Avoiding the Topic
Georgi R. Chakarov, Editor-in-Chief of TVBIZZ Magazine
A year has passed since the last MIPCOM, but it seems like a circle has been closed, not much has changed and we are starting all over again. Actually, a lot has happened, but everyone will try to avoid the topic.
It is simply too uncomfortable to talk about the problems around us. After all, we are in the entertainment industry and beyond politics and so on… But we all know that this is not true and keeping eyes wide shut only makes things worse. Television as a business is slowly disappearing, but still there are a few people who are ready to openly talk about this.
Not only is viewership dropping to record lows, but also advertisers are not putting television among their priorities for the coming year. Kantar’s Media Reactions 2023 report found out that only 6% of marketing bosses plan to increase spending on TV, while its ranking in terms of marketing priorities dropped from third to twelfth place in one year. Online video was the most preferred channel by advertisers, followed by sponsored events, digital out of home (+2 spots), video streaming ads (+2 spots) and online stories ads (+2 spots).
Kantar’s report also found that Amazon is consumers’ most-preferred ad platform, who deem it relevant and useful with few negative qualities. Add to this the recent announcement that the giant will add advertising to its streaming service Prime Video, and you get the picture. “We think conservatively it could add $3 billion [to Amazon’s revenue] if they’re just showing three minutes of ads every hour under the advertising community’s current go-to-market,” UBS US internet analyst Lloyd Walmsley told Yahoo! Finance last week. “But if they actually increase those ads closer to six minutes an hour, then it could obviously double that,” Walmsley added. “You’re talking about $6 billion of potential revenue coming in through ads, and, by comparison, traditional linear TV is showing something like 16 minutes per hour of ads.”
Obviously, this money will mostly come from redirected budgets and judging by Kantar’s study it is very likely that a significant part of the TV budgets will be moved online – to FAST channels, streaming platforms, etc. Taking Amazon, in a worst-case scenario for television in 2024 it could steal up to 10% of the U.S. TV ad spend which is expected to drop by 8% to $61.3 billion in 2023. The elections could keep the TV business afloat next year, but they only take place once in four years.
We are already seeing big TV groups struggling with their performance, cutting budgets and staff, in an attempt to simply survive and buy time to be able to adapt to the new realities and hopefully create a successful online/streaming business. The truth is they can’t all compete with the giants in the long term. Thus, channels will start shutting down and the very existence of the broadcasting model will be called into question. Private companies will start turning to their governments for financial support and it will be up to each state to decide how important are certain channels for their national security, and how (financially) independent they can be.