The True Emergence of Live TV Streaming

Growth in the number of video streaming services has exploded over the last few years, mostly to serve a consumer base that’s increasingly seeking more access to television content. The landscape has evolved rapidly, with companies including Netflix and Amazon Video expanding from libraries containing mostly obscure content during their infancies, to blockbuster movies and must-see originals. Out of all this activity, the increasing number of “skinny bundles” or live TV streaming providers is particularly noteworthy. They have emerged with the goal of providing users streaming access to TV content without the waste and expense of unwanted channels.

Ultimately, no provider has yet been able to solve what the consumer ultimately wants: access to the live channels they desire without paying for ones they do not.

It seems consumer demand has been the primary driver of this live TV streaming growth, indicating that user attention spans are growing and an overall desire for access to live content is increasing. That conclusion can be drawn from the latest numbers on time spent with live content online. According to a study commissioned by Yahoo, live streaming is the fastest growing segment in online video streaming, up 118 percent in 2016. This puts it ahead of long-form content, which increased 30 percent, and short-form at only 9 percent.

Though despite the increased consumer demand and number of new services entering the market (e.g., Sling, YouTube TV and Hulu Live TV) that are promising to cut costs and free viewers from the burden of a monthly cable subscription, nothing comes free. Users seeking alternatives still have to sacrifice something for the discount. YouTube TV for example, is heavy on sports, offering ESPN, Big Ten Network, the Comcast sports channels and CBS. However, users seeking content from giants Viacom, Turner and Discovery will have to look elsewhere. Conversely, Hulu offers a more robust package, but that of course comes at a higher price.

Some networks including HBO, CBS and Showtime have also emerged in the space with offerings of their own for customers who prefer to view these providers’ content on-demand. And with Disney announcing they will be severing their relationship with Netflix in 2019 and moving streaming of their content to a proprietary service, many other providers may follow suit. No matter what happens in the coming years, the streaming industry is certainly expected to become much more competitive.

Navigating this increasingly crowded landscape of emerging partners can be tricky for consumers and brands alike, since each provider has different cost models, access to content and technical capabilities. Ultimately, no provider has yet been able to solve what the consumer ultimately wants: access to the live channels they desire without paying for ones they do not. Clear evidence of this dynamic can be seen simply by looking at the slow adoption growth of industry pioneer Sling TV. Even though Sling TV touts itself as “a la carte TV,” offering users some choice in which channels they subscribe to, it still doesn’t offer full customization or local broadcasters. The service has been available since 2015, making it easily the most mature platform currently available, yet only boasts around 2 million subscribers.

Adoption challenges

So what’s holding some of the masses back? One thing many users who have made the switch are finding is that the technical experience itself still leaves much to be desired. Streams can be low quality and glitchy, and most cannot be viewed directly in a web browser, instead requiring an app to be installed on each device. Viewers are also complaining that the interface on some services isn’t as intuitive as they would like, making accessing content cumbersome.

As a possible result of these setbacks, “bunny ears,” or antennas used to access over-the-air television signals, made a comeback in 2017. According to the Consumer Technology Association, U.S. antenna sales were projected to rise 7 percent that year to more than 8 million units, fueled in large part by a generation that grew up on cable TV and is looking for ways to access their favorite content without the cost or commitment of cable or a skinny bundle. While this still pales in comparison to the total universe of 100 million cable households, it is a notable shift. The spike in sales comes despite the fact that, according to a survey by the National Association of Broadcasters, as many as one third of Americans are unaware that local broadcast TV is available free. Thanks to the ubiquitous nature of cable TV in the 1990s and early 2000s, and legislation in 2009 that required broadcasters to stop sending analog signals and upgrade to high definition digital signals, many younger viewers don’t know that their local channels are available at no cost.

This lack of awareness of free access to live content coupled with the emergence of numerous cable alternatives would seem to prime the market for mass adoption of live TV streaming. Unfortunately, subscriber gains have been slow as consumers decipher the landscape and decide what, if anything, they’re willing to sacrifice for a slightly lower price tag. Complexity is never a salesperson’s best friend.

