Nine Big TV-Related Things We’re Looking At Right Now

So here we are, almost two years into the Pandemic That Changed Everything and the TV industry is still in turmoil. Not in a bad way, but things are definitely unsettled.

Which makes this as good a time as any to look at where the industry stands today and to do what we do best at TVREV—cut through all the hype to tell you what’s really going on and share the nine things we’re keeping our eye on right now.

1. Not Everyone Is Going To Give Up Cable. This is one of those facts that seems to shock people in the tech part of the media industry because no one they know still has cable—not even their parents—and so how could it still be a thing.

Yet here’s the deal. Yes, cord cutting is picking up and the traditional pay TV business is losing millions of subscribers every quarter, a number that is not totally offset by the number of people subscribing to vMVPDs like YouTube TV.

And so in 2021, cord cutting is likely to net out at around 5% to 7% for the year.

Which is certainly a sizable number, one that will definitely have impact.

But…

There are still tens of millions of Americans (we’re thinking somewhere around 30 to 40 million households) who are only going to give up cable TV when they die.

Which, for many of them, may not happen for another thirty to forty years.

Why is this? 

Well, many of them just like the experience of flipping through the channels. They’re tech phobic. Complacent. Afraid the cost of broadband, untethered from their current triple play, will go through the proverbial roof. 

But mostly they just like cable TV in its current form, difficult as that may be for many streaming evangelists to believe.

Or, as I often tell clients, despite the fact that DVRs were essentially free for anyone with a cable subscription and vastly improved the viewing experience, they never achieved more than 50% household penetration in the U.S. for all the reasons about techphobia and complacency listed above.

2. The Linear/Streaming Split Impacts The Ad Industry.  Life would be much easier for most advertisers if they could just target viewers on streaming. 

Wait--I take that back. 

Life would be much easier for advertisers if it was still 1997 and streaming didn’t exist and all they had to worry about was network TV.

But given that’s not likely to happen, the next best option would be for everyone to move to streaming because then it would be much, much easier for them to keep track of which viewers had seen which ads in order to understand who they were reaching and who they were missing.

Sadly, this is not the case and advertisers are now going to have to deal with a universe where some of their consumers are mostly on cable, some are mostly on streaming, some are 50/50 on both and who sits in what camp changes more or less monthly depending on what shows they’re watching.

That means that for the foreseeable future they are going to need to figure out ways to reach audiences on both platforms without overtargeting or undertargeting specific households.  

Not to mention measurement in what is increasingly looking like a post-Nielsen era, and targeting and data across both streaming and linear

Which, my friends, is no easy feat, but does provide plenty of opportunity for anyone who had a workable solution.

3. MVPDs Will Need To Pick A Number.  A number where maintaining a pay TV business no longer makes sense for them, that is.

MVPDs make the bulk of their money selling broadband, so cable is, for all intents and purposes, a loss leader, designed to get customers to sign up and stay signed up as they are afraid of what will happen if they give up their triple play package. 

So at some point all the hassle of negotiating carriage deals, maintaining set top boxes and dealing with the bad PR of “millions of customers leave pay TV this quarter” will not be worth the income it brings in and the MVPDs will have to do something about it. 

What that is, however, is anyone’s guess.

Mine is that most of them will offer some form of streaming-centric bundle that combines broadband with local broadcast, X number of SVOD services and plenty of FASTs (including, quite possibly, their own.)

Another option, particularly for smaller MVPDs is to get out of the content game altogether and strike a deal with one or more vMVPDs for their customers who still want multichannel pay TV.

4. The TV Networks Will Need To Pick A Number Too. I’ve talked about this before—at some point it will no longer make sense to create an entire slate of high production value dramas and comedies that live exclusively on broadcast versus coming up with some sort of plan that makes broadcast a gateway drug to the network’s own streaming service. That gateway drug will likely come with a surplus of reality TV shows and similar low production cost nonfiction programming with teaser episodes of the network’s big streaming hits thrown in for good measure along with live sports. 

