TV advertising is already declining. Here's why things could get worse. (ROKU, AMZN, NFLX)

Roku CEO Anthony Wood

  • The traditional television-advertising business is increasingly under threat as Americans shift their viewing habits, Pivotal Research Group analyst Brian Wieser said in a new report.
  • New data from Nielsen indicates that streaming-video services are making significant gains against ad-based broadcast and cable television networks.
  • TV-ad spending already is declining, but things could get worse, Wieser said.

Streaming video could soon have a big impact on the TV-ad business — even bigger than it's already had.

Americans are increasingly watching video on their televisions via streaming devices such as Roku's players instead of from traditional broadcast or cable services, Brian Wieser, a financial analyst with Pivotal Research Group, said in a new report. That's bad for the ad industry because the kinds of video that consumers are streaming are less likely to have advertisements in them than video from broadcast or cable.

"Overall, the industry-level conditions remain negative for ad-supported national TV as a medium," Wieser said in the report.

Wieser's report followed up on new data from Nielsen about November television viewing. Nielsen found that overall TV watching was basically flat in the month compared with November of last year. The average household spent about 0.2% more time watching television in the month compared with the year before, while the average viewer between the ages of 18 and 49 spent about 3.8% less time.

Americans are watching more streaming video and less cable

But Nielsen's data showed an ongoing and significant shift away from watching cable or broadcast television and toward watching video through electronic devices. Viewers aged 18 to 49 spent about 36.1% of their total TV time watching ad-supported cable-television shows in November, according to Nielsen data cited by Wieser. That was down from 38.9% in November last year and 41.3% in November 2016.

Brian Roberts Sun Valley The portion of the total TV-watching time that viewers in that age group spent watching English-language broadcast TV saw a similar decline. It went from 21.5% of their TV time in November 2016 to 19.9% in November last year to 19.2% this year.

By contrast, the amount of time viewers are spending watching TV through Roku's boxes or other internet-connected devices has grown rapidly. In November, viewers aged 18 to 49 devoted about 16.5% of their total TV time to watching shows through such gadgets. That was up from 11.9% last year and just 8.4% in November 2016.

The amount of time viewers are spending watching video through streaming players has grown by about 40% on an annual basis throughout much of the last year, Wieser said.

Video-game consoles are also seeing increasing usage as video-watching devices. Viewers in the same age group spent 10% of their TV time watching video streamed through their game machines. That was up from 9.5% in November 2017 and 8.6% in November 2016.

"The fact that internet connected device-based viewing — whose viewing can include ad-supported content but more often does not — is sustaining ~40% growth rates is particularly negative" for the TV-ad business, Wieser said.

TV-ad spending is already declining

The TV-ad industry is already starting to take a hit because of shifting viewing habits. TV-ad spending in the US fell last year by 1.5% to $70.2 billion and will fall by 0.5% this year to $69.9 billion, according to eMarketer.

Marketers have been increasingly shifting their spending to digital ad formats, buying spots on Facebook, Google, and elsewhere. Advertisers have also been moving some of their spending to ad-supported streaming-video services, including Hulu and the Roku Channel. Amazon may cash in on that trend too; it reportedly has its own ad-supported streaming channel in the works.

Read more: Amazon's got its eyes set on yet another market — and one high-flying upstart should be worried

EMarketer expects traditional TV-ad spending to rebound in 2020. But Wieser thinks things for the industry could get increasingly worse as viewership declines.

"Budgets are generally unaffected by changes in ratings in the short-term," he said. "Unfortunately, sentiment towards the medium worsens as commonly reported or relied-upon measures such as adults 18-49 fall, especially by the significant levels observed recently. Negative sentiment ultimately leads to advertisers efforts to explore and encourage the use of alternative media vehicles."

SEE ALSO: After a blockbuster earnings report, Roku's CEO explains why its advertising business is exploding

Join the conversation about this story »

NOW WATCH: How SpaceX, Blue Origin, and Virgin Galactic plan on taking you to space



Contributer : Tech Insider https://ift.tt/2EvvFFg
TV advertising is already declining. Here's why things could get worse. (ROKU, AMZN, NFLX) TV advertising is already declining. Here's why things could get worse. (ROKU, AMZN, NFLX) Reviewed by mimisabreena on Tuesday, December 18, 2018 Rating: 5

No comments:

Sponsor

Powered by Blogger.