VOD : The future for linear TV channels

[OLD BOY]

Originally Posted by Anypermitedroute

well at the moment they dont carry adverts but who knows in the future they might, in fact they are testing advertising their own programs which can easily be converted to carry adverts.

also ITV announced not so long ago that advertising revenue was UP

There is no doubt about it that at the moment, there is plenty of money to be made out of advertising on broadcast channels.

My point is that there will be a sharp reversal at some point in the near future when people start to appreciate the benefits of streaming in particular.

The broadcast channels must surely be planning for this eventuality. The question is, how will they deal with it?

As more and more programmes are taken up by streaming services such as Netflix and Amazon, broadcasters will be relying more and more on their own home grown material and cheap lifestyle programmes. That will accelerate their decline.

[Anypermitedroute]

Then they will simply shift the advertising onto the VOD broadcasting like you see in 4od and the way channel 4 relaunched their whole 4od world and experience, no brainer, its big money and consumer still has the luxury of choosing what and when to watch, but still needs to be paid for and done by non passable adverts.

More of these programmes being competed for exclusitivities, or being originally made its need to be paid for. money will come direct from raising subscription, merchandise or advertisement, there is no other stream (i discounted goverment and very rich nice person)

[harry_hitch]

Originally Posted by OLD BOY

There is no doubt about it that at the moment, there is plenty of money to be made out of advertising on broadcast channels.

My point is that there will be a sharp reversal at some point in the near future when people start to appreciate the benefits of streaming in particular.

The broadcast channels must surely be planning for this eventuality. The question is, how will they deal with it?

As more and more programmes are taken up by streaming services such as Netflix and Amazon, broadcasters will be relying more and more on their own home grown material and cheap lifestyle programmes. That will accelerate their decline.

Seriously OB, where do you think businesses will advertize in future? You have posted on here that newspapers are on there way out in the future too, so where are companies going to advertize? Just on the internet and radio? Or do you think Tesco will not want the TV watching audiences of the future to know their beans are cheaper than Sainsburys in the future.

Adverts will just shift to VOD and we will be forced to sit through them, mainly because people don't realize how well things work at the minute and how lucky we are to have a choice to skip adverts. As well watch ad free OTT services.

Streaming companies most likely want people to transfer their viewing to online so they can charge the businesses more money by forcing people to watch adverts they can currently skip through.

---------- Post added at 14:26 ---------- Previous post was at 14:25 ----------

Originally Posted by Anypermitedroute

Then they will simply shift the advertising onto the VOD broadcasting like you see in 4od and the way channel 4 relaunched their whole 4od world and experience, no brainer, its big money and consumer still has the luxury of choosing what and when to watch, but still needs to be paid for and done by non passable adverts.

More of these programmes being competed for exclusitivities, or being originally made its need to be paid for. money will come direct from raising subscription, merchandise or advertisement, there is no other stream (i discounted goverment and very rich nice person)

Yup, that is indeed the only outcome of streaming.

[Stuart]

Originally Posted by OLD BOY

This article focuses on the BBC licence fee, but interestingly it draws the conclusion that streaming subscribers are becoming more familiar with programming without interruption, and this is slowing advertising sales growth for broadcasters.

Actually, Netflix are currently experimenting with advertising on their own programmes. It's not to much of a stretch of the imagination to think they might look at extending that to other programmes (assuming licences allow them to). It's also not too much of a stretch to imagine they may not allow skipping. So, the future you (and the article) appear to be speculating about may not include programming without interruption..

It is this slowdown in advertising sales that will kill off most broadcast channels eventually because this is what they rely on for revenue.

You are, of course, assuming that the likes of ITV cannot or will not compete with Netflix et al. I'd be surprised if they don't.

For instance, global voluntary subscription revenues are forecast to grow by 3.5pc per year up to 2019, compared with only 0.7pc for licence fees.

Over the same period in the UK, the overall proportion of households with some form of voluntary subscription television, whether via cable, satellite or over the internet from a telecoms provider such as BT, is forecast to increase from 57pc to more than 62pc.

