As the majority viewing habits switch to connected TV and a mix of linear and streaming business models for distribution, subscription and advertising need to follow suit.
Media analyst Alan Wolk at TV Rev takes this idea and offers a series of predictions for the year.
Nielsen Loses Value
To many in the industry, Nielsen — long the gold standard of TV ratings measurement — lost its shine a long time ago, and the derelegation of the service will happen at pace in 2022. Wolk notes that the major linear networks, NBCU, ViacomCBS and Disney and WarnerMedia are all looking at the possibility of adopting alternate measurement systems based on data from Comscore, Conviva, iSpot, TVSquared and VideoAmp.
“The move away from Nielsen, which will also see ads being measured separately from programming and impressions overtaking GRPs, will be gradual. Not so much because it needs to be, but because nothing in the TV industry ever happens quickly. Something about messing with billions of dollars that just invokes caution it seems.”
Movie Theaters Contract
Given that going to the movies “had become a pretty awful” and expensive experience since the eighties, “it should surprise absolutely no one that people aren’t going back to theaters any time soon and that many theaters have permanently shut down during the pandemic,” thinks Wolk.
This is not to say that cinemas will disappear in 2022 (or ever) but they will be on the downswing, both in terms of actual number of venues and in terms of actual number of moviegoers.
Movies on streaming, however, will see a decent-sized upswing, spurred, paradoxically, by the overwhelming number of new series on TV.
“Faced with the choice of devoting 12 hours to a new series or two hours to a new movie, the movie is going to seem like a very appealing option for time-crunched viewers. And once consumers get settled into that sort of behavior it will be tough for theater chains to woo them back, save the occasional Spiderman flick.”
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Smart TV OS Competition War
In the US right now, there are three main OEMs: Samsung, LG and VIZIO, as well as Roku (whose operating system is now built into tens of millions of TV sets).
Many others want in on the smart TV action. Amazon launched its own line of TVs this year, as did Walmart, Comcast and Google.
“The reason is pretty obvious: the massive improvement of smart TV operating systems means that dongles are dying off, which in turn means that getting your app on as many Smart TV OS’s as possible is every programmer’s 2022 goal.”
“The ACR data that they collect, which can be used to better target ads, better promote series and to guard against ad over frequency will further endear them to ad-supported services, who will be able to offer better viewing experiences as a result.”
Outside the US, where dongles haven’t really taken hold and where streaming is a bit more nascent, the smart TV OS may prove to be an even bigger battleground.
Pay TV Fights Back
Late last year, Sky TV in the UK launched a smart TV set with a deal that would allow subscribers to lease it as part of their monthly bundle, which also included their pay-TV service. The only catch was that it was a four-year commitment.
US pay-TV providers (Multichannel Video Programming Distributors, or MVPDs) “went all wide-eyed at this,” Wolk says, “as it could allow them to get rid of set top boxes, lock customers in for four years, provide a better viewing experience and give them a way to better capture measurement data across linear and streaming using ACR.”
It’s likely that Comcast, which owns Sky, will to offer something similar this year, Wolk thinks, and also that a handful of other MVPDs will follow suit.
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Cord-Cutting Slows Down (Somewhat)
The industry will be mixed viewing environment of linear and streaming for many years to come. That’s because, while cord-cutting of linear pay-TV is set to continue (pay-TV providers will continue to shed somewhere around 5% to 7% of their subscriber bases next year, Wolk suggests), the rate of loss is slowing.
“That’s partly because Omicron means we’re going to be at home again more than we thought we would and partly because the array of streaming services out there still seems way too confusing for a significant part of the population who… like the comfort of knowing they can still pick up the remote and click through all 852 channels any time they like.”
Wolk also thinks there’s a floor on cord cutting too: where between 30% to 40% of viewers are only going to give up their set top box-based pay-TV “when someone physically pries the remote from their cold dead hands.”
VMPDs Continue to Grow
Many people consider switching to a vMVPD to be a form of cord-cutting though in reality all they are doing is swapping one form of delivery (cable) for another (broadband).
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“For many viewers, vMVPDs are a nicotine patch of sorts, a way to get rid of the physical trappings of traditional pay-TV without giving up the ability to actually watch all their favorite cable channels, plus local news and sports.”
TVRev expects another big growth year for the main vMVPDs — YouTube, Sling, DirecTV, Fubo and Hulu — which will benefit from being bundled with Disney+ and ESPN+.
Addressable TV Advertising Spurred by Mid-Terms
Addressable advertising on connected TV is a given, but it’s taken a while to take root in linear. That’s not for a lack of trying, it’s just that advertisers remain convinced that TV is for mass reach while digital (mobile and display) is for targeting.
“That’s slowly changing however, as more advertisers spend more money on CTV and realize that they are not really sacrificing anything by targeting,” Wolk asserts. “Similarly, the use of data on TV is maturing and privacy is (slowly but surely) being figured out. So is measurement.”
Spurring it all on in 2022 will be the “massive influx of money” that is going to be spent on the midterm elections.
“Since that spending is mostly going to need to be local and targeted, we should see a significant uptick in the amount of money being spent on linear addressable,” he predicts.
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Though given how slowly the industry changes, we’re unlikely to see the real impact of these changes until 2023/2024.
Paramount+ and Peacock are Services Most Likely to be Churned
The regular cancelling of streaming services (churn) is a major factor for all SVODs in 2022 but for Wolk this is a matter of identity. He figures that most major streamers are pretty indistinguishable in terms of their HBO-like prestige drama and dark comedic programming.
Netflix though is first on everyone’s remote or smart TV and the one most people are reluctant to churn. Ditto Amazon Prime which has the added bonus of ‘free’ shopping delivery.
“Apple TV+ seems to be more of a marketing tool than an actual service. Disney/Hulu and Discovery/HBO Max have the power of bundles, which gives them some degree of immunity too.”
Which leaves Paramount+ and NBCU’s Peacock whistling in the air.