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Has VOD caused a second wave of disruption to the TV industry?

The television industry is on the verge of a second wave of disruption according to the BBC director-general Tony Hall. Alongside his theories on how the streaming competition will heat up, we have access to the latest TouchPoints data to see how the ‘first wave’ has impacted the media landscape.

We often forget that the TV market has consistently faced disruption, through new technologies we’ve seen station choice expand from a handful to over 500 channels in the past 20 years. The more recent memory is the emergence of internet TV and on-demand services. We now see the big players in the space, Netflix and Amazon Prime, with a subscription base of almost 20 million.

The new wave that Tony Hall refers to is increased competition in the subscription video-on-demand (SVOD) space. Disney, Apple, HBO and NBC are all priming services to launch in the UK next year. Whilst viewers will be spoilt for choice with all the providers, it will come at a cost – if you were to subscribe to all paid-for platforms you’ll be spending £120 a month! £1,500 a year will be hard to justify for many households.

With so much variety on what to watch, what impact can we expect on our linear TV audience? Well, the IPAs TouchPoints data set can give us an insight into current media consumption since Netflix and Amazon joined the scene…

Overall, there has been a marginal 1% increase in total hours spent with any media channel so far in 2019, at 8hrs 8mins. The macro split of channel consumption remains similar, peak TV hours still being later in the evening, newspapers in the morning etc. However, we do see a slight 4% decline in average hours of live TV viewing year on year (YoY). TV also continues to drive by far the highest level of weekly reach across all adults (as shown below):

media landscaoe

Breaking TV down into its component parts, we do see hours spent on SVOD increasing YoY – 45% of adults watch in a week, up from 37% in 2018. This is even more pronounced for the 15-34-year olds… 71% watching each week, up from 63% last year. With a more competitive market, prices are expected to fall for the services. Improved availability will likely continue to push SVOD hours up as we move into 2020.

All Response Media viewpoint
From a planning point of view, live TV is maintaining its huge reach and scale, allowing us to successfully optimise plans and generate maximum returns. Much of the increase in viewing is incremental rather than a replacement so live TV should still play a pivotal role in your marketing budget.

However, the proliferation of VOD services now means this channel is a serious consideration within our recommendations. VOD platforms that utilise adverts continue to price outperformance clients, high entry cost per thousand (CPTs) mean it’s extremely difficult for campaigns to work on a cost per acquisition (CPA) basis. On the flip side, where audience reach is key, the introduction of VOD may be necessary to deliver additional reach, especially against the younger audiences.

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