New 5G Services Could Accelerate Cord Cutting in 2019

The rate of consumers dropping their cable and satellite TV packages hit the highest level ever in the fourth quarter of 2017, while Internet TV subscribership grew strongly.

According to analysts at Moffett Nathanson Research, the total number of pay-TV subscribers in Q4 dropped 3.4% from a year earlier, the highest rate of decline since the trend of cord cutting emerged in 2010, with almost 500,000 customers leaving in the fourth quarter alone, that leaves the industry with about 83 million cable households.

These calculations don’t include the growing number of households that never subscribed to a pay TV service in the first place, AKA: “Cord Nevers”. Over half of cord nevers are millennials, ages 18 to 34, but just 35 percent of cord cutters are millennials.

The cable bundle has become increasingly unappealing as consumers have turned to more flexible and less expensive video offerings, disrupting the traditional cable TV model, like Netflix and Hulu that feature traditional TV and movie formats, to shorter programming from YouTube, Facebook, and Snapchat.

But offsetting the shift is the growing number of people signing up for packages of TV channels delivered over the Internet by services like Google’s YouTube TV, Dish Network’s Sling TV and AT&T’s DirecTV Now. At about $20 to $50 per month, the online offerings are considerably cheaper than the average cable TV bundle.

Later this year Verizon, T-Mobile, and AT&T will all be launching 5G networks creating real competition among home internet services. Instead of having one or two options to choose from, consumers will have 5 or more broadband services options, driving a new wave of cord-cutting as consumers continue to unbundle internet services from their local cable company.

TV Ratings are Falling as SVOD Subscriptions Rise…

 

TV viewing in the US are on the decline and as TV ratings fall, so does TV advertising revenue, as companies like Fox have experienced this year.

Nielsen’s Q4 “Total Audience Report” released on Wednesday shows a huge drop off in traditional TV viewing as consumers shift their viewing habits from old-fashioned scheduled programming.

American adults still spend a huge amount of time watching TV each day. But the overall levels of viewing (which includes live TV + time-shifted viewing) declined 4.6% year-on-year. That’s compared to a 4.2% year-on-year decline in Q3 and a 2.1% decline in Q2. The level of decline is accelerating.

Excluding time-shifted viewing, total live TV consumption was down 5.5% year on year to 114 billion person-hours of live TV video consumption.

Nielsen time spent with TV

The Nielsen Company

Among younger audiences, the drop off in TV viewing was even more severe: 16% among 18 to 24-year-olds, and 10% among 12 to 17-year-olds.

The steep drop off of traditional TV viewing is correlated with a sharp rise in the number of US homes with access to a subscription video on demand service like Amazon, Hulu, or Netflix. Nielsen says 40% of US homes had access to a subscription video on demand service in Q4 (the pink segment in graph below), up from 36% in the same quarter the previous year.

Nielsen Subscription Video on Demand

The Nielsen Company

Of those with access to video streaming services, Netflix is the most popular option.

Nielsen Netflix Penetration

The Nielsen Company

As you may have noticed from the previous charts, the amount of media consumption per day is actually up as consumers have more choice about the way in which they view content. And the more devices and services they have, the more content they consume.

Nielsen daily screen time

The Nielsen Company

Elsewhere, the amount of time spent on the web and with apps across devices among adults over 18 years old was up 32%, according to estimates from Pivotal Research, which uses Nielsen’s data as a guide. Pivotal says this now equates to 44% of the time spent with TV versus 32% in the year-ago period (although, intriguingly, on Pivotal’s estimates, this represents a sequential decline from 48% in the third quarter.)

An opportunity for TV networks?

hbo now announced at apple event Richard Plepler, CEO of HBO

APHBO CEO Richard Plepler announcing HBO Now at the Apple event on Monday.

Brian Wieser, senior research analyst at Pivotal Research, says in a note: “While declines should level off eventually (and viewing levels would certainly look better if tablets and out-of-home viewing were included in the data; a break-out of viewing of TV content in digital environments would also probably convey something more favorable for legacy providers of TV content), a concern is that if reported viewing levels continue to fall at these levels and if the industry is unable to generally make its case for why advertisers should use the medium, marketers who might otherwise have continued to focus their spending on TV may incrementally look toward other alternatives – namely digital media at a broader level.”

However, Wieser adds that this is a “secondary concern” relative to the broader state of TV advertising, which Pivotal believes is mostly due to the fact that marketers are maintaining tighter cost controls broadly across their entire advertising budgets.

There might be new competitors in the space, but there’s also more ways to get content (and advertising) in front of viewers than ever before — and they’re actively choosing to consume more of it.

And that’s why — as ratings are getting hammered — more and more traditional TV companies are opting to launch streaming services. Most recently, HBO announced HBO Now will be available on Apple devices starting in April.

