TV Networks Form New Consortium to Advance Targeted Advertising


Frenemies: Top players in the TV advertising space are coming together around an open standard for addressable advertising set to launch in early 2020.

Why this is necessary: TV networks (national) currently have to work with pay-TV providers to identify users through subscriber data. To make matters worse, this is a fractured process with no standard between pay-TV providers.

How it will work: Inscape will develop the watermarking standard to help TV networks send targeted ads to smart TVs. The standard will be open and available to other smart TV manufacturers such as Samsung and LG.

Quote from Jodie McAfee — SVP, Sales + Marketing @ Inscape:
“The only way this really works is if there is a direct relationship between the publishers and OEMs [original equipment manufacturers],”

The players in Project OAR:
1) AMC Networks
2) AT&T
3) CBS
4) Comcast NBCUniversal
5) Discovery
6) Disney
7) Freewheel
8) Hearst
9) Inscape
10) Turner
11) Xandr
12) Vizio


Two benefits for national networks: Provide them with a way to offer addressable advertising during their share of the ad minutes without having to work with a pay-TV provider.

Ad minutes per hour (% of total):
1)
National — 14 (87%)
2) Local — 2 (13%)

Something cool that you may have missed: Comcast released a white paper titled The New TV that breaks down the video ad ecosystem in relation to the viewer.


More #1: Disney, NBCU, Turner, CBS and More Join Vizio-Led Addressable TV Advertising Consortium

More #2: Taking A Bite Out Of Data Confusion At RampUp

More #3: With AT&T Breathing Down Its Neck, Comcast Looks To Acquire Ad Tech

Hulu And YouTube Prepare To Overtake Satellite Giants Atop Streaming Bundle Market

Dish and DirecTV both were early entrants into the streaming pay-TV battle, but YouTube TV and Hulu Live are gaining fast.

Streaming pay-TV providers by subscriber numbers (% of total):
1) Sling TV — 2.4M (27%)
2) Hulu Live — 2.0M (23%)
3) DirecTV Now — 1.6M (18%)
4) YouTube TV — 1.0M (11%)
5) PlayStation Vue — 870K (10%)
6) fuboTV — 250K (6%)
7) Other — 250K (3%)
8) Philo — 150K (2%)


Subscriber growth in 2018-Q4:
1)
Sling TV — ↑ 50K
2)
DirecTV Now — ↓ 267K

Video: Is cord-cutting worth it?


More #1: The future of cable may be no TV at all, as one small company from Arizona shows

More #2: The 6 dumbest cases against cord-cutting (and why they’re so wrong)

Ratings bombshell: In two years, network TV demos plummeted 27 percent

Average combined primetime viewership for 18–49 across ABC, CBS, Fox and NBC (YoY growth):
1)
2016-Q4–9.6M
2)
2017-Q4–7.9M ( 18%)
3) 2018-Q4–7.0M ( 11%)

Interesting question: Who are the people that are shifting consumption? Are they high income? Low income? Are high-income consumers more likely to pay for ad-free viewing? Mike Shields argues this is something worth more attention in his latest piece for TV[R]EV.

Interesting data: Nielsen released a viewership estimate for The Marvelous Mrs. Maisel (a favorite of Mrs. Screens) that projected 1.9M viewers/episode.

The most interesting data point was an estimated average income of $95K which is well above the national average of $61K.

More: How We Disrupted the Fun Out of TV

Viacom Buys PlutoTV Streaming Service, Its Biggest Digital Push Yet

Big news: Viacom is buying PlutoTV for $340M.

What is PlutoTV? PlutoTV is an ad-supported video streaming service that offers content from 130 film and TV partners. Similar offerings include Tubi, the Roku Channel and Amazon IMDB Freedive.

PlutoTV users by year:
1)
2016–5M
2)
2018–12M

Solid growth: For all of our readers on Wall Street that is a 55% compound annual growth rate (CAGR)!

