Across the last few months media commentators have been obsessed with the battle between Disney+ and Netflix with the forecast that the Mouse would dwarf Reed Hastings business.
But…the reality is the landscape is tough for media giants.
In the summer the FT reported that the largest US media companies have shed almost $400billion in value this year. Recession worries, audience changes post-pandemic and advertisers taking cover all add to the pain.
In fact, the S&P500 had at the time dropped 13% – the media sector giants had fallen 35%.
So what’s happening – well the streamers are beginning to think like the traditional networks. SVoD (Subscription Video on demand) is beginning to be supplemented by AVoD (Advertising-based Video on Demand).
Isn’t that just a re-booted linear service delivered through streaming rather than through the air? It feels like it.
Having worked in the broadcast business for more than three decades, I’d be a rich man if I had a dollar or a pound or a euro for every time I hear advertising agencies or journalists saying, “Linear TV is dead” Even the boss of Netflix used the line recently….
But sorry guys the reality is it isn’t dying, it is evolving.
The streamers are looking more like traditional tv broadcasters, and with new platforms the TV businesses are looking like and beginning to act like streamers and aggregators. In the UK ITVX should launch in Q4 2022, NBC is positioning Peacock as its gateway. In the Middle East broadcast networks are looking to take a slice of the streaming pie with localised streaming platforms.
Yes, we are seeing some broadcasters close channels – Disney and the BBC have recently closed or announced shutdowns – but these are for what are in reality niche services that never had huge audiences.
The main Networks in each country can still record huge figures for events such as Superbowl, major dramas and news events – just think of the global audience for the funeral of the Queen.
We as an audience want a shared (or near shared) experience, we want a community and a commonality of experience. Live TV does that in a way steaming does not. Yes, millions may watch a streaming premier – but the watercooler moment is usually patchy compared to linear tv events where there is a greater universality of experience when a fixed channel shows a promoted show in a given timeslot.
We are also lazy – I’m writing this watching linear tv – it’s the news and (thanks to Hurricane Ian) the weather. I can rattle away on the laptop while someone else scheduled my entertainment saving me the pain of searching for something that scratches a viewing itch.
And while I mention ‘News” – none of the streamers have tried to offer news. It’s expensive, takes a huge amount of resource and can go wrong so very easily without a real understanding of how to make it.
We are also seeing the US-based companies re-trenching back to their home patch as subscribers think twice about multiple SVoD accounts. Netflix, Amazon and others have reduced their spend in international shows – less relevant content is heading the way of European customers. But on linear tv, the domestically based broadcasters are still pumping hundreds of millions into content production.
Researcher Moffett Nathanson also notes the continued value of linear TV. In the US linear TV revenue (mainly from ads and carriage deals) sits at $86.3 billion (€89.2bn). That’s nearly four times that of the streamers at $22.6 billion.
No doubt more tv channels will close, but I would also wager that we’ll see the closure or merger of some of the major streamers too.