nScreenMedia OTT multiscreen media analysis

Three themes driving the conversation at NAB 2018

NAB 2017 Splash

Television’s competitiveness, dealing with disintermediation, and moving from a data-poor to data-rich business environment are three issues that will underpin much of the conversation at NAB 2018. Nothing less than the future of the television industry is at stake.

Television’s competitiveness

Traditional television is finally coming to grips with the fact that ad-laden linear channels are not faring well against ad-free viewing in SVOD services. John Martin, CEO of Turner Networks, captured the issue at CES 2018:

John Martin CEO Turner

“My fear…is that by the time the industry gets to full addressability everybody is going to be watching on Hulu and Netflix.”

At NAB, I expect to hear many approaches to improving the experience of linear television discussed. Mr. Martin is pinning his hopes on improving the relevancy of ads to the viewer with addressable television solutions. Others are reducing the ad-load, so viewers get to spend more time with the shows they love. NBCU says it will cut ad-time during primetime by 10% in the fourth quarter of this year. Fox says it will cut 2 minutes of ads per hour by 2020. According to Ed Davis, Chief Product Office for Fox networks Group:

“The two minutes per hour is a real target for Fox, and also our challenge for the industry…Creating a sustainable model for ad-supported storytelling will require us all to move.”

The measures by Fox and NBCU will still leave viewers seeing a lot of ads. It is far from clear if it will be enough to win audiences back that have already moved much of their primetime viewing to Netflix and Amazon Prime Video.

Expect to hear many announcements and discussions related to television’s competitiveness coming out of NAB 2018.

Disintermediation

The Internet is in the processes of doing to the television industry what it has done to every other industry it has touched. Old content aggregators that bridge the gap between content creators and the audience are being squeezed out. Two big market shifts are accelerating this trend.

Increasingly, television providers are opting to go direct to the viewer over the Internet. HBO started the trend in 2015. This month Disney will launch ESPN plus, its first DTC service, and follow up with a general entertainment service next year which many see as a competitor to Netflix.

New aggregators of premium video content are beginning to grow online. Amazon Channels and VRV are pulling together SVOD services, making it easier for customers to find and manage content. Virtual MVPDs like YouTube TV and Sling TV are providing traditional television services at a much lower price-point than traditional pay TV providers.

MVPDs are beginning to react. For example, Comcast is providing services like Netflix on its X1 set-top box. The cable giant announced last week that it was making Sling TV’s International channels available to X1 subscribers too. However, the strategy has not halted the decline in television subscribers. Comcast lost 186,000 video subscribers in 2017.

There will be many announcements of new partnerships and technologies seeking to help television providers deal with disintermediation. I will be leading a discussion of one such solution, Android TV, on Monday.

Data

The television industry is moving from a data-poor environment to one where data is plentiful. Dealing with this change is impacting every part of the business. Data is emerging as a fundamental tool in the business of premium video. It is required for the television industry to reinvent its business to deal with the issues of competitiveness and disintermediation.

The transition to a data-rich environment will not be easy. For example, NBCU just announced it is moving to an ad metric it created, called CFlight. It is frustrated with traditional data metrics which it says does not reflect the true viewership, and value, of its programming.

There will be many vendors at NAB with tools to help television deal with a data-rich media economy. One, artificial intelligence, is sure to be very visible on the show floor and in conference schedules. Other hot topics reliant on rich data will include personalization and voice control and discovery.

Why it matters

NAB 2018 finds the television industry in transition.

Underpinning much of the conversations at the show will be the following three topics:

  • Television competitiveness
  • Disintermediation
  • Data.
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