THB #209: Unanswered Streaming Questions, Pt 2 of 2

In part one, I addressed but couldn’t answer…

• What is the TAM (Total Addressable Market)?

• Will global sports rights build major sports league significantly ?

• How many countries will be more effectively served by rolling out AVOD or FAST rather than SVOD as their first offering?

• Can you match or surpass subscription revenue per sub with ad-powered revenue per sub?

Four more unanswered questions today…

What will finally push broadcast and cable networks to go fully/primarily to streaming?

This is really a split question, made clearer by last week’s claim that more people were now streaming than watching cable television. Thing is, Nielsen’s The Gauge is way too vague about how things are measured for anyone serious to overvalue this big promotional stat.

As an example of the blur, YouTubeTV is the streaming “basic” television/cable in about 4% of U.S. households. If you watch Broadcast or Cable channels on YouTubeTV, those are streaming views. But are they? The advertisers are paying Broadcast or Cable rates. Your eyeballs are counted, whatever “wire” is feeding you.

There are really 2 tracks. Consumer Behavior and Advertiser Pricing.

Putting aside the very real, but very complex issue of broadcast signal rights, the current reality is that advertisers value Broadcast and Cable more than Streaming (As measured in CPM aka Cost Per Thousand Viewers/literally Cost Per Mile), As long as this bias remains, legacy media is going to drag its feet on the dominant conversion to streaming.

I say that Consumers could not care any less what wire or stream brings their desired content into their homes and onto their phones and tablets. I have friends on the DTC side who seem to disagree… though I can’t imagine what they are thinking.

The best path forward for mass content distributors would be to exploit all delivery channels… IF the ad dollars were all the same. Putting aside rights issues, if ESPN could get paid the same amount for 30 seconds on Monday Night Football on ESPN+ as on ESPN, there would be no direct conflict between the 2 platforms within Disney.

According to Standard Media Index, 30 seconds on NBC’s Sunday Night Football cost about $800,000 to buy outside of a large, negotiated package of ads. ESPN’s Monday Night Football got about $400,000 for a 30. To some degree, apples and oranges, because of ratings. Sunday Night gets about 20 million viewers and Monday gets about 14 million. But Sunday isn’t double the audience… but it is double the price.

Point is, on the ad side, the conversion of networks and cable channels to streaming from Broadcast/Cable/Satellite is a money loser at this point. The tipping point for networks will not be eyeballs, it will be a combination of eyeballs and a rise in the price advertisers are willing to pay for them on streaming. OR when the ad market shifts to the new opportunities that multiple major streamers are about to dump onto the market, all within 6 months to a year, so that the pricing for broadcast/cable drops to create that balance.

This is when the weight of live sports begins to get heavier… not just because of the size of the audience, but because live sports viewers are less likely to skip ads. This is also why the dying awards show business is unlikely to completely die… if you can get tune-in and maintain tension, people will stay with the show through the spots.

Will we see broadcast and cable networks on YouTube in the near future? Why not? The obvious answer is advertising sharing. Ads are (almost) always the answer to these questions.

For ad-based “networks,” the 4 simple/big issues are:

• cumulative audience

• the cost of (or earnings from) distribution

• how much advertisers will pay for their audience/how it is or is not differentiated by distribution platform

• the cost of content

In the case of broadcast networks, affiliates are a fifth big issue still.

For the moment, the logjam is behind the advertising pricing issue. When/If that breaks, there is a lot more room for creativity available to these networks to distribute their content (and their sold ads) across streaming.

What is the monthly price tipping point for consumers, before and after cord-cutting?