Interesting points made:
"Martin calculates that content companies earn 30 cents per person for each
hour of content viewed on linear TV. That compares to 11 cents per person for
each hour of content viewed on Netflix and 3 cents per person per hour for
content viewed on YouTube."
This sort of refrain is fairly meaningless. It is easily misunderstood. The
wider perspective is that what is currently the most lucrative **in terms of
cents per viewer per hour**, is simultaneously becoming the less used. The
result being, what is most lucrative in terms of actual revenues has no
relation to this per viewer per hour statistic. And too, as advertisers wake up
to current realities, even the per viewer per hour realities will change.
Don’t believe me?
"Martin says the rise of subscription VOD services like Netflix have grown the
overall TV marketplace by between $4 billion to $8 billion in revenue. A
decline in pay-TV households lowered TV revenues by About $210 million per
month, but that decline is more than offset by consumers subscribing to
Netflix, Hulu and Amazon Prime."
Precisely my point. And importantly, by increasing your live stream cents per
viewer per hour demands, as we have seen they are still doing, will only
further accelerate the decline of this type of viewing.
Note to Craig: TV network content is also increasingly being consumed on
demand. Just because there's a decline in linear viewing and in MVPD
subscriptions does not NECESSARILY translate to a decline in TV network content
popularity. Nielsen still appears to have a hard time adding it all up. This
particular analyst says that CBS and Scripps are both showing an increase, for
example. And, to add to the subtlety, live streaming is also increasing, for
certain types of content.
On this:
“'The most revenue upside should accrue to U.S. content companies that treat
small screens as an adjacency to the 30 cent per person per hour (dual revenue
stream) linear TV platform,' Martin says."
I seriously doubt that. It seems people have a hard time understanding that TV
content no longer needs to be wedded to a "linear stream." I think that's just
an old notion that will take another generation of "analysts" to fully
comprehend. If, as she claims, the increase in Netflix and other SVOD revenues
more than offsets the decline in MVPD subscriptions, it kind of proves that
point.
She also points out that unbundling would cause the less popular channels to
disappear. That's a given, unless they are sold for higher price, to their
niche audience.
Bert
-------------------------------------------
http://www.broadcastingcable.com/news/currency/analyst-video-s-future-omni-channel-content/159491
Analyst: Video’s Future Is Omni-Channel Content
Linear TV still delivers the most revenue per viewer hour, according to
Needham’s Martin
9/11/2016 10:46:00 PM Eastern
By Jon Lafayette
Video viewing is becoming more global, more mobile and more selective as
over-the-top options let consumer connect with programming on more devices, but
linear TV remain the most lucrative platform for content companies, according
to new Wall Street analyst report.
The Whitepaper, entitled “The future of TV: Mobile, Live, Immersive, Social,”
as published by Laura Martin of Needham & Co. Thursday but released to
reporters on Sunday.
“Consumers are adopting an ever broader range of devices, which are creating
‘new windows of time’ for video consumption, both inside and outside the home,”
Martin writes. Devices used per capital [sic] are expected to grow globally by
55% to 3.4 by 2020 from 2.2 now, and even faster in the U.S. But Martin notes
that “devices monetize at different rates and content consumed also differs by
device.”
Martin calculates that content companies earn 30 cents per person for each hour
of content viewed on linear TV. That compares to 11 cents per person for each
hour of content viewed on Netflix and 3 cents per person per hour for content
viewed on YouTube.
“The most revenue upside should accrue to U.S. content companies that treat
small screens as an adjacency to the 30 cent per person per hour (dual revenue
stream) linear TV platform,” Martin says.
Martin says the rise of subscription VOD services like Netflix have grown the
overall TV marketplace by between $4 billion to $8 billion in revenue. A
decline in pay-TV households lowered TV revenues by About $210 million per
month, but that decline is more than offset by consumers subscribing to
Netflix, Hulu and Amazon Prime.
Looking at what’s next, Martin looks at several trends.
In a more mobile-oriented environment, “Content that is omni-channel should
have a competitive advantage over content that is only available on a subset of
devices because it can engage its fans all day,” Martin notes. In the social
media world content does not work equally well across Facebook, Instagram,
SnapChat, Pinterest and others. “We expect this to be true for content as well,
suggesting that teams of 1-3 people must be dedicated to editing TV content
into shorter clips to maximize engagement across each digital devices. We
expect different lengths, genres and interactivity levels to work better on
different video sites.”
Martin also notes that live video adoption is on the rise on streaming
services, including CBS All Access with Big Brother, You Tube live, Facebook
Live, live viewing of video streams form the political party conventions and
even the Periscope and Facebook video of the congressional sit-in over gun
control.
Another thought: “Because smartphone are always with their owner and these
devices are personal, this creates options for new types of content that could
never exist in the home environment, where more than one person is often
watching the TV simultaneously,” Martin says. “Personalized content and
advertising suggest greater targeting and pricing upside.”
Despite all the talk about cord shaving and skinny bundles, Martin expects
skinny bundles to account for less than 10% of U.S. subscription revenue and
less than 10% of total revenue when they mature. She explains that Netflix and
Hulu are succeeding now because they are themselves large bundles. “As the
aggregators become unbundled into dozens of a la carte channels, choosing among
hundreds of total channel choices is hard work for the consumers,” she says.
That should lead to inertia among consumers.
Unbundling destroys $100 million of market capitalization and even more value
for consumers as channels below the top 50 disappear,” Martin calculates.
In the environment Martin describes, she sees CBS and Scripps Networks
Interactive as the best positioned TV stocks.
Both CBS and Scripps CEOs have outstanding records (based on one-year and
five-year market capitalization growth), excellent programming teams, upward
ratings momentum, a handful of ‘must-have’ channels that we expect to be
included in every skinny bundle, and ownership of deep libraries of content
that they can sell globally over all digital platforms, including smartphones,”
she says.
Martin says the rise of subscription VOD services like Netflix have grown the
overall TV marketplace by between $4 billion to $8 billion in revenue. A
decline in pay-TV households lowered TV revenues by About $210 million per
month, but that decline is more than offset by consumers subscribing to
Netflix, Hulu and Amazon Prime.
With Facebook getting 83% of its revenue coming from mobile device usage, and
mobile advertising increasingly becoming a must-buy, Martin also sees the big
social network’s stock as a winner. Other positives for Facebook include having
its users registered with real names and potential revenue streams from areas
including video and payments, plus incremental revenue and profits from other
Facebook apps including Instagram, WhatsApp and Facebook Messenger.
She recommends Apple as well, because of its smartphone eco-system., which is
creating a new global distribution network. Apple experience little churn with
its devices, which give it pricing power and predictable revenue streams as it
takes 15% to 30% of any revenue earned via its devices worldwide.
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