This is where I feel the article is wrong. It's comparing Apples and Oranges. Most UK households have a licence. Those that don't either don't need one or are unlikely to buy one whatever the TV licencing company do. As such, the revenue from the licence fee is unlikely to increase much unless the government authorise a massive increase, which they are unlikely to do.

The on demand TV market (and to some extent the linear pay TV market) is nowhere near the same level of saturation , so they have a *lot* more room to increase revenues.

That predicted growth does not include the added impact of streaming services that are not necessarily bundled with an internet access subscription, such as Netflix and Amazon. Total revenues for such "over-the-top" services are expected to more than double from £216m last year to £497m in 2019. Those streaming services include Sky’s Now TV, as well as those on offer from US technology companies.

Those figures do sound impressive, but let's put them in perspective. They are combined figures from all the subscription on demand providers, including Sky, Netflix and Amazon and they have doubled, but they are still under half the programming budget for ITV (£1.04bn) ITV's revenue was £2.96bn (so, around 6 times the combined revenue for the streaming services.

In 2012, Channel 4 spent about £450m on programming. The BBC spent around £2.276bn on programming last year..

On a side note, while I like Netflix and Prime Instant Video and use both, that article presents the study as being so pro streaming, I'm wondering who paid for it.

[telegramsam]

Tv companies might well use more live tv programs that encourage the viewer to interact such as BGT where you vote for your favourite act? That`s one way live tv can win over on demand I guess. And of course football matches are always better watched live in my opinion

[OLD BOY]

Originally Posted by harry_hitch

Seriously OB, where do you think businesses will advertize in future? You have posted on here that newspapers are on there way out in the future too, so where are companies going to advertize? Just on the internet and radio? Or do you think Tesco will not want the TV watching audiences of the future to know their beans are cheaper than Sainsburys in the future.

Adverts will just shift to VOD and we will be forced to sit through them, mainly because people don't realize how well things work at the minute and how lucky we are to have a choice to skip adverts. As well watch ad free OTT services.

Streaming companies most likely want people to transfer their viewing to online so they can charge the businesses more money by forcing people to watch adverts they can currently skip through.

---------- Post added at 14:26 ---------- Previous post was at 14:25 ----------



Yup, that is indeed the only outcome of streaming.

Good point, Harry, but this is another question, the answer to which may become apparent with time. However, Netflix have already ruled out advertising on their services, and indeed it is the lack of advertising which is attracting people to use them.

The advertisers themselves will withdraw their advertising or pay much less for advertisements if people are being drawn away from broadcast channels in great numbers. True, they may move to on demand, but punters are not going to use on demand if they get flooded out with commercials as they are on broadcast channels and there are advert free alternatives available.

---------- Post added at 12:18 ---------- Previous post was at 12:07 ----------

Originally Posted by Anypermitedroute

Then they will simply shift the advertising onto the VOD broadcasting like you see in 4od and the way channel 4 relaunched their whole 4od world and experience, no brainer, its big money and consumer still has the luxury of choosing what and when to watch, but still needs to be paid for and done by non passable adverts.

More of these programmes being competed for exclusitivities, or being originally made its need to be paid for. money will come direct from raising subscription, merchandise or advertisement, there is no other stream (i discounted goverment and very rich nice person)

I can't see that working, because it is not that simple. My argument is that with all the options available, people will not be prepared to sit through commercials any more and will choose alternatives.

I guess there may be a proportion of viewers who cannot afford to pay for on demand services that are on subscription and would be prepared to put up with the adverts rather than have nothing, but the question is whether these are the viewers who are valued by the advertisers and whether they view in great enough numbers.

I suspect that the viewers most likely to spend money in response to ads are those who would rather pay subscriptions. But we will see.

[muppetman11]

Wonder why Sky has invested millions into Sky Adsmart then ?