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Interpublic takes big step towards Programmatic TV buying

Interpublic Group, one of the largest media agency conglomerates, is taking a big leap toward automated buying in a development that could have a huge impact on the current media ecosystem.

According to the Wall Street Journal, Interpublic has begun building a new system that will allow it to automatically buy TV and radio ads and has partnered with Clear Channel, A&E Networks, Tribune Co. and Cablevision to test the new system.

The idea is to use existing technology to better target ad buys, and to get rid of some of the more cumbersome parts of making a TV ad buy, which can take weeks or months to iron out under the current system.

TV networks are cautious as there’s speculation that an automatic system could have an impact on media rates, as it has for online search display ads.

Im a firm believer that anything that can be sold programmatic, will eventually move to programmatic and Interpublic has just taken the first step.

Programmatic Buying makes a play for TV

Programmatic buying is a hot topic in the digital media world, but recently a new “audience-buying” platform called AudienceXpress has been making the headlines on Madison Avenue as it rolls out an automated system enabling agencies and their trading desks to serve ads into the most premium network television inventory.

Because of its implications for the overall media marketplace, the rapid rise of programmatic trading in online display advertising has been one of the most closely watched developments of the past couple of years, splitting Madison Avenue and its media supply chain into two philosophical camps: Those that want to preserve the world of old-school media-buying based on relationships and person-to-person negotiations; and those who want to shift to a new world of “audience-buying” based on scientific, real-time, transparent programmatic technology enabling brands to reach the audiences they are seeking with their precision at that exact moment they need to reach them.

The fear of losing control over the value of advertising inventory has been the major impediment to programmatic exchanges in the online business, but that hasn’t stopped the online display market from developing a marketplace based on sell-side machines trading with buy-side ones.

While supply was a big factor in the success of programmatic trading online, other big factors including the needs for agencies to improve their margins by utilizing technology to automate the way they buy in an increasingly fragmented media marketplace, as well as their philosophical shift from old school “media-buying” based on the seller’s inventory to the new world of “audience-buying” based on reaching the consumers that their clients’ brands want to reach with their ad messages.

According to the most recent estimates from Interpublic’s Magna unit, programmatic buying of media currently represents about 25% of online display buys, and is growing fast.

Since it went live in January with a beta being used by the trading desks of at least two of the biggest agency holding companies, AudienceXpress has already served nearly 2 billion ad impressions to network TV viewers nationwide — all below the radar of most of the TV advertising industry

One of the first adopters of AudienceXpress are cable operators because the platform gives them an incredibly efficient means of selling their TV advertising inventory to national advertisers in a way that does not cannibalize on the local and regional buys sold by their direct, in-house sales organizations.

The system essentially enables local cable operators to efficiently and automatically pool the local TV advertising avails they split with their cable network partners into an audience trading platform that taps the budgets of national advertisers. In other words, it enables local cable TV operators to compete directly for ad budgets with the national advertising sales organizations of their network affiliates. Generally, national cable TV networks give two minutes per hour to cable systems to sell as part of their distribution agreements.

Programmatic trading has quickly matured on Madison Avenue, and every major agency now has its own trading desk, or works with an array of independents. Almost all of them claim to be either currently buying or close to developing a solution for buying TV advertising inventory through their systems. At least two are doing so already.

In the minds of most TV folks, real-time bidding means devaluing your inventory, The AudienceXpress value proposition is to provide liquidity — largely for the sell-side — by applying
technology on the back-end and the front end, and then layering on audience data that increases the value of that inventory to advertisers.

The TV revolution has just begun…

Apple’s recent purchase of video-recommendation site Matcha.tv is further evidence of the coming revolution of IPTV.

Matcha.tv is a site that enables people to bring together programming guides for a variety of different services, such as Hulu, Amazon, and Netflix.

Most of the content we now watch on TV, with the exception of live events and sports, is available online somewhere. The challenge for the consumer is finding the content they want to watch across multiple streaming sites (Netflix, Hulu, Amazon, etc) and then playing it on whatever device they choose.

The TV revolution will begin when someone creates a smart software interface that makes IPTV video content search and playback seamless across devices and platforms. The holy grail moment is when someone creates an IPTV platform that is as easy to use as the box in your living room, but extends the viewing experience to whatever device you currently have in your hand.
One thing Apple has done consistently well is to use software to simplify complex technology problems exactly like this.

This past year has bern flooded with rumors of Apple expanding their “experiment” with TV, but this looks like Apple has taken an important step towards starting a true TV revolution.

Multi-Screen consumption making TV harder to measure

 Every Tuesday, the Nielsen company publishes a popularity ranking of broadcast television programs that has served as the industry’s report card dating back to when most people had only three networks to choose from.

And every week, that list gets less and less meaningful.