Quick math on PlutoTV advertising:
1) Annual revenue — $150M
2) Monthly revenue — $12.5M
3) Monthly revenue/user — $1.04
4) Ad minutes/hour — ≈ 3
5)
30s spots/hour — 6
6) CPM $ —  $30 
7) 30s spots/month — 35
8) Viewing hours/user/month — 5.8

Pluto TV users by type (% of total):
1)
Connected TV — 7.5M (63%)
2) Non-connected TV — 4.5M (37%)

More #1: Viacom to acquire Pluto TV for $340 million

More #2: Viacom Gets Into Streaming By Acquiring Pluto TV

Number of Streaming Shows Overtakes Basic Cable, Broadcast for First Time, FX Reports


Original scripted shows by year (% change YoY):
1) 2009–210
2) 2010–216 (↑ 3%)
3) 2011–266 (↑ 23%)
4) 2012–288 (↑ 8%)
5) 2013–349 (↑ 21%)
6) 2014–389 (↑ 12%)
7) 2015–422 (↑ 9%)
8) 2016–455 (↑ 8%)
9) 2017–487 (↑ 7%)
10) 2018–495 (↑ 3%)


Big news: Streaming accounted for the highest share of scripted shows for the first time.

Original scripted shows by distribution (% of total):
1) Streaming — 160 (32%)
2) Broadcast — 146 (30%)
3) Basic cable — 144 (29%)
4) Pay cable — 45 (9%)


Original scripted shows from streaming (% growth):
1) 2017–117
2) 2018–160 (↑ 37%)


More #1: Peak TV Update: Scripted Originals Hit Yet Another High in 2018

More #2: Streaming services outpace linear TV production for the first time

Nexstar’s $6.4 Billion Tribune Buy Spurs More Dealmaking

Big deal: Nexstar has agreed to purchase Tribune for $6B in the latest deal to further consolidate local broadcast station ownership.

$15B worth of local TV stations have changed hands since 2016.

Why this matters: Nexstar will become the largest broadcast group reaching close to 50% of U.S. homes with stations in 8 of the top 10 markets.

What Nexstar is adding:
1) 42
local TV stations
2) Cable networks WGN America and Food Network (31% stake)

WGN America reaches 77M U.S. homes through traditional pay-TV.

Watch: Online TV Streamer Locast Has an Ambitious Plan to Help Broadcasters


Flashback #1: Ad spending for the 2018 midterms reaches nearly $3 billion

Flashback #2: Even as Sinclair Aims to Be a Bigger Broadcaster, It’s Building a New Streaming Service Called Stirr


Flashback #3: “Thank God you’re not in newspapers”: Local TV is doing way better than you’d think, a new report suggests

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) 2017P — $19.8B
9) 2018P — $21.1B

More #1: National Brands Are Cashing In By Targeting On Local Level.

More #2: What the Nielsen Total Audience Report Expansion Means for Local TV

More #3: Big Brands, Regional Markets

Nielsen: Americans are streaming 8 billion hours of content per month on connected TVs

Nearly 2/3 of U.S. households have a device to stream video to a television according to Nielsen.

Video viewing hours per month on a TV set in the U.S.:
1) Linear TV — 38B
2) Streaming — 8B

Median age by device:
1) Live TV — 56
2) STB VOD — 45
3) Connected — 42
4) Desktop/mobile — 40


Read the full report here.

Flashback: comScore: State of OTT

OTT viewing households by year:
1) 2016–44M
2) 2017–55M (↑ 25%)
3) 2018–60M (↑ 17%)


More #1: Nielsen Puts Connected-TV Use at 8 Billion Hours Per Month

More #2: Facebook Should Just Buy Roku Already — or Move on from TV

Outlook for Traditional TV Goes From Bad to Worse

Source of pay-TV in 2018–4Q according to UBS:
1)
Cable — 53%
2)
Satellite — 29%
3)
Telecom — 9%
4)
Streaming — 9%


Flashback #1: Streaming TV Growing Faster Than Anticipated, Analysts Eye 25% Of Marketplace In Next Five Years

Streaming pay-TV subscribers by year according to UBS:
1) 2018–9M
2)
2020–17M
3)
2022–24M (25% of all pay-TV)

Flashback #2: Cord cutting accelerates as pay TV loses 1 million customers in largest-ever quarterly loss

Pay-TV subscriber growth in 2018-Q3 according to MoffettNathanson:
1) Traditional pay-TV — ↓ 1.1M
2)
Streaming pay-TV — ↑ 414K
3)
Total pay-TV — ↓ 709K

Flashback #3: Who Killed the Great American Cable-TV Bundle?

