A decade ago we raised the specter (to pay TV services and broadcasters) that broadband had the potential to replace legacy TV viewing. The advent of DVRs, TV Everywhere and pay TV’s VoD offerings have only delayed the inevitable. Broadband delivered videos via the internet are better than linear TV in every way – such as watch anywhere, at any time and on any device. For some time, it was thought that pay and broadcast TV would always hold a monopoly on live performances such as sports, news and weather. Led by Periscope, that illusion has been shattered and Facebook, Google, Twitter and others are giving thought to the crown jewels of live TV – professional football/soccer games in North America and Europe.
The Diffusion Group (TDG) has produced what it calls a “groundbreaking study” that details continuing shift from legacy TV to broadband video sources over the next decade. It said broadband video will grow from 17% of total viewing minutes in 2015 to 38% by 2025, up 81%, while legacy TV will decline from 80% of total viewing minutes to 53%, down 34%.
Joel Espelien, a TDG senior analyst and author of the report, “The Future of TV Viewing, 2016-2025,” said, “Professionally-produced, TV-quality video is now accessible from a widening array of sources and services, in virtually any
context, and on multiple devices. Though [pay TV] operators and [TV] networks are now aware of these trends, few have any idea what they mean for the future of TV viewing – that is, the extent to and rate at which they will redefine the viewing mix in the next decade.”
The report examines forecasts for video viewing during the next decade, by source (legacy TV, TV Everywhere, and broadband video), by service (broadcast TV, tier-1 and tier-2 pay TV, TV Everywhere, “Big Four” SVoD, direct-to-consumer SVoD, direct-to-consumer AVoD), by device (smart TV, PC, tablet, smartphone, game console, dedicated streaming device), and by age cohort.
We think TDG’s forecast is right from a trend standpoint but that the percentage of linear TV viewing is overstated. Once the “live” barrier is broken, especially for live sports, the floodgates will open for broadband delivered TV. It’s only the “legacy contracts” for content that legacy TV owns that is holding the floodwaters back. Many of those content owners, such as major sports leagues, are now realizing that keeping their content off broadband, especially mobile broadband, is holding back the growth of their sports by reducing the number of possible viewers.
Those two trends – live streaming of major sports events and legacy TV’s loss of long term content contracts – are evidenced by Twitter obtaining the global rights to stream 10 of the National Football League’s Thursday night games for which it paid about $10 million last week. The games that Twitter will stream will also be broadcast by NBC and CBS, which are available for free from local TV stations – plus simulcast on pay TV’s NFL Network. The NFL emphasized that the 10 games will be available on free broadcast TV, pay TV and the internet.
Because of pressure from Congress and the FCC, the NFL is quite sensitive to offering games that are not universally available – although it does with games on ESPN that are only available to pay TV subscribers. The NFL’s move has a profit motive. Adding an internet TV service such as Twitter as one of its distributors is an effort by the NFL to make its games and its advertisers’ ads available to a wider audience – and to attract more millennials as fans so as to avoid American baseball’s decline in popularity compared to American football.
“If you want a sobering experience, walk around a college dorm. They don’t have TVs anymore. They graduate from college, and they replicate their dorm experience in a rental apartment. They’re not signing up for cable,” said Ted Leonsis, the owner of the Washington DC professional basketball and hockey teams on Fox Business News channel. He said Millennials are changing the way sports teams interact with fans when asked to comment on the deal Twitter has with the NFL to stream 10 Thursday Night Football games this fall. He said he believes sports remain the biggest draw for live audiences, but younger consumers are looking for more ways to watch.
This first ran in Rider Research’s Online Reporter.