Will linear TV kills digital TV in 2017?

In recent months we have observed a heated debate about new television model and online, digital video services. It is not a mystery. A traditional, linear model still evolves. Digital channels are booming. In this analysis, we will try to look at the changes that have taken place and some predictions.

What is linear TV?

What is in a fact linear TV? In brief, kind of television service where all viewer has to watch a scheduled TV program at the particular time. On the particular channel it’s presented on. Opposite of this would be incorporating the use of DVRs, VCRs or Video on Demand, according to the ITVdictionary. Typically this leaves little call for interactivity. Publishers, producers, broadcasters certainly don’t want you to leave the show by going to your computer. They only want your attention to be on that show and it’s advertisers. Money from ads, commercial materials, product placement. Slightly more advanced form is Linear-to-On demand. In this model TV links are made available for the viewer to activate with their remote control device. Viewers are able to access on-demand content. Quite often in the form of advertisements, merchandise for commercial forms.

Definitions of digital TV

The difference between Linear TV and Digital TV? As we can found in LifeWire materials, they have roots in the way the TV signal is transmitted or transferred from the source to the TV. In turn, it dictates the type of TV the consumer needs to use to receive the signal. This also applies to the way a DTV converter box has to transfer a signal to an analog TV. This is important for these groups of consumers that use DTV converters to receive television programming on an analog TV set. Digital TV (DTV) on the other hand, is transmitted as data bits of information, just as computer data is written or the way music or video is written on a CD, DVD, or Blu-ray Disc. A digital signal is composed of 1’s and 0’s. It means that the signal transmitted is “on” or “off”. Digital signals are finite, so the quality of the signal does not vary within a specific distance related to the power output of the transmitter. Digital TV has been designed from the ground up to take all the main factors of the television signal into consideration: B/W, color, audio and can be transmitted as an interlaced (lines scanned in alternate fields) or progressive (lines scanned in linear sequence) signal. As a final result, there is greater integrity and flexibility of signal content. Broadcasters can supply much more features: surround sound, multiple language audio, text services, more in the same space occupied by a standard analog TV signal.

Linear vs. Digital TV status 2017

In recent 2-3 years traditional networks that rely on linear TV as their bread and butter are having a hard enough time competing with digital TV to produce top-rated shows. As consumers spend more time with new streaming TV services, we could see digital video begin to approach the time spent levels of linear TV. According to eMarketer research, the average time spent with digital video will reach about 30% that of linear TV in 2017. Futhermore, with the average adult consuming 72 minutes of digital video versus 241 minutes of linear TV per day. However, if one or two linear streaming services thrive, we think this could go closer to 50%. Among the total Millenials (or better, more prcisely Gen X) 18-24 population, weekly live TV viewing averaged 13 hours and 2 minutes per week in Q1 2017, while DVR and time-shifted TV viewing averaged 1 hour and 29 minutes per week.



Picture 1: Traditional TV viewing trends ba age group (Marketing Charts, Nielsen)

Research shows that in most parts of the world the majority of TV viewers are older, ranging between the ages of 36 and 65. In fact, people aged 50-64 watched 39 hours and 54 minutes per week, representing a 1.4% increase year-over-year(for the past 6 years). Recent surveys show that although younger audiences are watching less traditional TV, the older age group still prefers to watch their favorite shows at specific times on linear television, especially as there is better and more diverse content. As Business Insider noticed, Over half of Americans (you can assume other nations too) now own a smart TV capable of streaming internet video, but regular TV still accounts for a majority of viewing, according to a IAB’s new report, The Changing TV Experience: 2017. Here are some key points from the report:

  • Increased competition from digital services like Netflix and Hulu as well as new hardware to access content are shifting consumers’ attention away from live TV programming.
  • Across the board, the numbers for live TV are bad. US adults are watching traditional TV on average 18 minutes fewer per day versus two years ago, a drop of 6%. In keeping with this, cable subscriptions are down, and TV ad revenue is stagnant.
  • People are consuming more media content than ever before, but how they’re doing so is changing. Half of US TV households now subscribe to SVOD services, like Netflix, Amazon, and Hulu, and viewing of original digital video content is on the rise.
  • Legacy TV companies are recognizing these shifts and beginning to pivot their business models to keep pace with the changes. They are launching branded apps and sites to move their programming beyond the TV glass, distributing on social platforms to reach massive, young audiences, and forming partnerships with digital media brands to create new content.
  • The TV ad industry is also taking a cue from digital. Programmatic TV ad buying represented just 4% (or $2.5 billion) of US TV ad budgets in 2015 but is expected to grow to 17% ($10 billion) by 2019. Meanwhile, networks are also developing branded TV content, similar to publishers’ push into sponsored content.


Picture 2: Linear vs. online TV among the generations (Global Web Index)

The growing popularity of digital TV consumption will also heat up the digital video advertising market in 2017. Expect to see increasing innovation and scale in the market. And, expect things to get easier for media companies that want to measure and sell digital video advertising the same way they measure and sell linear TV advertising — the long-awaited convergence may finally arrive. According to annual Connected Life research (Kantar partner TNS), the increase in the percentage of consumers intending to buy smart TV’s outpaced any other consumer device intention year over year. From an advertiser standpoint, consumer migration to connected TV offers marketers unique advertising opportunities and rich targeting capabilities through addressable TV segments.


Source: BusinessInsider, Connected Life, LifeWire, ThePerspective

Photo: Arqiva