Published   Rethink TV

The Year of Living Dangerously in TV

How and when traditional TV advertising value collapses

“slow dwindling of pay TV subscriptions, starting in the more advanced markets of North America and Europe, but gradually infecting Asia Pacific and Latin America”

Predictions reveal two price corrections in the next 5 years due to the effect of subscription video on demand (SVoD), and the emergence of original content on pay TV subscriptions, and on ratings which essentially drive broadcast advertising revenues.

US broadcasters have been making their advertising more and more expensive to satisfy their shareholders, but the rate of price increases cannot be sustained.

This forecast sees US broadcast TV advertising taking the hit first, a full 20% softening in price, only cushioned by some improved uptake of Addressable advertising. This fall will occur over 2019 and 2020, caused by the rising tide of SVoD and vMVPD viewing, which sees broadcast ratings plummet even further.

A secondary hit will happen when major US sports begin to go online, and in some cases, direct to consumer, lower the interest in live broadcasts. European advertising markets will mimic this behavior later, and slowly so will all TV advertising markets around the world.

This will come home to roost in a collapse in advertising value late in 2019 and early in 2020. At the same time, more US homes will cut the cord, resulting in fewer pay TV homes, and more and more advertising opportunities with long form digital Virtual MVPDs and others.

Fewer viewings, watched less often leads to a weak market and uncertainty and this in turn leads to sports rights shifting to online properties and in some cases “going it alone” in a direct-to-consumer strategy.

This in turn leads to a further ratings collapse and more cord cutting, and a fragmenting of advertising opportunities which plays to the advantage of the online duopoly – YouTube and Facebook, and undermines advertising value.

Who should buy this report:

Anyone who’s business or work relies on the way the TV industry is today, needs to read this report urgently. Advertising has been kept from collapse by simply raising prices, but this cannot continue to work, and this will effect the advertising chain, pay TV subscriptions, advertising agencies, technology suppliers, such as advertising insertion and decisioning specialists and addressable and programmatic exchanges as well as buy side and sell side systems.  Broadcast and Cable networks should see the coming changes for what they are and plan their survival accordingly. All thee businesses need to view this report at the C Suite and senior management level urgently.

This report illustrates how:

  • Over $200 bn of TV Advertising will transition to online
  • Shows who will absorb it apart from Google and Facebook
  • Indicate falls in values of the protagonists around the globe
  • Global TV Advertising will dip and transition to Online in each market
  • How much of the TV market Google and Facebook can expect to inherit
  • Point to the likely financial values of the protagonists around the globe

Companies mentioned in this report:

ABC, Alibaba, Amazon, Apple, AT&T, Baidu, BAMTech, BBC, beIN Sports, Benfica TV, Bundesliga, CBS, Comcast, DAZN, Deutsche Telekom, DirecTV, Discovery, Disney, Dorna Sports, ESPN, Facebook, fuboTV, Formula 1, Fox, Gracenote, GolTV, Google, Hulu, International Tennis Federation, iQiyi, Major League Baseball, MoffettNathanson, Movistar, NBC, NFL, Nielsen, Netflix, Orange, ProSiebenSat, Roku, Showtime, Sky, Telefonica, Tencent, Time Warner, Twenty First Century Fox, Ubisoft, Univision Networks, Verizon, Vodafone, Yokou, YouTube, YouView

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Contents: 2

How and when traditional TV advertising value collapses: 4

A look back at 2018: 5

So where does all that leave us?: 6

Forecasts by Region: 8

Confusion of the duopoly: 10

When will the correction come and what will trigger it?: 15

Trigger to dump TV advertising is when live sports goes online: 19

What will happen to US broadcast TVs: 21

The Constant belief in AVoD is based on a Fallacy: 22

The Rise of the Tripartite Operator: 25

TV Advertising remains stable for now — How come?: 26

What about corporate values/market cap?: 27

What would we expect to see?: 28

Methodology: 31

Rethink TV: Forecasting disruption in video: 32

Contributors and Contacts: 33

About Rethink Technology Research: 34


Global TV market in $ billions: 4

Global TV Growth—What’s wrong with this picture: 7

US Total TV Revenues in $ billions: 8

European Total TV Revenues in $ billions: 9

Asia Pacific Revenues in $ billions: 11

Latin American  Revenues in $ billions: 11

Broadcast TV Forecasts US: 21

US and China likely original content spend: 24

US Broadcaster Revenues in $ billions: 27

US Broadcaster valuations in $ billions: 27