An article in Barron’s published this last weekend entitled “TV’s Sports Problem” contained this startling forecast: that by 2020, Google and YouTube parent Alphabet, Facebook, and Amazon could have $100 billion in free cash flow in their coffers on a combined basis, compared to $30 billion for broadcasters ABC, CBS, NBC, and Fox. That means the online marketers will have more than three times the amount of money to bid for sports rights, and to create original programming to compete with conventional television channels. It brought to mind the days when cable television was in its infancy and your Friday Forecaster was selling a lowly .01 national rating on a financial markets network. Back in those days – circa 1988 – the big three networks dominated ratings and Fox was in its infancy. The first era of TV, the broadcast era, was slowly ceding territory to the second wave of TV viewing, the cable era. Nonetheless, the big three networks’ overwhelming command of the airwaves and eyeballs stoked a prevailing wisdom that cable was a stepchild and was never going to be a real threat. Then things began to change. Audiences began to diffuse as more and more niche channels launched, and in 1994 Fox attained genuine legitimacy by airing NFL Sunday, competing with and eventually beating the big three at their own game. Then, in 2002 cable viewership reached a tipping point when, on a combined basis, ratings for cable surpassed the big four networks. So much for not amounting to much.
Flash forward to today and it feels very much like the dawn of cable; the beginning of the TV everywhere age. There are many trends which support this notion, including cord cutting, changes in viewing habits by device, the explosion of Netflix, and on and on. Just this week, Disney announced that it would not be renewing contracts with Netflix in favor of launching two new streaming services of their own: an ESPN-themed sports service and one geared toward family entertainment and the Disney canon which includes Lucas Film (Star Wars), Marvel, and Pixar properties. Meanwhile, Amazon has paid $50 million for the rights to stream 10 Thursday Night Football NFL games this upcoming season, surely a preview of what is to come.
So, what does all this mean? That consumers are likely to look at what there are spending for cable and realize that they will increasingly be able to select the product that is meaningful to them on an a la carte basis and save money in the bargain. That the aforementioned online giants are going to be enormous players in this new era, and that audiences are going to become even more dispersed. That once live sports programming gets decoupled from its traditional broadcast network home, it may very well be game over for conventional broadcast networks unless they change their business models. That the competition to create the next zeitgeist series – think Game of Thrones or The Walking Dead – will be fierce. That audiences are going to watch what they want, when they want, and on the device of their choosing, and that there is no turning back to the golden days where the TV acted like a hearth the family gathered around. No, it is no longer a hearth, but a beating heart-like organ, held in the hand of the individual as if it were an extension of one’s very body.
Thankfully for advertisers, Alphabet and Facebook, and in a different manner, Amazon – all rely on advertising-based models for this success – so “TV” advertising isn’t going away, but like the programming it piggy-backs off of, it too will have to be everywhere. This reality is a wake-up call to all media planning and buying agencies – but especially to those that traffic solely in television advertising as we knew it – that they had better get busy diversifying their capabilities lest they go the way of the rabbit ears of yore. Say goodbye to “Must See TV” and hello to “Must Stream TV.” It isn’t something that is looming on the horizon. It has arrived. It is here. Right now.
Rick Petry is a direct marketing veteran of over 25 years who has been involved with campaigns that have generated over $1 billion in sales. He provides creative services to both B2C and B2B marketing campaigns and recent projects have included Actegy/Revitive, Education Connection, GOLO, Joybird, and OYO/DoubleFlex. The author of over 200 articles on direct marketing best practices, Petry has a Bachelor of Arts in Cinema/Television from the University of Southern California and an MBA with a Concentration in Marketing and Sales from Marylhurst University.