For some networks this might happen in as little as three years, for others in 20, and everywhere in between. My crystal ball can only predict so much.

5. What To Do About Live Sports. Live sports wants to be on streaming where the leagues can draw in the younger fans they desperately need by adding in all sorts of cool digital interactive elements, including betting.

Only right now the deals are all with the broadcast networks and that’s unlikely to change until the networks figure out how to make as much money from running ads on streaming sports programming as they do on their broadcast channels. (In other words, not all that soon.)

6. What To Do About RSNs. Regional sports networks are way too expensive for the average cable bundle but do come with a dedicated fan base that is likely willing to pay big bucks to watch them. Sinclair is going to roll out its 19 RSNs as independent streaming apps next year, in conjunction with Ballys, which of course, does sports betting and should be a good way to keep costs down some. 

The thing to look out for here is how well those streaming RSNs do and how much will fans (and advertisers) pay for them. RSNs have kept many fans tied to cable but if those ties are no longer necessary we can expect millions more fans to jump ship.

7. What Happens To Local News. The shift to streaming means an end to local evening news broadcasts at a time when local newspapers are shutting down too. Which is why there are all sorts of companies pitching solutions to the local news problem.

The problem is that while it’s often cited as one of the few things keeping people glued to cable, there is no clear consensus on whether local news fans will be okay with just one option when they’re used to three or more. A single option may suit them fine for national news, but for local, our assumption is that they want choices, even if it’s just three different variations of the weather forecast.

8. The Search And Discovery Thing. Viewers want an easy way to find the shows they want to watch across all the platforms they subscribe to, along with recommendations on what to watch next.

That’s all well and good, but the various streaming services all want you to stay on their app and their app alone, so they want absolutely nothing to do with any sort of universal search and discovery solution.

And as for recommendations, whoever owns your interface likely sees selling paid recommendations to viewers in the programmers target as an easy additional revenue stream, so there’s that.

Meaning this one is not getting solved any time soon except maybe by a third party that figures out a way to do deep links into the major SVOD services in a way they can’t get sued for. 

Not a likely thing, which means viewers are likely to continue relying on Google to figure out which service Mare of Easton is on, meaning Google gets all that data, an outcome no one in the TV industry really wants.

So there’s that, too.

9. The Global Thing.  Since the U.S. market is pretty saturated by streaming services and all of the major Flixes seem pretty committed to seeing those U.S.-based services through for the next few years, the real battleground is now the overseas market, which can be divided into Europe and the rest of the world, with big asterisks for Canada and Australia, both of which sit somewhere between the U.S. and Europe.

Certain Flixes have an early advantage in Europe thanks to name recognition (HBO, Disney, Discovery, Apple, Amazon and Netflix) while others (Peacock and Paramount+) are able to join forces as being overseas means they are no longer bound by outdated American TV regulations.

Europeans have great free to air TV options and far smaller commercial loads than in the U.S.,, so getting them to add on streaming services is more of a battle as the whole “but you’ll save money” argument goes out the window.

That’s doubly true in the developing world, where American streaming services need to find a price point that’s acceptable to local audiences while still allowing them to stay in the black, or not too deeply in the red, as the case may be.

Otherwise they’re all fighting for the 10% of the audience that can afford Western--style prices, leaving the remaining 90% to local players like Disney-owned Hotstar, which controls a massive chunk of the Indian streaming TV market and whose cheapest plan goes for less than 50 cents/month.

Netflix, which has first mover advantage in many of these markets and has proven that it understands non-U.S programming (Squid Game) has a leg up in the developing world, but only if they can figure out pricing, which, even at their “mobile only” rates, still seems to remain out of reach for most of the audiences in these countries. 

So that’s about where we are right now.

Just about everything is up in the air, we’re waiting to see where the spinning plates will land and we’re likely to be waiting for some time to come. 

Meaning just sit back and enjoy the show as trying to guess the ending takes all the fun out of it.