[OLD BOY]

Originally Posted by Stuart

Actually, Netflix are currently experimenting with advertising on their own programmes. It's not to much of a stretch of the imagination to think they might look at extending that to other programmes (assuming licences allow them to). It's also not too much of a stretch to imagine they may not allow skipping. So, the future you (and the article) appear to be speculating about may not include programming without interruption..

You are, of course, assuming that the likes of ITV cannot or will not compete with Netflix et al. I'd be surprised if they don't.



This is where I feel the article is wrong. It's comparing Apples and Oranges. Most UK households have a licence. Those that don't either don't need one or are unlikely to buy one whatever the TV licencing company do. As such, the revenue from the licence fee is unlikely to increase much unless the government authorise a massive increase, which they are unlikely to do.

The on demand TV market (and to some extent the linear pay TV market) is nowhere near the same level of saturation , so they have a *lot* more room to increase revenues.



Those figures do sound impressive, but let's put them in perspective. They are combined figures from all the subscription on demand providers, including Sky, Netflix and Amazon and they have doubled, but they are still under half the programming budget for ITV (£1.04bn) ITV's revenue was £2.96bn (so, around 6 times the combined revenue for the streaming services.

In 2012, Channel 4 spent about £450m on programming. The BBC spent around £2.276bn on programming last year..

On a side note, while I like Netflix and Prime Instant Video and use both, that article presents the study as being so pro streaming, I'm wondering who paid for it.

It may not seem much of a stretch for Netflix to take advertising, but remember that they have explicitly stated that they will not. Given this, I see no reason for concern that this is what will happen, you've heard it from the horse's mouth.

I have not made any assumptions about ITV except that they are likely to have to close some or all of their channels down in favour of on demand/streaming services. Although there may be an advertising option for those not willing to pay subscriptions, I believe that they will offer a subscription service and any advertising on there will be on the index pages, through programme sponsoring and product placement.

The comparison on the figures was for information purposes I believe. It was designed to show that the total number of people watching TV had increased marginally whereas viewership of streaming services was increasing significantly. A great amount of this must be at the expense of linear channels.

I think you are grossly underestimating the increasing presence of Netflix and Amazon and other providers that we can expect to come into play over the coming years. Netflix alone has some pretty good new series coming on stream on a regular basis at the moment. It's as much as I can do to keep up with them. I'm still getting through 'Orange is the New Black', 'House of Cards', 'Angel Black' and so on, and they are still adding new Netflix originals such as Sense8. Forget ITV's expenditure and the BBC's expenditure (which will probably be curtailed by the Government), it is the results in terms of programmes you want to look out for.

I suspect that most American series will be scooped up by these providers in the short to medium term. This probably explains why Sky 1 is going downhill rapidly with very little worth watching these days.

Seriously, there is an obvious problem here and I am a little surprised that you cannot see it. Advertising will cease to be a dominant feature as an income stream and this will put the broadcast channels in a very difficult position. I am sure there are some answers, but I don't believe that linear channels are going to last much longer in their present form. Live TV (mainly news and sport) may be an exception to this for the foreseeable future, although I wouldn't bet on it.

---------- Post added at 12:42 ---------- Previous post was at 12:37 ----------

Originally Posted by muppetman11

Wonder why Sky has invested millions into Sky Adsmart then ?

I think it is due to the fact that they are desperately clinging on to the linear channel model upon which Sky relies, and to reduce the potential move away from broadcast channels by advertisers, they are offering a way of making ads personal to the viewer. This will be attractive to advertisers and may slow down the move away from this medium.

However, I think the diminishing revenue trend will continue over time, with the caveat that no-one can foresee the unexpected in terms of developments that no-one has yet anticipated. They will need something big to arrest the anticipated move away from this method of viewing.

---------- Post added at 12:44 ---------- Previous post was at 12:42 ----------

Originally Posted by telegramsam

Tv companies might well use more live tv programs that encourage the viewer to interact such as BGT where you vote for your favourite act? That`s one way live tv can win over on demand I guess. And of course football matches are always better watched live in my opinion

Well, maybe so, although one would have thought that Challenge TV would have come up with that ages ago.