With DVRs, video on demand, game consoles and streaming services, tablets and smartphones, the way people watch televisionis changing and the industry is struggling to keep on top of it all. Even the idea of “watching television” is in flux. Are you “watching TV” when you stream an episode of “Downton Abbey” on a tablet?

Nielsen, which has long had a virtual monopoly on the audience statistics that drive a multi-billion dollar industry, last week took an important step toward accounting for some of the changes. Starting in September, Nielsen will begin measuring viewership through broadband devices like game consoles for the first time. Right now those numbers go uncounted.

“The ratings are a very one-dimensional look at what is happening,” said Alan Wurtzel, top research executive at NBC Universal, “and we now live in a very multi-dimensional world.”

Nielsen’s weekly rankings count people who watch a broadcast TV show live or on their DVRs that same day through midnight on the West Coast. To be sure, this is still how most people watch television. CBS didn’t need anything other than live numbers to know that its new reality show “The Job” was a flop, and canceled it a week ago after two episodes.

Through separate, less publicized rankings, Nielsen can also track how many people see a program on a time-shifted basis. One ranking, which measures live viewership plus those who watch on DVR or video on demand within three days of the original airing, is what the industry uses to set advertising rates. Other rankings measure those who watch within a week, or even within a month.

Those numbers can present a much different picture of a program’s popularity.

During the last week of January, for example, ABC’s “Modern Family” ranked No. 12 for the week with 10.8 million viewers if you count just the people who watched on Wednesday, Jan. 23. But within seven days, 15.9 million people had seen the episode, enough to make it the third most popular show of the week behind two “American Idol” episodes. Fox’s “The Following” finished a modest 15th place initially, but its audience jumped by 45 percent over the next week, enough to lift the show to fourth place.

Meanwhile, almost all of the “60 Minutes” viewing is done live. The CBS newsmagazine dropped from seventh place in the initial rankings to 15th after a week.

The time-shifted viewing can change a network’s perception of a show. NBC would have likely canceled “The Office” years ago without this additional audience. “The idea of how many people are watching a program and caring about the show becomes increasingly important, and it is not reflected in the Tuesday report,” Wurtzel said.

In a world where people demand information faster and faster, television executives are no different. They want ratings NOW. The problem is, all of the changes in content consumption demand patience. Nielsen’s report on how many people watch a show within seven days isn’t released until three weeks after a show first airs.

“We have to basically train the entire industry to no longer look at the fastest information, which is preliminary and not necessarily reflective of what the reality is,” Poltrack said.

Nielsen says it regularly discusses how it releases ratings with all of its clients and there’s been no consensus on change. Most people watch their favorite shows as quickly as they can, said Pat McDonough, Nielsen senior vice president of insights and analysis.

Each week the average American spends 32 hours and 15 minutes watching live television, according to a Nielsen study issued last month. More than 12 hours is spent either watching time-shifted TV or DVDs, playing on game consoles, surfing the Internet or watching video on computer or mobile devices, the study said.

“The one thing most people don’t think about is a lot of the additional viewing is rolling out slowly over time and right now, live plus same day viewing is the best way to measure,” she said. “It may not be that way five years from now.”

Networks dispute the notion that things are changing slowly, although they are happy that Nielsen will soon be able to estimate how much television is being watched on broadband. There’s a limit to the information, though: Nielsen can’t yet tell specifically what programs people are watching this way.

Later this year, Nielsen hopes to roll out a pilot program to identify what people are watching on iPads. It’s unclear when this technology will be available for other tablet brands or for smartphones.

The company measures some online video streaming and includes it within its time-shifted reports. However, this picture is partial, too. Nielsen can measure streamed programs only if they have the same commercials shown on TV, and not every website does this.

Netflix’s release of an entire 13-episode season of the well-reviewed series “House of Cards” on Feb. 1 was a television landmark, evidence that a lot more “television” content is coming from non-traditional sources. Nielsen has no idea how many people have seen “House of Cards,” though. Netflix knows. But it won’t tell.

People are increasingly spending time catching up on series they’ve caught on to midstream, the phenomenon known as binge viewing. No one really knows who is spending an evening watching three episodes from the first season of “Homeland” instead of live TV. Nielsen has an oblique way to illustrate that binge viewing is a reality: When AMC’s “The Walking Dead” returned from a hiatus on Feb. 10, the 12.3 million people who watched that night was a series record and evidence that it had attracted new fans during a pause in original episodes.

That episode of “The Walking Dead” was the ninth most-watched television show in prime time that week, but it would have taken some investigation to know that. Nielsen ranks broadcast and cable shows separately even though that distinction means little to a younger generation of viewers. TV is TV.

There’s a similar dynamic with PBS. The public broadcasting system generally doesn’t pay Nielsen to have its programs rated, although it will on special occasions. The 8.2 million people who watched the third-season finale of “Downton Abbey” on Feb. 17 was more than anything seen on ABC, Fox or NBC that night. No one would have known that unless they’d seen a report generated by a PBS press release.

