Well-known industry analyst Alan Wolk is publishing his popular Week In Review columns first on Fierce Video every Friday. This means that Fierce Video readers are the first to get all Wolk's insights as they navigate the fast-moving television business.
1. DirecTV Returns To Its Roots
Now that DirecTV has been sold to a private equity firm, it’s free to go back to its roots.
If you remember, prior to the AT&T acquisition, DirecTV was a fairly well-liked service. In the interim, it’s undergone more transformations than Madonna, including multiple renamings and reimagninings as a vMVPD.
Things seem like they might be settling down now as the new DirecTV will feature a strategy that rests on the simple mantra “beam it or stream it” which is already leagues better than the tangle of offerings and strategies they were previously relying on.
Why It Matters
While the service has been announced, it’s still not officially rolled out. There’s been considerable confusion on social media about what’s going on and why the name change is happening—the industry frequently forgets that the average customer is not up on the latest M&A activity.
So, there’s that.
There’s also the fact that it seems like people who’d been involved with AT&T’s well-received U-Verse TV service are going to be running the new DirecTV, so that’s a step in the right direction.
But then of course there’s the elephant in the room.
The really big and obvious elephant.
That’s the fact that traditional linear TV is fading. Not all that rapidly, but it’s shrinking rather than growing, something that is highly unlikely to change. This is going to present a challenge for DirecTV, though maybe not as big a challenge as it might seem.
The truth is that, much in the way that physical newspapers and magazines have not disappeared, traditional linear pay TV is unlikely to completely disappear either.
Right now, around 75% of all US households have pay TV subscriptions, either via MVPDs or vMVPDs. Even if that number falls to 30% or 35% over the next ten years, that’s a sizable chunk of the country (figure around 35-40 million people) and while they are unlikely to be affluent 33-year-olds with graduate degrees, there will be brands that want to get their ads in front of those 35 million linear viewers. That, and the ability to reach so many people at once is going to be attractive to even more advertisers.
DirecTV has the advantage of not being bound by any physical cable wires and so can reach a national audience--that’s one of the reasons why they were able to launch a successful addressable advertising business back in the day, and the new version will be able to make this a key selling point as well.
So there’s that too.
What You Need To Do About It
If you’re DirecTV, remember that simplicity is beautiful, so no more of those TV plans that resemble old school phone plans.
Take advantage of the fact that Hulu and YouTube have both gotten rid of their RSNs and so people who are only subscribing to pay TV for their RSN fix are looking to you to provide them with a reasonably priced option.
Finally, selling addressable advertising across both “beaming and streaming” is going to prove popular with advertisers, so make sure you remind your ad sales team to play that up.
If you’re Hulu, Sling and YouTube, your opponent has been cleaned up, hydrated and had the blood wiped away. Now it’s time for Round 2 (or maybe it’s Round 3). Either way, it’s time to start upping your game again, and watching to see how DirecTV plans on regaining its audience.
If you’re an advertiser and DirecTV gives you a way to reach audiences on both its MVPD and vMVPD services, jump on it. Crossplatform is the way to go and you can add in streaming and network addressable via something like Project OAR too in order to fully round out your latest campaign in a way that reflects all the places your audience is hiding.
If you’re a consumer and you still like pay TV, keep your eyes open. I suspect there may be some good deals coming from DirecTV soon.
2. Cord Cutting Still At Trickle Level
The latest numbers are in for Q2 2021 and it seems that the six biggest MVPDs (Altice, AT&T, Charter, Comcast, Dish and Verizon) only lost 1.1 million video subscribers last quarter, down from 1.6 million in Q1.
Now “only” is a relative term, but overall it means the universe of pay TV subs declined by 3.9% in Q2, versus 4.3% in Q1.
And that’s not even factoring in Hulu Live TV or real numbers from YouTube TV.
Why It Matters
Yes, I like to beat this dead horse.
But to read so many mainstream publications and tech blogs, you’d think that well over 50% of the pay TV audience had vanished in a “massive wave of cord cutting” whereas in reality it’s still only shrinking in dribs and drabs, with most knowledgeable estimates predicting a decline of somewhere between 5% and 7% for 2021.
That’s not nothing, but it’s not a “massive wave.”
And it matters because the TV industry needs to get ready for a long transition period where something like half the audience is still subscribing to traditional pay TV, half the audience is only on streaming and the vast majority are watching both.
That affects everything from programming decisions—does NBCU, continue to produce separate slates of programming for NBC and for Peacock—to advertising—how do brands reach consumers who are all over the place, how do they determine which consumers are mostly on streaming and which are mostly on linear, and how to do plan and measure the whole thing?
That’s a whole great big ball of uncertainty and, like a storm cloud in this era of massive climate change, it’s going to sit there for a while, coloring everything the industry does and making it tougher to move on.
That’s not necessarily bad. It’s just different, and companies who can best handle a level of semi permanent chaos will come out on top.
What You Need To Do About It
If you’re just about every player in the industry, you need to sit tight, pack a bunch of snacks, and prepare to ride this one out. Things are going to remain in flux for the foreseeable future and you need to be able to deal with it.