I think there is money to be made out of exciting game shows using interactivity, but I see no sign of anyone testing this out.

What happened to Sky Poker, by the way?

[spiderplant]

The lack of advertising on VOD isn't an act of kindness. It's because it's a technically difficult thing to do. It involves splicing video and audio streams that are often in different formats, which makes life hard for the decoder.

I'm sure eventually the issues will be resolved, so you advertphobes enjoy it while you can.

[muppetman11]

Sky has spent millions on its On Demand library and now makes some of its shows available On Demand before airing on linear so that's a silly point.

Who owns the large production companies ? That's right the broadcasters and large media companies you keep telling us won't be around much longer.

[OLD BOY]

Originally Posted by muppetman11

Sky has spent millions on its On Demand library and now makes some of its shows available On Demand before airing on linear so that's a silly point.

Who owns the large production companies ? That's right the broadcasters and large media companies you keep telling us won't be around much longer.

It's linear TV that won't be around, I believe. The large production companies will live on but the delivery of their products will simply change.

Whatever happens in the future, I have absolutely no intention to watch programmes that are constantly interrupted by advertisements. Most people will come around to my way of thinking about this, I am absolutely certain.

[Anypermitedroute]

I do like your world you depict Old Boy, where i choose soley what i want to watch, and when, and just watch live shows as/when they on.

My fear is without advertisment , this utopian world you depict will cost a hell of alot MORE cash to replace the lost revenue of advertisement which we musnt underestimate. (or is full of endorsement/product placement which is the same)

I yet to see in your arguement how they would get the alternative cash, as I said subscriptions would sky rocket from their current amount which is too much for some now

[OLD BOY]

Originally Posted by Anypermitedroute

I do like your world you depict Old Boy, where i choose soley what i want to watch, and when, and just watch live shows as/when they on.

My fear is without advertisment , this utopian world you depict will cost a hell of alot MORE cash to replace the lost revenue of advertisement which we musnt underestimate. (or is full of endorsement/product placement which is the same)

I yet to see in your arguement how they would get the alternative cash, as I said subscriptions would sky rocket from their current amount which is too much for some now

In this new world, there will inevitably be some downsides. It's not really a matter of whether we like that world or not, it's really a question of observing what is happening and for how much longer, with all the developments taking place, viewers will put up with the way things are now.

Perhaps a good balance would be to have sites which give the option of more expensive subscriptions or advertising, but I can't see the likes of HBO going for that.

For me, the ability to choose from a huge library of material without commercials getting in the way, is heaven!

Originally Posted by OLD BOY

For me, the ability to choose from a huge library of material without commercials getting in the way, is heaven!

It just won't happen.

The likes of Netflix may hold back the adverts for the time being because they want their product to be as attractive as possible, but in the long term it simply isn't sustainable without cranking up subscriptions. And when you do that, you immediately become a niche provider, rather than a mass-market or universal distributor. Sky did this in the 1980s. Sports and Movies were all part of the package when they launched. It didn't last.

There will always be a substantial audience for completely free-to-view TV, and the most cost effective way of delivering it will always be over-the-air scheduled broadcast.

[theone2k10]

Originally Posted by Chris

It just won't happen.

The likes of Netflix may hold back the adverts for the time being because they want their product to be as attractive as possible, but in the long term it simply isn't sustainable without cranking up subscriptions. And when you do that, you immediately become a niche provider, rather than a mass-market or universal distributor. Sky did this in the 1980s. Sports and Movies were all part of the package when they launched. It didn't last.

There will always be a substantial audience for completely free-to-view TV, and the most cost effective way of delivering it will always be over-the-air scheduled broadcast.

Netflix have been going since 1997 and have never used commercial adverts and most likely never will, they are testing programme adverts though aka trailers of their own shows, according to AFTV netflix have already said they will never have commercial adverts.
OTA broadcasting is getting more expensive for providers you only have to look at the cost of freeview slots to see this however linear tv isn't going anywhere anytime soon isps are investing in tv now and even though bt,talktalk and plusnet tv is online they are still linear channels.