TV is the new TV
For years now, we’ve been bombarded with predictions that TV – particularly linear TV – is dying. Just this last January, YouTube’s chief business officer Robert Kyncl forecast that online video will overtake linear TV by 2020.
It’s not hard to see where these predictions have come from. The rise of digital TV content – whether short form videos through the likes of YouTube or Video on Demand services from broadcasters or Netflix and Amazon Prime – has exploded in recent years. In 2015, the time consumers spent watching digital TV each day overtook social media use for the first time (one hour 55 minutes compared to one hour 44 minutes).
With Millennials spending more time watching TV content on digital devices than any other age group, there is an expectation that traditional TV will die out as more digital natives rise through the ranks. Look a little closer though, and the picture isn’t quite as gloomy as we’ve been led to believe.
The death of linear TV isn’t as near as we’re made to think.
Research released by ThinkBox in March this year found that TV still makes up almost 80% of all video consumption in the UK. The average viewer watches three hours and 51 minutes of TV each day, and just four of those are consumed on other devices including smartphones and tablets. Furthermore, Subscription VOD (SVOD) services and YouTube make up just 8.4% of TV viewing time combined.
Rather than displacing TV altogether, it seems that digital media is simply shifting the way that TV is consumed. This is evident when looking at the 16 – 24 age group. Viewers that fall into this bracket watch an average of three hours and 25 minutes of video each day. While around 58% of that time is still spent watching traditional TV, these viewers also watch twice the amount of broadcast VOD programming than the average viewer (7% compared to 3%), twice as much SVOD (8.7% compared to 4%), and twice as much YouTube (10.3% compared to 4.4%). They’re also more likely to watch content from all sources on devices other than a TV; 38% have watched video on a smartphone or tablet compared to the average across all age groups of 20%.
The continued dominance of TV when it comes to advertising revenue is another clear indication that its predicted demise may well have been over-egged.
According to Deloitte, while long form TV ad-spend is declining, it still represents a whooping US$170 billion annually worldwide.
Why do we still love TV so much?
Long form programming is continuing to draw in large audiences, despite the rise of short form video. According to Deloitte the most viewed YouTube video ever, Gangnam Style, has received two billion views globally. Long form programming racks up about two billion hours of viewing every day, just in Europe.
It is this storytelling element that had allowed TV to retain its position in the market. TV programming is able to keep viewers immersed in storylines over time, not just within a 30 or 60 minute window, but over a full series of content. New digital players have had to rely on this format to build their own user base. As well as negotiating rights to carry various popular TV shows, both Amazon Prime and Netflix have become content markers in their own right, developing some of the most popular and anticipated programming in recent years.
According to Nielsen, Orange Is The New Black was watched by 6.7 million viewers in its opening weekend on Netflix, and just last week, Amazon Prime debuted The Grand Tour – the long-awaited replacement for BBC’s Top Gear. YouTube is even jumping on board, and will launch its own pay TV streaming service in 2017 called Unplugged.
Despite the explosion of content available to viewers, the fact remains that there simply isn’t enough premium content across these new platforms in the UK to completely replace linear TV. On top of that, traditional players are doing a good job of innovating when it comes to storytelling, giving viewers the option to consume their preferred content when, where and how they want, by making content available on demand across a range of devices. Many have also started to develop complementary content to feed viewers appetites outside of main programming. Channel 4, for example, often produces online episodes of its hero shows like Made in Chelsea, keeping fans engaged throughout the week with additional new content.
Staying on top
Digital is already playing an important role in helping traditional TV players retain their position in the market, and will continue to do so in the future. Data is one area that can drive ongoing innovation.
Although TV advertising still generated £5.3 billion last year in the UK, TV’s share of the overall advertising market is decreasing.
In contrast, internet ad spend hit £8.6 billion in 2015, a 17.3% increase on the year before. One of the reasons behind this is targetting. Advertising on digital channels is inherently more measureable than anywhere else, and can be significantly more targeted than TV’s current breakdown of age and gender. However, there has been much talk about the shift to programmatic ad buying in TV in recent years, a more similar model to digital ad buying which is based on a specific data points to ensure advertisers reach their intended audience. Combining this level of targeting with the higher engagement of long form TV advertising, whether on traditional TV or digital TV is the holy grail of advertising and presents significant opportunities to increase revenues. This approach is already widely trialled.
However, data isn’t just useful for advertising.
TV watched on digital channels – via broadcasters, streaming services or live TV streaming services like TV Player can provide invaluable information about how content is being consumed. This can then be fed into how programming is developed which will be particularly important as younger audiences start to become the decision makers.
A recent report by Ofcom into the media consumption habits of children shows that, like the older generations, TV continues to be an important part of their lives. Around nine in ten children use a TV set, and it is the only device most children use every day. While a large portion of their viewing time is spent with the TV, YouTube is becoming an increasingly important content destination for all children, especially those in the 12-15 age bracket. Around 16% of this age group say they prefer watching YouTube to TV programmes on a TV set.
Understanding these patterns and how they evolve over time will be key to developing content that appeals to all age groups, and determining which channels are most appropriate to drive best engagement. For example, broadcasters with younger audiences could keep them engaged by developing mini-series of short-form content to complement other programmes, or by incorporating YouTube stars into their long form programming.
TV thus far has remained resilient to change by continuing to innovate and focus on its strengths in storytelling. As audiences continue to develop and new challengers come in, TV won’t become any less important, but it will be essential for TV networks and broadcasters to continue to adapt and innovate as they have done. Part of this will involve collaborating with new players such as streaming services and network operators, to create a broadcast experience with a mix of new and old channels and formats that fits the needs of a range of audiences. Content will continue to be king for years to come, but new and legacy players will need to work together to develop the content that people want, delivered in the formats and on the devices they choose.