Is Traditional TV Just Too Old-fashioned for the Digital Age?
TV can’t hold back the tide of over-the-top (OTT) services, but it still offers compelling reasons for viewers to tune in.
The “still” from that statement may be misleading, however, considering that traditional TV is actually reigning king. In 2017, 201.8 million U.S. adults are expected to watch traditional TV, while 175.4 million will watch digital video, according to eMarketer research.
So, why is this leader considered an underdog by industry watchers?
Experts see little content emanating from the traditional TV realm that will be able to override the pull of viewers to alternate video outlets or keep them from cutting the cord. OTT services like Netflix and Hulu have been draining viewers away from pay TV for years, offering people such a myriad of show options that they can pretty much create their own programming slate.
Yet, it’s this very abundance that allows broadcast TV to keep the upper hand. The multitude of options makes it overwhelming for viewers to discover new shows and become loyal fans, and this makes it difficult for advertisers to narrow in on an audience. And there’s the rub, as Shakespeare would say.
Adjusting to a new reality
Total viewership on one channel may never again be what it was five or 10 years ago. The new norm is a promulgation of video content through both set-top boxes and digital channels. This means that linear TV is likely to continue to lose viewers. As a matter of fact, eMarketer anticipates that the number of U.S. households with pay-TV subscriptions will continue to decline—from 99.7 million in 2015 to 95 million by 2020.
Traditional TV isn’t going to give up the throne without a fight, however. Taking cues from the digital world, cable providers are rolling out program options and are experimenting with features more common with digital advertising, such as targeting ads to specific audiences.
What’s more, the tangible benefits of digital video are hard to pin down for many marketers. First of all, as viewers branch out across multiple channels and marketers try to follow them, brand messaging gets spread too thin. Trying to be all things to all people is a losing proposition. Second, technologies like ad blockers cut out revenues. Third, viewability and ROI are difficult to measure.
This is keeping some advertisers very loyal to the TV market. Coca-cola CMO Marcos de Quinto recently said that TV advertising is better than digital in terms of ROI “across media channels.” Arguably, linear TV is a more straightforward venue. Last year, David Levy, Time Warner’s Turner cable unit president, forecast that marketing dollars will move back to TV, as analytics and targeting capabilities improve.
The quality of content will also continue to play a role in the popularity of both traditional TV and digital alternatives. In sheer quantity, scripted shows on broadcast, cable and digital services has grown 71 percent over the past five years, according to FX research published by The Wall Street Journal. In fall 2016, MediaPost reported that ABC, CBS and Fox all experienced ratings declines year over year. Must-see shows on alternative channels could cause TV ratings to continue to drop, making TV less attractive to advertisers.
Moreover, digital options will likely evolve faster than traditional networks can keep up, potentially razing outdated programming distribution models. Yet, there’s also the potential for linear programming to make the transition to multiple platforms with a mobile-first outlook, which could draw viewers who prefer alternate channels. Connected TVs that comprise both old and new distribution models could also help traditional TV from being overridden by live streaming.