Traditional television providers are concerned they will lose their audience to ad-free viewing in SVOD services like Netflix and Hulu. Is their concern justified?
Jon Martin, CEO of Turner Networks, aired the concern that if things don’t change soon he could lose all his viewers to Netflix and Hulu. Certainly, current viewing trends should cause linear television providers some concern. Live TV viewing among the under-35-year-olds has plummeted since 2014, with the 18-24-year-olds watching 34% less. At the same, the average Hulu user is watching about an hour a day on the service.
Where will these trends lead? I decided to ask a panel of experts at NAB 2018 during a session called: What is television’s next act? I asked each panelist to comment on the following statement: Soon everybody will be watching ad-free SVOD during primetime – true or false? Here is what they had to say.
SVOD will eventually embrace non-disruptive ads
Ralf Jacob is Head of Digital Media Services at Oath. Oath’s Verizon Digital Media Services specializes in bringing live television channels online. Mr. Jacob thinks SVOD services won’t remain ad-free forever, though he doesn’t think they will move to television-style interruptive ads.
“I don’t think SVOD will function without introducing ads, but maybe in a different format. You will see new ad formats that do not disrupt the viewing experience. For example, you will start to see superimposed imaging inside of whatever it is that you are watching right now.”
By way of example, he cited the billboards that surround soccer fields. In many European markets, these billboards are in effect green-screens, with broadcasters superimposing ads on them during the broadcast.
Ad-supported free TV will always have a role
Bob Sullivan is SVP of Programming at Tegna, a broadcast media company that owns many local broadcast television stations. He sees our video future as a blend of approaches:
“What the ecosystem has proven is that people will pay for quality content. But there is still a large swath of people that can’t afford to pay anything. That is why free over-the-air ad-support television still comes into play. I think it’s going to be a combination of both. I don’t think it’s going to be all SVOD.”
The data certainly shows free-to-air ad-supported TV use is on the rise. The number of homes watching over-the-air TV in the US increased from 12.7 million in Q2 2015 to 15.8 million two years later.
SVOD use to increase with mobile linear growing too
Erynn Petersen is VP of Product Management for Synacor, a TV Everywhere solutions provider to the pay TV industry. Ms. Petersen agreed with Mr. Sullivan, that we will use a blend of SVOD and linear. However, she sees mobile stepping to the fore in linear delivery:
“You are going to see a continued shift toward SVOD but with increased access to enhanced mobile linear content, particularly in news and sports.”
TV Everywhere is now used by a third of pay TV subscribers, and one of the most popular viewing platforms is mobile. As well, viewing is a blend of linear and on-demand content.
Not all SVOD services will make the cut
For SVOD to usurp television during primetime, each service needs to climb a steep learning curve, according to Mike Green, VP of the Marketing Media Division at Brightcove. He doesn’t think all services are up to the challenge.
“I don’t agree with the statement. Hulu is saying they have all these metrics that show service interfaces need to help a customer make a selection and start playing a show within three minutes. They’ve got so much experience they can decide what’s important and see if the user is going to churn off the service or not. All these other services coming in their wake must have that same knowledge. And that’s a steep hill to climb.”
As an early mover, Hulu has had plenty of time to figure out how to use data to attack problems like churn. As early as 2015, the company was using techniques to identify at-risk customers and act to stop them from leaving.
No way will SVOD rule primetime
The last words on the subject were given by Geoff Wolinetz, VP of Client Relationships at FreeWheel. He was blunt in his assessment of SVOD’s chances at ruling primetime:
“I think that is manifestly false. If the problem statement is that people will be consuming SVOD exclusively during primetime, I don’t think that will ever exist.”
Do you agree or disagree with Mr. Wolinetz or any of the other panelists’ opinion? Let us know by posting your thoughts at the end of this piece.