to attract brands, and brands need a replacement for TV. For both ad-supported streaming is the answer.
“Historically, subscription-video-on-demand platforms have delivered stronger profit margins. However, as the ad-supported streaming business grows, that dynamic is evolving. Ad-supported streaming provides consumers more options, and provides streamers more levers to pull in the quest for profitability.”David Cohen, CEO, Interactive Advertising Bureau. (source)
Firmly lodged in our cultural and media landscape.
As Dr. Grace Kite writes in this blog post on Magic Numbers, “There’s no going back. With viewing declining year on year, this task won’t be achievable on TV in the future. Strategist Tom Roach is leading the discussion on the future of brand building, and he’s quite right when he says that nostalgia isn’t going to help.”
This isn’t a debate about the future of TV.
And it’s certainly not about the death of it.
This is a story of change.
It has always been about video, namely, the best format for telling interesting and captivating stories. TV used to be the default format for consuming it.
Don’t burden yourself with nostalgia, truisms, and the allure of sticking to how things used to be.
The fundamentals of advertising are still the same. We still need to choose the platforms and formats that reach your audience AND get their attention.
I’ll end with this quote,
“That’s the joy of these long-lived processes of invention and learning. You never quite know where they’re going to come out. But in the meantime, don’t let anyone convince you it’s not going to [be] brilliant. The future of advertising needs your enthusiasm.”— Dr. Grace Kite