The numbers-crunchers within the industry know all of this.

Nielsen’s Tuesday rankings — and the achievement of getting into the week’s Top Ten — used to mean the world. Now it’s a small part of television’s picture.

DAVID BAUDER

Three Reasons why Video on TV is still better than TV online

Google, Microsoft and AOL are hoping that their web video offerings and NewFront presentations will help them extract a healthy slice of the TV industry’s upfront money this year.

That all-too-familiar annual rite of spring is upon us. The trades are full of pre-negotiation rhetoric. Industry conferences are dotted with panels of shadow-boxing buyers and sellers. Every day it seems we get reports from industry equity analysts telling us which networks will see pricing growth and which holding companies are best situated to hold the line.

This year, however, we have a new dynamic. A group of would-be interlopers are trying to nudge their way into the TV advertising futures market, where advertisers and their agencies make billions of dollars in commitments to lock up the best inventory and, they hope, best pricing.

No, it’s not the cable networks. They’ve been trying to crash the party for years, and some have even gotten their own seats at the table. These crashers are the web folks: Google, Microsoft, Hulu, AOL and others hoping to reframe the upfront conversation from “just about TV” to “all about video.”

They have some strong arguments. Web video is growing, with hundreds of millions of streams a month in the U.S. Much of the higher-quality web video now carries interruptive video ads, not unlike the ads we get on TV. Web video delivers targeting and measurement, just like the web (it is the web) and; finally, it gives advertisers and agencies the cross-platform product showing up in everyone’s briefs this year as we all prepare for a multiscreen, multiplatform digital-media future.

The web guys scored a lot of good points with their presentations. They got some great visibility. However, they aren’t going to get cut into that action at the “adult” table that they so cherish, at least not this year. Here is why:

There’s not enough reach yet.
The upfront is a futures market where people buy things they need that are precious and scarce. For mass-awareness advertisers, massive reach accumulated quickly is scarce. That is why TV media is so in demand. That is why the biggest and best shows are bought in the upfront. Web video just doesn’t have that kind of scale yet. As Nielsen told us just last week in its annual Three Screen Report, 98% of video in the U.S. is viewed on TV. Only 1% is viewed on the web. Web video is not an alternative to TV when it takes a month to deliver as much national reach as two TV networks deliver in one night.

The best stuff will be bundled.
Advertisers do want web video, but the best stuff — the “premium” video associated with existing TV programming — is already being bundled and sold by the TV networks in packages. It is largely being sold with TV, not as a stand-alone web product.

Buying streamers means buying heavy TV viewers.
If you dig into the recent Nielsen numbers, you realize that the one quintile of U.S. consumers who stream 95% of the web video also consume four hours of regular TV each day. Advertisers buying TV are already buying the heavy web-video viewers. Thus, if you buy web video, you’re not buying incremental reach. You’re buying more frequency against heavy TV viewers.

Change is glacial.
U.S. viewers have been spending more time watching cable than broadcast programming for well over 10 years. However, according to Nielsen, last year was the first year that cable networks received more advertising than their broadcast-network brethren, despite now having twice the viewership of broadcast. In this industry, it takes a long time to earn your place at the table. The web folks won’t get entirely shut out. Some web video will be bought this year around the upfront. Digital planners created enough noise with the NewFronts that clients are going to demand they get something. After all, web video is this year’s bright shiny object. Plus, if nothing else, acquiring some will give the buyers something to use for leverage — even if it’s illusory — when the TV networks ask for the inevitable double-digit pricing increase. Yes, Google, Microsoft and AOL will get some of TV’s scraps. It’s progress, even if it’s not yet a seat at the table.

How Social TV is Changing Broadcast TV

Back before remote controls, watching TV was just that – watching the television. These days, it’s so much more.

Now we’re Tweeting and Facebooking up a storm all while keeping one eye on our favourite TV shows and while we’re online, we’re talking about what we’re watching.

Reality TV programs receive the highest mentions, understandably, since they inspire debate among viewers.
Twitter seems to have the most TV junkies of all the Social Media platforms.

Whether we’re Tweeting while watching, having our say post-viewing, discussing a show with friends, or Tweeting the show or its stars – we love Twitter TV talk.

Here are some stats on Social TV viewing…
55% are female
45% are male
Winning, voting and judging are the top subjects, which helps explain why reality TV programs are such a hot topic of Tweets and Updates.
72% Tweet pre-viewing
69% Tweet during the show
47% Tweet after viewing
77% Tweet so friends and followers know what they’re watching
68% Tweet to keep their favourite shows on air

These days, it’s to be expected that at least one or two TV programs will feature in Twitter’s trending topics at any given time.