Not Your Regularly Scheduled Program: The Changing TV Landscape
We all know that TV has utterly transformed. The family members that used to gather around their living room television at the end of the day are now each watching their own content on their own devices.
The result? OTT has 5X’d in the last 6 years and the addressable ad market has grown from $410 million to $300 billion.
Despite this growth, TV’s fundamental market equation is still made up of the same three basic parts: content, distribution, and monetization. While the overall equation stays the same, these three elements are being radically reshaped.
As historical incumbents try desperately to navigate these changes, newcomers are revolutionizing the industry. Unsurprisingly, many of these new players are digital marketers.
So how are digital marketers taking advantage of the TV landscape? What opportunities are they chasing and what challenges still need to be overcome?
Joshua Wepman, managing director of GCA Advisors, gave an overview of the current TV space to answer those exact questions.
The bottom line? There’s a ton of green space available for savvy digital companies that are willing to adapt to this rapidly-changing market.
HOW TO: Understand the challenges and opportunities of the shifting TV landscape
- Harnessing data is the key to success across the market equation
Content producers use data to create relevant content, distributors use it to find the right platforms to offer, and advertisers use it to create, target and sell addressable products.
All three players use data for audience targeting, though accuracy remains a huge challenge. Luckily, there are a few players already working on it →
- Content is expanding across new distribution windows and production methods
TV shows originally had high production costs and were only featured on big networks. These days, the boost in user-generated videos and original series means content can be produced at marginal costs and featured on new channels, all while being held on par with expensive content in the eyes of audiences.
This trend is great for audiences and advertisers, but hard on the incumbent companies trying to retain their viewership. For example, OTT subscribers have doubled in the past 3 years, meanwhile Comcast has lost subscribers in that same period of time.
- Content creators now distribute directly to consumers, reshaping the old affiliate model
Previously, MVPDs would bundle content from creators, along with affiliate fees. Now, distribution companies are creating content and delivering it directly to consumers, removing the need for affiliate middle men.
The direct-to-consumer model offers content at a fraction of the price. Viewers can get HBO, Netflix, CBS, Hulu, and ESPN for just $50 a month vs. $200 a month for Comcast.
- The TV market is fragmented, allowing new players to join without getting squeezed out
Compared to digital, where Google and Facebook control 60% of ad revenue and 90% of industry growth, the TV landscape is both bigger and much more fragmented. New players actually stand a chance against struggling incumbents.
- The 3 major remaining challenges: measurement, monetization, and attribution
How do you ensure accurate measurement, particularly across platforms and channels? Will connected tv and addressable ads help publishers make up for lost fees from content owners? And how do you build accurate attribution systems to understand which media performs best?
So far, these questions remain unanswered in the TV space, posing both a challenge to current players and an opportunity for future growth.
