Channel 4, Discovery and Mediaset have all witnessed a rush of new-to-TV advertisers since the first lockdown – many of them digital-native brands. These new customers expect more flexibility in how they buy, the data they use and the audiences they reach, but the TV industry has adapted to accommodate them, with self-serve and even real-time bidding auctions among the innovations. In a wide ranging discussion at Future TV Advertising Global, questions were asked about how the market capitalisations of CTV-first players are going to be met, with ‘more linear targeting’ offered as a key requirement.
It is difficult to overstate the scale of the transformation TV viewing has undergone over the last decade, and which accelerated during the pandemic....
According to recent forecasts published by Digital TV Research, SVOD subscriptions in Germany are set to surpass the UK for the first time by 2026 . The success of SVOD platforms, both across Western Europe and globally, is also expected to continue its steep trajectory upwards, with 238 million and 700 million paying subscribers predicted respectively, within the same timeframe. Despite Netflix being set to retain its ‘top dog’ status in Western Europe, Digital TV Research projects that Disney+ will dethrone Netflix in terms of global subscribers by 2025.
Sky in the UK is about to dramatically evolve the Pay TV model with the launch of its own Smart TV that will contain the Sky platform built-in, and by making these available on a mobile phone type contract – with a monthly fee that covers the television set and the Sky TV services you take. The television set does not contain a satellite tuner; this is also the moment that Sky UK offers a full-service solution that does not rely on satellite. The virtual STB has arrived, but with the glass itself controlled by the Pay TV operator.
WarnerMedia has given further details about the roll out of HBO Max in Europe, with the Netherlands, Turkey and Greece added to the previously announced territories for a 2022 launch. The D2C service opens its doors in the first seven countries – including Sweden and Spain – later this month. You can subscribe for as little as EUR 69.99 a year in Finland and Spain. The service deploys on a new global streaming platform. The arrival of Warner Bros. movies into the SVOD service after 45 days in cinema is described by the media giant as a game-changer. And the presence of shows like ER, originally made by Warner Bros. Television for U.S. network TV, demonstrates how D2C shifts power to producers.
The evolution of Pay TV operators into super-aggregators, and the expansion of BVOD services beyond catch-up TV into digital entertainment libraries with vast box-set collections, make it even more important that television companies master content discovery. A recent Videonet webcast with Liberty Global, Swisscom, ITV and Gracenote underlined how content discovery has a direct impact on business transformation and the opportunities to differentiate services and monetise them fully.
Leading executives at The Future of TV Advertising U.S. highlighted the growing importance of streaming, with one seller saying streaming is no longer an extension on the media plan but foundational, while an agency said clients who are heavily into DR had started building frequency rather than incremental reach on linear TV so were now using more OTT and connected TV.
Household addressable TV advertising was established in the U.S. using the two minutes of inventory per hour that Pay TV operators are entitled to sell against channels they carry. The vast majority of linear TV inventory still belongs to the programmers however, and work is underway to open up this ‘national’ inventory for addressable advertising as well, dramatically boosting scale for targeting via the television set. Programmers, Pay TV operators and buyers are committed to making this happen and many of them gave an update on progress at The Future of TV Advertising U.S. recently.
The Pay TV set-top box provides an increasingly important subset of connected TV and Sky Media in Germany, working with FreeWheel, is demonstrating how this STB CTV can be managed to maximum effect. Sky serves IP advertising into on-demand IP video including boxsets and the inventory can be bought direct or programmatically, with both demand sources integrated into fully unified auctions that understand total campaign requirements – not just highest bidders. Sky Q inventory is also available to advertisers in an aggregated, multi-publisher audience buy via FreeWheel Media and this acts as an incremental revenue source for Sky Media and a way to build CTV scale for buyers.
Ampere Analysis has modelled the revenue sacrifice that major studio groups must make if they want to stop licensing their content to third-parties including cinemas and also give up on Pay TV channel revenues in order to feed their own direct-to-consumer streaming services exclusively. To replace this income fully they would need 180-200 million D2C subscribers and this figure works for all the studio launches despite their different price points. It is a theoretical model, and the analyst firm is not saying this is what studios should do. Nevertheless, this analysis neatly explains why D2C is driving Pay TV operators, broadcasters and even mid-tier channel owners to invest in more original content.