Randy Cooke | June 1, 2015
The cord-cutter is frequently singled out as a culprit behind the rapidly shifting video ad market — the nemesis of TV’s established order. But lurking in their shadows is an even more elusive breed of content consumer: the ‘cord-bundler’.
Insights teased in the trades by Nielsen last month suggest the assumption that cord-cutters are siphoning subscribers (and by extension, audience) away from MVPDs may be overstated. For TV ad sellers though, would a confirmation that cord-cutters are having a negligible impact on total audience availability be worthy of celebration?
The cutters, and the cord-nevers (linear TV’s lost generation), are not the centers of influence in accelerating audience fragmentation. It’s the cord-bundlers — the households stitching together a host of SVOD services (like iTunes, Netflix, or Hulu) in addition to their cable subscriptions — that are at the root of media owners’ greatest audience fulfillment and yield optimization challenges.
The ever-expanding number of devices powering the delivery of this content only serves to increase the relative value of over-the-top (OTT) services versus linear TV, with a majority of Americans now preferring streaming content to live TV, according to Deloitte’s latest Digital Democracy Survey.
All of this seemed to happen overnight, and the adoption curve for video-enabled connected devices (in aggregate) is arguably the steepest of any consumer lifestyle or technology product in history.
As recently as the fourth quarter of 2013, Nielsen wasn’t even reporting usage metrics for multimedia devices (Apple TV, Roku, Amazon Fire, etc.) in its quarterly Total Audience Report. Today, nearly one in five US households has at least one of these devices. Even more significant, the penetration of gaming consoles in the US now exceeds the number of homes subscribing to wired cable.
When you add connected smart TVs, desktops, smartphones and tablets to the mix, nine out of ten Americans now have the ability to consume video content outside the living room. Those between the ages of 14 and 25 are already consuming more video on their mobile devices than they are on TV screens.
Just ten years ago, there was a single currency for television; a “holistic” viewing stream with no consideration for time-shifting audiences, as DVRs weren’t yet in more than a few million households. That may have been the last point in time TV was purely linear. Today it’s spatial, with content consumption available any time in any place. This is why media owners are starting to invest heavily in OTT infrastructure, both in the forms of content carriage through SVOD services and direct-to-consumer apps.
It’s the multi-device cord-bundlers that are having a material impact on television, and you need to look no further than the iPad to see the effects. Nielsen has noted that Adult 25-54 PUT (Persons Using Television) levels across all dayparts decrease dramatically in households with tablets—by more than 20% in some local markets.
Roughly translated, this means that for every five tablets sold in the US, one impression will be permanently displaced from every daypart in the linear TV stream. More than 57 million tablets will be sold in the US alone in 2015, according to Statista, and with forecasted unit sales reaching another 60 million in 2016, audience shifts will continue to happen in increments of millions of impressions.
While traditional live linear TV will most likely remain the single largest cache of audience for the foreseeable future, for an increasing number of media owners, a majority of their audiences are now outside of live TV. To counter the proliferation of screens and viewing streams, many media owners are turning toward programmatic technologies as a sensible mechanism to fully monetize audience splintering across time and device.
For most media owners, the transactional automation that accompanies programmatic implementations is a secondary feature, dwarfed by the need for a holistic suite of supply-side tools supporting both linear and multi-device ad monetization. Indeed, cross-stream inventory management, yield optimization and campaign fulfillment are mission-critical core competencies for media owners seeking to reconstitute the value of cord-bundlers. It’s here that the promise of programmatic TV looms large.
Read the full article here (subscription required): http://www.multichannel.com/cord-bundlers-are-true-disruptors/390961