Television is often described as an industry stuck in the twentieth century. The long-promised future of television is finally becoming a reality. Viewers, especially snake people, no longer want to be saddled to a 100+ channel cable bundle. They want to be able to watch the few channels or shows that they want, when they want, and on the device that they want. I can vouch for that. Apart from the odd Jays game, I cannot remember the last time I watched traditional live television. As a result, streaming services from the big tech firms are popping up seemingly every other week. How will traditional distributors and advertisers adapt? Is the streaming landscape truly delivering a better experience?
Let’s start with the old school. There will always be a place for live television. News, sports, awards shows. But fewer people are watching, and advertising costs are increasing. So what gives? The easy explanation is that television programming still operates in the interruption model of marketing. Consumers can’t skip ads during live content. In the digital world, we have switched to the engagement model. People have the ability to keep scrolling, skip your ad, or just shut it off. Marketers have to find a way to force people to pay attention. On live TV, they don’t, which is what makes it so valuable.
Now, how do you make it even more valuable? Most believe the answer lies in combining the interruption model with the individualized, tailored advertising of the internet experience. This is the thinking behind the merger of AT&T and Time Warner. AT&T has more than 100 million subscribers across its properties (with large swaths of data on each), and Time Warner has valuable offerings including CNN, HBO, and Warner Bros. The companies want to target people with individualized TV commercials using a cable or satellite box.
Tailored advertising is a generally accepted part of the internet experience (while creepy at times). You see it daily on website ad banners. How did they know I was just looking at running shoes? Traditional TV, however, continues to advertise in large swaths. Watching football? Expect to see ads targeted towards 20-50-year-old men. Now, advertisers want to combine the data intensity of internet advertising with the clear value and ability to change peoples’ perceptions that you get with a television ad.
It’s now a question of when, and at what cost to do so. A full-fledged digital transformation of classic television will take years to fully implement, but it is beneficial to big brands and consumers alike. You’ll actually like the ads, because they’ll be for products you love or products you don’t know about, but will love. Apart from targeting, this system could also mean frequency capping. No more seeing the same ads over and over again (hurray)! Jeffrey Chester, an ED for the Center for Digital Democracy says it best: “Television, instead of the boob tube, is going to be ‘I know you’ tube.”
In the streaming field, you have the veterans like Netflix, Amazon Prime Video, and in Canada, CraveTV. For a monthly subscription, usually around $9, you have access to thousands of TV shows and movies. While not the “same” as live TV, these three services should offer you a selection to suit your fancy. The selling point for these services has become their original content (House of Cards fan in the building). Netflix spent $6 billion in original content this past year, and registered 91 Emmy nominations, second only behind HBO! Amazon was the producer of the Academy Award nominated “Manchester by the Sea”. While not original content, CraveTV is the only place where you can watch Seinfeld. The best part of these services is… no commercials (not so good if you’re an advertiser). Other streaming services include sports options from the MLB, NHL, NBA, and NFL.
We also have the newbies to the streaming field. Last year YouTube launched YouTube TV, allowing some to watch lineups from ABC, CBS, and FOX. It’s currently only available in the US, and not in all states. Facebook is rolling out “Watch”. Video has always been integral to the Newsfeed. Now, Facebook has partnered with A&E, Buzzfeed, and MLB to produce episodic shows. Both YouTube and Facebook have some of the most robust data on user’s habits. It makes a lot of sense for these companies to leverage this data with advertisers in the form of opening, or mid-roll advertisements.
When Streaming and Cable Meet
Both Bell and Rogers have realized that they need to give the people what they want… sort of. Bell with Fibe TV, and Rogers with AnytimeTV, offer consumers the ability to stream most of their classic cable channels. The catch? You have to be subscribed to their cable service to use the stream service. How does that make sense??? Bell has recently launched AltTV, which is free from the cable subscription, but doesn’t have nearly the same offerings. A person can dream though. These services have mid-roll advertisements throughout viewing content.
The Unknown in Streaming
There are two giants entering the streaming field. Disney recently announced it would be pulling its content from Netflix in 2019 (really bummed about not being able to stream Star Wars when my inner Jedi wants to). Rather than being on other platforms, Disney will be launching an ESPN streaming service in 2018, and a Disney-prime service in 2019. In terms of advertising potential, I suspect that Disney will need to display ad content on the ESPN service to supply the professional sports leagues with the TV revenue they are used to demanding. I don’t know what, if any, data Disney has on individual consumers and whether they can deliver targeted ads to consumers the way Facebook can.
The other unknown is Apple. To grow Apple Music, Apple has released its first original content. “Planet of the Apps”, a Shark-Tank-esque reality TV show, and “Carpool Karaoke”, a spinoff of the James Corden skit. Neither were met with great reviews, but Apple has announced it is going to be spending $1 billion on original content (about ten shows) this coming year. Unfortunately for advertisers, Apple has no plans to add commercials to Apple Music.
Cord-cutting is absolutely right for some people. For me, it works. I can get the content I want through Netflix and NFL Gamepass. For others who are used to having infinite live TV channels, it might not be time. My main issue with the streaming landscape at the moment is the fragmentation. If I want to watch House of Cards, I have to switch to Netflix. Sports? I have to switch to ESPN or one of the league’s streaming services. A Marvel movie? Have to switch to Disney’s service. You see my point?
Consumers might like the freedom of the user experience, but is constantly switching between all these apps really a better experience? For advertisers, there are some interesting developments, not just in the streaming landscape, but in classic cable-box television. I am still waiting for the “aha” moment in the industry. The shattering of the television universe is a start, but shattering into a boundless multiverse of subscription services sounds like an expensive pain. With the politics of content rights and the ad money that goes with television, the ideal viewing experience for the consumer may never come.