"On TV And Video" is a column exploring opportunities and challenges in advanced TV and video.
Today’s column is written by Geoff Spence, regional vice president of business development at SpotX.
For a few years now, traditional pay TV providers in the United States have lost subscribers each quarter as viewership shifts to less expensive alternatives and to other long-form programming.
These losses have been in part due to an increase in cord cutters, who have canceled their pay TV subscriptions for other premium options. There is, however, still demand for linear content.
While digital streaming and over-the-top (OTT) are slowly eating away at traditional TV platforms, multichannel video programming distributors (MVPDs) have sought to become part of the growing digital-first media landscape. They might partner with companies that offer app-based streaming TV services as an alternative to a managed video network, which relies on set-top boxes or developing digital versions of their linear offerings (virtual MVPDs), as DirecTV and Dish Network have done with DirecTV Now and Sling TV, respectively.
Virtual MVPDs and app-based streaming TV services are also OTT providers, in the sense that they allow their content to be delivered over the internet through their own mobile apps, websites and connected TV apps. MVPDs and pay TV providers have also invested in popular, joint-venture streaming platforms like Hulu to get in on the rising OTT opportunity.
With the increased consumer demand for digital linear content, there is a newer segment of publishers rising up: the digital linear programmers.
Digital-first publishers, such as Tastemade, Red Bull, Cheddar and Jukin Media, have traditionally relied on social platforms like Facebook and YouTube to reach their audiences and for monetization. With much of the consumption happening on mobile devices, these digital-native publishers have traditionally focused on developing more short-form, snackable content. The data from these platforms provides publishers with in-depth insights about how their content is performing, which allows them to adapt and evolve their content strategies quickly. Coupled with their ability to produce, source and curate content at a fraction of the price of traditional broadcast, these publishers can churn out what seems like an endless amount of content to satisfy their audiences’ appetites.
Today, many of these players are creating linear TV channels and distributing their content across OTT environments that include virtual MVPDs (Sling TV, fuboTV, Philo), Roku, Samsung TV and more.
However, when it comes to the consumption of linear channels in OTT, much of it happens in connected TV environments. This is where traditional broadcasters have the upper hand. Digital-native publishers must adapt their content strategies to cater to the lean-back viewing experience by producing more long-form content, developing new formats or adapting their best performing shorts. This will require a larger production investment, and they’ll need to work closely with their distribution partners to ensure they’re collecting the valuable data needed to inform this new content strategy.
The result? The industry is experiencing a convergence of digital and linear in which these two worlds – digital publishers and linear broadcasters – are competing more closely than ever.
Redefining the future of TV
As this new TV ecosystem emerges, it’s clear that the gameplay has changed. Although these digital programmers have aspects of the business to learn – scheduling, Nielsen GRPs and audience-based selling – they are not merely pawns. Rather, these rising stars are active participants, helping to define what “new TV” will look like in the future.
Today, most content is still being consumed in an app environment, and with Disney and NBC rolling out their streaming services, that trend is likely to continue. However, much of this content is also being consolidated into one digestible user interface, which Sling, Roku Channel (and TV), Samsung TV and other distributors are making available to customers. These distributors are giving digital-first publishers the chance to compete for audience attention alongside more traditional broadcast companies like NBC, CBS and ESPN.
The hardware manufacturers are extremely well-positioned because they control user behavior from the moment a device is turned on via a remote control. As such, playing nice with companies (such as Roku, Samsung and Amazon) is key, as they may influence how your content is accessed and how widely it's seen, since they control promotions and subscriptions. While many of these players demand a huge percentage of the publisher’s inventory to monetize for themselves, partnering early on will stage digital programmers as a strong team player with the future giants of “new TV.”
As viewers continue to cut the cord, more eyeballs will move to IP-delivered content. The question is: Will we see these digital programmers buck the trend and launch channels on a traditional cable infrastructure to grow their audiences?
It is definitely a whole new playing field for these digital publishers. They're learning on the fly, they are experiencing growing pains and they are seeking guidance.
Digital publishers can enlist partners to gain a better understanding of the processes and best practices surrounding linear ad monetization, content distribution and audience measurement. Doing so will allow them to better compete with broadcasters who have been in the business for decades.