Welcome to the twelfth edition of State of the Screens. Keep the feedback and ideas coming as we continue the dialogue on the convergence of television and digital advertising.
1. ‘Game of Thrones’ Season 7 Premiere Shatters HBO Ratings Records
16.1m viewers tuned into the Game of Thrones premiere on Sunday.
% growth from 2016:
1) Total — ↑ 38%
2) TV — ↑ 27%
3) Streaming — ↑ 60%
Viewership for the premiere grew by 4.4m between 2016 and 2017.
How does this compare to an event like the Super Bowl?
1) Super Bowl: 113m (7X)
2) Game of Thrones: 16m
1) Super Bowl: 111m (11X)
2) Game of Thrones: 10m
1) Super Bowl: 1.7m
2) Game of Thrones: 6m (3.5X)
Share from Streaming:
1) Super Bowl: 2%
2) Game of Thrones: 37%
2. Netflix Surprises With Big Subscriber Gains, Shares Soar
Netflix blew away Wall Street expectations adding 5.2m subscribers vs. a projection of 3.2m. They beat the target by 63%!!!!
The stock is up 30% this year.
They have now broken 100m subscribers with more than half coming from outside the U.S.
Netflix has customers in 109 countries and 80% of the subscriber growth was outside of the U.S.
Revenue grew to $2.8b or roughly $9 per subscriber/month.
Assuming an average ad CPM of $25, an average user would have to watch 359 video ads per month to match that level of revenue.
Premium content. Netflix currently has $15.7b in content obligations and recently received 91 Emmy nominations.
3. Nielsen Total Audience Report Q1 2017
Time spent by platform in Q1 (2016 vs. 2017):
1) Live TV — 4h 21m (↓ 5%)
2) Mobile — 2h 19m (↑ 40%)
Bottom line. People are spending more time in front of screens which is why you see 40% growth in mobile with only a 5% decline in live tv.
The challenge for advertisers is budgeting between the various screens.
4. The ad industry feels like Silicon Valley is killing creativity
The ad industry knows that they need shorter creative (6s, etc.), but isstruggling with storytelling in a compressed environment.
A few challenges:
1) Connecting w/ consumers — Creative executives worry that 6s is not enough time to connect with customers in a similar way to the 30sallotted in most TV spots.
2) Pricing for creative — Fixed costs for creating both formats is very similar. Will brands expect to pay less?
3) Pricing for ad spots — Do these spots cost 1/5 less to run? For example, if a 30s spot has a CPM of $25 does the 5s cost $5?
Quote from Jason Sperling — SVP, Chief Creative Development @ RPA.
“actors haven’t gotten cheaper. Production costs haven’t gone away.”
Quote from David Campanelli — SVP, Director of National TV @ Horizon Media.
“We know that most of the time the 15-second ad is less effective than 30. Not usually half as effective, but less effective,”
A good example of a 6s ad currently being tested by Acura:
5. The 25 Best Ads of 2017 (So Far)
AdWeek breaks down the top 25 ads so far this year.
12 of the 25 are video w/ format and length:
1) The New York Times, “The Truth Is Hard to Find” — horizontal / 1m 6s
2) The Atlantic, “Am I Typecast?” — horizontal / 2m 51s
3) 84 Lumber, “The Journey” — horizontal / 5m 45s
4) Samsung, “Ostrich” — horizontal / 1m 50s
5) Coca-Cola, “Pool Boy” — horizontal / 1m 1s
6) Volvo, “Moments” — horizontal / 3m 11s
7) Apple, “Earth (Shot on iPhone)” — horizontal / 1m 1s
8) Nespresso, “Comin’ Home” — horizontal / 1m 1s
9) Hornbach, “Regret Nothing” — horizontal / 1m 7s
10) Jose Cuervo “Last Days” — horizontal / 2m 1s
11) PlayStation, “Gravity Cat” — horizontal/ 4m 18s
12) Connect Internet, “Ice Bucket Challenge” — horizontal / 46s
A few questions to ask while watching some of the best examples of storytelling in advertisng:
1) How many of these stories fit into a 15s, 30s or 60s?
2) How many of these stories were shot and/or would be a good fit for mobile video (vertical, etc.)?
6. Pew Research Center: Local TV News Fact Sheet
Pew Research Center does a deep dive on the State of the News Mediawith a specific focus on local news.
Local TV station revenue normally follows a cyclical pattern based on the political cycle.
Station Revenue by year (TV only):
1) 2010 — $19.4b
2) 2011 — $17.9b
3) 2012 — $20.3b
4) 2013 — $18.4b
5) 2014 — $20.0b
6) 2015 — $18.5b
7) 2016 — $20.6b
8) 2017 — $19.8b*
9) 2018 — $21.1b*
Digital revenue broke $1b for the first time in 2016.
Air time dedicated to news continues to grow (hours per day):
4) 2016–5.7 (↑ 54% since 2003)
Top platforms for $174b local spend (% of total):
1) Direct Mail: $37.1b (25%)
2) Local TV: $20.9b (14%)
3) Online / Interactive: $18.6b (11%)
4) Newspapers: $16b (11%)
5) Mobile: $16b (11%)
6) Local Radio: $15.6b (10%)
7. Streaming services led by Netflix pile up 2017 Emmy nominations
57% (4 of 7) of the nominations for Best Drama aired on a streaming platform like Netflix and Hulu.
Netflix alone had the same number of nominations (for Best Drama) as broadcast and cable tv combined.
Most nominations by network:
1) HBO — 111
2) Netflix — 91
Top investments in original content:
1) Netflix — $6b
2) Amazon — $3b
3) HBO — $2b
8. How TV Tuned in More Ad Dollars: Digital Doubts, Drugs and Desperation
Networks try to sell 75–80% of their annual inventory during the upfront period.
Broadcast revenue from upfront ad commitments is expected to grow 3–4% this year.
Television ad revenue is projected to drop 1.4% in 2017.
How can overall revenue drop if commitments at the upfront grow? One possible explanation is that advertisers are moving more money into the upfronts and out of the scatter market.
Increase digital commitments:
1) NBCUniversal — ↑ 42%
2) Fox — ↑ 40%
3) Disney/ABC — ↑ 20%
More on this topic. Online Publishers Try Reducing Ads to Boost Revenue
More on this topic. ‘Yield isn’t everything’: How Turner shifted programmatic private
9. Gameday for Disney to Boost ESPN Growth
Disney continues to grow cable revenue despite subscriber declines.
How are they able to do this?
1) Increase per month cost for channels like ESPN
2) Add provisions in contracts with cable companies that stipulate a minimum number of packages that must carry ESPN
The average annual price increase for ESPN is 5%.
1) Subscriber growth — ↓ 2%
2) Monthly subscription cost — ↑ 6%
3) Total fee revenue — ↑ 4%
10. Follow-ups from previous editions
1) Why CNBC International is shifting its video strategy to YouTube
2) ‘Views can happen by accident’: Publishers are thinking more about watch time — and YouTube
3) The Tipping Point of TV
4) How Important is the OTT Device Market if the ‘Future of TV is Apps’?
5) Sources: TV Networks, Including ESPN, Bracing For Drop In Ad Revenue For Football Games
6) Global online video consumption and advertising to increase by a fifth in 2017