The future of television is broadcast & streaming: Here’s why

The television continues to evolve, the NBA’s new media rights agreement is indicative of the future direction of the medium. Last month, the NBA added NBC/Peacock and Amazon Prime Video as media partners and dropped TNT which had been televising games since 1988. The 11-year $77 billion agreement will expire after the 2035-36 season. NBC, a broadcast network, has extensive reach, available in 125 million U.S. households. Prime Video has a reported 115 million subscribers in the U.S. and 200 million globally.

In another indication on the direction of television has been the financial challenges the one-time lucrative regional sports networks have been facing. Last year, AT&T SportsNet, operational in four markets, exited the RSN business. The Diamond Sports Group, the largest RSN, declared dropped the RSN with a combination of broadcast stations and a direct-to-consumer offering. Local stations have extensive reach in TV markets and are benefiting from the growth of digital antennas and increasing availability of NextGen TV. Also, watching live sports on a streaming service has been on the rise.

Below is a quick overview on the sttatus of cable, streaming and broadcast.

The number of households with access to cable programming had reached its high-water mark in May 2011 when subscribers totaled more than 105 million households accounting for nearly 91% of TV homes. Since then, with the emergence of cord-cutting, the percentage of homes has dropped precipitously. Nowadays, only 57% of television households subscribe to cable, accounting for just over 71 million households. Furthermore, the number of households dropping their cable TV subscription has been accelerating. In 2023, among the largest cable programming distributors, a record five million canceled their cable subscription, an increase from 4.6 million in 2022.

With the decline in subscribers the audience for most cable networks have been in a freefall. In 2023 there were only three cable networks that averaged over one million viewers in prime time. By comparison, in 2013, there were 19 cable networks that averaged over one million viewers. The audience erosion is not slowing down. In Nielsen’s June 2024 Gauge report, cable totaled a 27.2% share of TV usage, the lowest to date. In June 2023, cable’s share had been 30.6% and in June 2021 cable’s share numbered 40.1%.

Among the reasons most often cited for cost cutting include cost and alternative viewing sources such as streaming. In 2023, pay TV providers generated $85 billion in revenue, a decrease from $92.4 billion in 2022. Ad revenue for cable television has also been declining. In 2023 S&P expected cable ad revenue to total $22.4 billion and with declines every year will fall below $20 billion in 2027,

Last year, Charter Communications and Disney reached a carriage fee agreement that was hailed as transformative. Under the new agreement, Charter’s Spectrum TV Select subscribers will be getting Disney+ with ads. Additionally, Spectrum TV Select subscribers can access ESPN+. Furthermore, Disney agreed to allow Charter to drop cable networks: Freeform, Disney Jr, Disney XD, Nat Geo Mundo, Nat Geo Wild, FXM, FXX and Baby TV.

Streaming
The fastest growing video platform is streaming. A survey from Park Associates found the percentage of U.S. households with at least one video streaming service is now at 89%, significantly higher than cable TV. Among the reasons for the growth in streaming video include better shows, programs can be binged, and their on-demand capabilities.

Nielsen’s Gauge Report found in June 2024 streaming accounting for a record high 40.3% share of TV usage. Also, according to Nielsen, for the week of July 1, streaming recorded over 313 billion viewing minutes across streaming platforms, the highest level of streaming consumption in a single measurement week. In June YouTube, with a record high 9.9% share, continues to be the most watched video platform, a position it has held for 17 straight months. YouTube claims 150 million people in the U.S. watch each month. Netflix ranked second with a TV usage share of 8.4%.

Aiding in the increase in streaming usage is the increase in web connected smart TV’s. Nowadays, the average viewer watches over 20 hours of streaming video each week. Nielsen reports over 70% of U.S. TV homes have at least one smart TV, up from 62.3% two years ago.

One of the fastest growing segments is ad supported streaming. A survey from LG Ad Solutions found 69% of U.S. CTV users favor a free ad-supported streaming television (FAST) programming rather than a paid subscription. Despite content consisting primarily of licensed programming, the survey found 53% spend more than two hours each week accessing FAST applications

In addition, CTV has become the fastest growing ad supported media channel. eMarketer projects CTV ad revenue will surpass $30 billion this year, outpacing cable. Ad revenue is forecast to reach $42 billion in 2027.

Streaming has its challenges. Among the frustrations among streaming video users is with so many viewing choices is the length of time spent finding a program. A study by Nielsen’s Gracenote reported the average amount of time, viewers spend picking a show is 10.5 minutes. Amazon’s Prime Video has announced plans to introduce AI to aid in making program recommendations. Increase costs has been another issue, 45% of subscribers have canceled a streaming service because of cost. To help counter subscription increases. a number of bundling services have been launched at a discounted price that are available.

Broadcast
According to a CivicScience survey, in-home traditional or digital antennas are the fastest growing method viewers are using to watch television today. Presently, 30% of U.S. adults use an antenna, which enables U.S. households to receive over-the-air transmitted by local stations at no cost. The survey found that 17% of households say they use their antenna “often”. Usage is more prevalent with millennials (age 25-to-44). In addition, since 2009 when digital transmissions replaced analog, broadcast stations groups have launched dozens of over-the-air digital multicast networks (a.k.a. “diginets”) that can be accessed via digital antennas. A high-quality digital antenna can cost less than $100.

In November 2017 the FCC approved rules enabling local broadcast television to upgrade to an IP based standard to transmit over-the-air signals. The FCC called the upgrade ATSC 3.0 but is often referred to as NextGen TV. The roll-out has been on a voluntary market-by-market basis. Accessing NextGen TV requires an in-home antenna, an ATSC 3.0 compatible television set and either Wi-Fi or streaming subscription.

For the Paris Olympics 56 TV markets can watch the games using NextGen TV with High Dynamic Range (HDR). There are an estimated 73 million TV households that reside in markets that have NextGen TV signals transmitted with HDR video. (HDR is a method allowing for content in detail for very bright and very dark videos.)

Among the other benefits of NextGen TV include a greater amount of content including multiple video streams and on-screen interactive apps, the potential to view video content on mobile devices and automobiles. There are 12,000 NextGen TV sets sold each day in the U.S.

Where does the puck go next?
Industry analyst Bill Harvey believes that the impending death of linear TV has been greatly exaggerated, and points out that many of the highest rated streaming shows first appeared on broadcast or cable. He quotes a Nielsen Gauge article which says “The 6 billion minutes Young Sheldon garnered in May 2024 were split almost exactly in half between traditional linear channels and streaming. Its success on linear TV fed its success on streaming platforms, and vice versa. This is the way in which the programmers who stay ahead of the puck will rebuild an even stronger television business by coordinating all of the delivery paths,”

Harvey adds, “Streaming is not competing with linear; it’s extending the reach of linear. The ROI upsides of addressability have not been fully leveraged, and when that happens the smaller commercial loads in streaming will equal the yield per viewing minute of the more heavily commercialized non-addressable linear. At that point the networks need not care which delivery path a viewer chooses, they will all be almost equally lucrative. But not if linear backs away from scripted series in favor of lower cost reality shows, that would be the way to make the feared future doom scenario come true.”