As consumers are increasingly given more ways to consume content, buyers will need to account for the fragmentation in order to deliver at the reach and frequency historically achievable through TV buys alone.

Advertising considerations

While consumers are slowly experimenting with live TV streaming services, advertising remains relatively consistent to that offered within the traditional live TV space. There are, however, a few interesting opportunities and challenges worth noting. By now marketers know the key advantage of advertising within a digital TV streaming service is the ability to dynamically insert ads into live TV, allowing for advertisers to replicate the 1:1 consumer relationship achieved digitally. This application of data enhances the way advertisers target consumers, while providing a more relevant ad experience.

Despite this advantage, the broad reach of traditional TV is unfortunately not achievable through live TV streaming services, since each property is reporting nominal subscriber numbers. As a result, advertisers are currently using live streaming as an add-on to existing digital and addressable TV plans, rather than considering it a standalone option in reaching target audiences. It stands to reason though that when these services improve their capabilities, options, and pricing models, then increased adoption, and therefore reach, can be expected. In the meantime, especially as consumers are increasingly given more ways to consume content, buyers will need to account for the fragmentation in order to deliver at the reach and frequency historically achievable through TV buys alone.

Adding to the already complex landscape, there are also vast differences in targeting and ad opportunities across each provider. For example, Sling TV is selling inventory programmatically, which allows advertisers to layer on first and third-party data, and purchase inventory in dynamic marketplaces driven by digital inputs and measurement. In contrast, YouTube TV is working with exclusive partners through upfront deals with large spend commitments. As live TV streaming partners expand upon their ad capabilities and look to gain media share from traditional TV environments, it is becoming interesting to see these vastly different approaches. Additionally, it is rumored that YouTube TV is not profiting from their subscription model due to the high costs of their content partnerships pitted against the low service prices they charge. These growing pains will be essential for marketers to monitor in order to anticipate the coming shifts.

Measurement

Measurement poses a significant challenge to the digital space since Nielson’s approach is unique and inconsistent across each ad type, device, app and network. That said, approaches do exist across live streaming that can help marketers determine effectiveness.

Linear ad load: This execution mimics the ads shown on traditional live TV. These ads are essentially logged and rolled up into Nielson’s overall linear TV measurement. For Smart TVs, measurement is done through Nielson’s traditional watermarking approach, while mobile device measurement is census based and captures everyone within participating apps. Unfortunately, that means that any apps not currently being tracked will not be added into the measurement.

Live or on-demand dynamic ads: As the name implies, these are spots that are dynamically inserted into either live or on-demand content. This measurement is broken down into two types: digital content ratings and digital ad ratings. Digital content ratings focus on tracking digital content within apps that have installed Nielson tracking. Digital ad ratings clock spots, when they run, across mobile, desktop and Smart TVs, though current measurement for Smart TVs is only possible on Roku and Hulu.

Nielson continues to improve their measurement and capture new sources of viewership (as evidenced by the recent announcement that they will begin measuring Netflix members), yet large gaps in tracking still remain. Thus, these gaps and methodology variances hinder media planning by making it difficult for marketers to obtain a more precise view of exactly how an advertiser’s overall audience is being reached. These issues are of course not insurmountable or unprecedented, but they will be ones that cause brands and agencies alike to continue calling for change.

Future questions

As the TV landscape rapidly evolves, the potential future implications are vast. Due to the now easy access of on-demand content through service providers such as Netflix, Hulu and Amazon, consumers are less likely to differentiate the experience they have with TV content, whether live or on-demand. As a result, the future designs of smart TV user interfaces are also showing little differentiation between these two content sources. That then begs the question: What will live TV mean in the future, and what content must be live versus on-demand? Only time will tell, but in the meantime, savvy marketers would do well to continue taking stock of how live streaming is changing today’s video landscape.