In a significant shift that underscores the changing landscape of television consumption, linear TV viewership fell below the 50% mark for the first time in July, according to the latest data released by Nielsen. The data revealed that both broadcast and cable TV usage hit new record lows, accounting for 20% and 29.6% of total TV usage, respectively. When combined, these figures resulted in a total linear television viewership of 49.6%.
Meanwhile, the time spent streaming content via television experienced a 2.9% increase in July compared to the previous month, reaching a new record high of 38.7% of total TV usage. Key streaming platforms, including YouTube, Netflix, and Amazon Prime Video, all witnessed month-over-month growth in viewership, with increases of 5.6%, 4.2%, and 5% respectively.
Commenting on the trend, Macquarie analyst Tim Nollen conveyed a bleak outlook for linear TV. In a note to clients, Nollen stated that linear TV had likely crossed the point of no return. He noted that the revenue outlook for cable and satellite operators appears to be “permanently negative,” as pricing strategies fail to generate positive momentum while TV advertising growth stalls.
Nollen went on to explain that the metrics for linear TV viewership are showing a consistent downward trajectory. Ad revenue across a spectrum of media networks experienced an average decline of 13% in the second quarter, compared to an 8% drop in the first quarter, which included the high-profile Super Bowl event. The analyst predicted a somewhat improved performance in the second half of the year, but maintained a negative outlook, including comparisons to a non-political year.
The current data aligns with the ongoing trend of cord-cutting, as more consumers opt to abandon traditional cable packages in favor of streaming services. This shift has led to a transformation of the media landscape, with streaming platforms becoming dominant players, despite their historically lower profitability.
However, Nollen cautioned against overestimating the success of streaming platforms, highlighting that major direct-to-consumer services (DTC) experienced a combined decrease of approximately 500,000 subscribers. He noted that global DTC subscriber growth had slowed to 8.5% year-over-year, the first instance of single-digit growth. The crackdown on password-sharing by Netflix contributed to its substantial growth of 5.9 million subscribers in the second quarter.
Among the streaming services, Comcast’s Peacock demonstrated significant growth, expanding its subscriber base by 84% year-over-year to reach 24 million subscribers, up from the previous 13 million. This surge was attributed, in part, to a deadline for Xfinity subscribers to access Peacock for free until June 26. Nollen also observed a trend of pricing increases across various platforms, including Disney’s hikes and Hulu’s impending status as the priciest ad-free option at $17.99.
In terms of revenue growth, direct-to-consumer advertising emerged as a robust source, posting an average growth of 27% across media companies such as Disney, Comcast, Warner Bros. Discovery, and Paramount. This marks a notable increase from the 13% growth recorded in the first quarter.
Looking ahead, Nollen projected that Comcast lags behind in the DTC arena, with only 14% of its estimated revenues expected to come from DTC sources by 2024, compared to 85% from its linear networks. In contrast, Disney is on track to surpass linear network revenue with its DTC earnings in 2024, demonstrating the dynamic and evolving landscape of the television industry.
Source: Yahoo Finance