% of TV channels viewed:
1) 2005–16%
2) 2010–12%
3)
2015–8%
4)
2017–7%


More #1: Just How Bleak Is The Future Of Traditional TV?

More #2: Wall Street’s predicting a big shake-up for AT&T’s DirecTV after pay TV’s worst quarter on record

More #3: Pay TV and streaming services head-to-head comparison


How Will Disney Manage Hulu and Launch a Competing Streaming Service at the Same Time?


Big question: How will Disney handle both Disney+ and Hulu?

Updated Hulu ownership:
1) Disney: 60%
2) Comcast: 30%
3) WarnerMedia: 10%

Quote from Bob Iger — CEO @ Disney:
“We aim to use the television production capabilities of the combined company to fuel Hulu with a lot more original programming, original programming that we feel will enable Hulu to compete even more aggressively in the marketplace.”

Old is new: Could we see some type of “new bundle” that consists of Disney+, ESPN+, and Hulu? What a concept!

Flashback #1: The Streaming Wars: How the new kingdoms of Hollywood are battling it out for the future of entertainment


The digital video world as if it were Game of Thrones:
1) House Netflix — The White Walkers
2) House Disney — The Starks
3) House Amazon — The Lannisters
4) House Warner — The Iron Bank of Braavos
5) House Comcast — The Tyrells
6) House Apple — The Targaryens

Flashback #2: Disney Unveils New Streaming Services, to End Netflix Deal


More #1: Disney to invest in more original content for Hulu, expand service internationally

More #2: At Netflix, Who Wins When It’s Hollywood vs. the Algorithm?

More #3: The Ripple Effect Of Streaming Video

Inside Cable’s Retreat From Scripted Series

Networks that are cutting back on scripted series include:
1)
A&E
2) Bravo
3) CMT
4) Discovery
5) E!
6) ID
7) MTV
8) TV Land
9) VH1
10) WGN America

Flashback #1: Netflix Eyeing Total of About 700 Original Series in 2018

Original scripted shows by year (% change YoY):
1) 2009–210
2) 2010–216 (↑ 3%)
3) 2011–266 (↑ 23%)
4) 2012–288 (↑ 8%)
5) 2013–349 (↑ 21%)
6) 2014–389 (↑ 12%)
7) 2015–422 (↑ 9%)
8) 2016–455 (↑ 8%)
9) 2017–487 (↑ 7%)
10) 2018P — 520 (↑ 6%)


Just 16% of U.S. broadband homes subscribe to 3+ video services according to Parks Associates.


High cost: Producing 1 hour of a scripted show costs most networks between $3–6M per hour! That is 10X the cost of an unscripted hour.

Flashback #2: TV Series Budgets Hit the Breaking Point as Costs Skyrocket in Peak TV Era

Cost per episode by show:
1) Game of Thrones (HBO) — $15m
2) The Crown (Netflix) — $10m
3) Jack Ryan (Amazon) — $8m
4) American Gods (Starz) — $8m
5) Stranger Things (Netflix) — $6m
6) American Crime Story (FX) — $6m
7) The Tick (Amazon) — $5m
8) Will (TNT) — $5m
9) Carpool Karaoke (Apple) — $2m

Quote from Michael Pachter — Research Analyst @ Wedbush Securities
“It’s an arms race, and it’s going to be that way until somebody realizes they’re just beating their head against the wall and not getting anywhere,”

More: With The Rising Tide of Streaming Services, Tune-In Becomes Data Driven