While Nine, Seven, and ViacomCBS ‘Network Ten still make most of their money through ads that appear on traditional television, their investments in technology to compete online are now starting to pay dividends.
New data released in PwC’s 2021 Entertainment and Media Outlook tells a predictable story. Subscription streaming services like Netflix (driven by social distancing restrictions in 2021) will continue to grow through 2025, while traditional TV advertising will remain stable, with a slight increase over the next five years. Advertisers still want access to the widest possible audience live. PwC predicts that linear TV will continue to account for nearly 70 percent of TV ad spend in 2025.
But there is another growth story: BVOD platforms for networks are booming.
Revenue from streaming video on demand (apps like 9Now, 7Plus and 10play) grew 39 percent in 2020 and is expected to grow at a compound annual rate of 33 percent through 2025. BVOD revenue was $ 229 million in 2020, but they will be worth nearly a billion dollars by 2025.
PwC Australia partner Samantha Johnson says BVOD was one of the most prominent during 2020.
“While it comes from a much lower base than linear TV, we still forecast a compound annual growth rate of 32.7% over the next five years, making it one of the fastest growing subsegments in the industry. “, He says. .
“The challenge BVOD faces is twofold. The first is the competition for screen time that is spreading to more and more channels and platforms. They not only compete with other BVOD offerings, but also with subscription video on demand, premium video on demand, YouTube, Twitch, and other video-based platforms. Getting your share of consumer attention will be an ongoing challenge, as it is for everyone in the video industry. “
Nine CEO Mike Sneesby says growing 9Now is a big part of the company’s future strategy.
“You can be sure that you will have a broader profile within our business, including the right approach with the right people leading the 9Now initiative across the company,” says Sneesby. ”Revenue growth at 9Now and audience growth at 9Now has reached a really significant turning point. If you take a look at what we’ve shown in terms of results for the semester, you’ll start to see that 9Now becomes a really big part of that total TV business to the point where it flips up the revenue ladder and scale. audience. . “
This vision is similar at Seven, where Chief Digital Officer Gereurd Roberts is in charge of growing its on-demand platform, 7Plus. “7Plus is at the heart of what we are doing,” he says. “We saw tremendous growth of over 70 percent year-on-year and that continued throughout this year. Below [chief executive] James [Warburton], we had a very clear directive to invest and take advantage of the short-term growth of the market to build a long-term sustainable business ”.
The investment is a combination of purchasing exclusive content for the application and using data and technology to improve the experience for viewers and advertisers. In the July quarter, Roberts said Seven will release 20 new series as well as exclusive content from the Tokyo 2021 Olympics Games. Nine and Ten similarly invest in exclusive content for their online platforms.
As audiences grow, networks try to explain to advertisers the value they can get from viewers who watch television over the Internet. Industry measurement provider OzTAM has launched a new reporting platform called Virtual Australia (VOZ), which will provide data on the audience you watch on TV and connected devices on a daily basis.
Johnson says the second big challenge for networks as they grow their online streaming products is demonstrating to media buyers the reach these services provide.
“If they can make this case clear using the new VOICE data, this will ultimately help BVOD’s growth,” says Johnson.
ViacomCBS and Ten’s director of sales, Rod Prosser, say that revenue is growing in line with audiences, giving Ten more reason to invest in its BVOD platform, 10Play.
“The audience is growing, so the revenue is growing. But the ability to target advertising using both your own data and third-party and customer data is really attractive, “he says.
The return of living room visualization
Broadcasters are excited about the opportunity that the rise of smart TVs could offer.
Roberts says that the increasing use of smart TV has led to the return of “living room TV” viewing. Nine, Seven and Ten said that about 70 percent of the viewing in their BVOD apps is done through a smart TV. And it’s just the beginning.
PwC data shows that all networks benefited from people staying home due to factors related to the coronavirus pandemic. But the forecasts indicate that the income for these online services is just beginning.
Says Prosser: “The penetration of connected TVs is very high, but the audience still has a long way to go to reach that tipping point.”
But for her part, Fair is concerned that without a proper regulatory framework, the rise of smart TVs could lead to a flood of local network programming by a tsunami of offshore broadcaster programs.
The big streaming giants have deeper pockets and can pay these manufacturers to make sure they are the first apps available when a person purchases a smart TV. There is a debate in Britain about updating legislation to ensure the prominence of ITV and BBC streaming services on smart TVs which is also starting to happen in Australia.
“Audiences are increasingly dependent on television manufacturers and operating systems such as Android in the way they find their television content, which means that a regulatory solution will be essential to ensure the prominence of free-to-air content in the environment. communications technology, “says Fair. .
“Australians want and need a viable and prosperous local broadcast industry. It is critical that policy settings for the future provision of television services produce this result. Without this, we risk losing our access to local news, local stories and free sport. “