Don’t Fear The Backlash: We’ve Only Seen The Shift to Streaming TV’s First Wave

Ad spend on CTV

By Ashwin Navin, Co-founder and CEO of Samba TV

Streaming has had a bit of a backlash over the past few days in the public markets. Netflix’s disappointing subscriber news sent investors fleeing the stock which then caused a ripple effect throughout the broader connected TV marketplace pulling down just about anyone that touched the streaming world. While a disappointing quarter can certainly dampen moods, the fact remains that the macro picture regarding the future of the broader connected television marketplace remains brighter than ever.

As Lightshed Partners’ Rich Greenfield put in on Bloomberg recently, “We’ve shifted from linear TV to streaming TV and there is no going back.”

The challenge for those seeking to read the streaming tea leaves is that many are simply viewing the market through the wrong lens.

While the headlines of the past two years have focused almost exclusively on the growth of paid subscription services like Disney+, HBOMax, Apple TV+, Paramount+ and Peacock, the reality is these services and the subscription market overall, offer just one view into the very diverse television landscape that is rapidly evolving before us

What we are witnessing today — right now in fact —  is simply that the first wave of the shift to streaming, which has been fueled primarily by the ad free subscription companies — has begun to reach a natural and expected ceiling in some markets. That doesn’t mean that the secular shift toward digitally delivered TV is slowing down. Not for a second.  Nor does it mean that there is not an enormous migration of revenue already underway that will only accelerate into the connected television space.

The reality is that just as the first wave of subscription fueled streaming services have matured and come ashore, the second wave is just beginning to crest and with it will come the largest realignment of marketing spend in a generation.  By 2025, the US television market alone will be a 100 billion dollar industry with the lion’s share of growth coming from streaming.

According to eMarketer, connected TV advertising in the US surged 60% in 2021.  Protocol called 2021 a ‘post cable’ year in a year where The Harris Poll found that 90% of US consumers now stream. Just as streaming has surged, linear cable has continued its precipitous decline.  More than one and a half million traditional pay television subscribers cut the cord in Q3 of 2021 alone.

As subscription services mature and linear declines, streaming’s second act has begun to take center stage.  Ad supported streaming has been surging since the pandemic began two years ago — and we see signs that it’s growth trajectory will only continue to surge along with the availability and popularity of free ad supported services.

As more media companies invest in advertising supported streaming platforms with lighter commercial loads, consumers are leaning into the value of exchanging their time with brands for great content.  Fox is already predicting that Tubi— the free ad supported platform it acquired just a few years ago — will be a billion dollar business by 2023.

CBS Viacom’s Pluto is already there. Streaming inventory was a huge driver in last year’s bounceback TV upfront as CNBC reported “Ad-supported streaming steals the show at Tv upfronts”.

With these macro changes, come real challenges.  The shifting landscape of television and consumer engagement (we saw this play out again at the end of last year, as both GroupM and Dentsu had to once again tear up their forecasts for digital ad spending — and revise them upward, thanks in part to CTV) highlights the risk of misreading the signals in today’s connected television landscape.

One missed guidance number doesn’t negate the fact that according to GroupM, $170 billion was spent in 2021 on television advertising globally — the vast majority of it still locked up in the declining linear TV world.  The bulk of these dollars are poised to move to connected TV regardless of how the streaming wars net out.

With ad supporters streaming platforms poised to gain, a new ecosystem is emerging to help marketers navigate the most fragmented media landscape we have ever witnessed.  These new players in the measurement, targeting, data and analytics markets are poised to benefit significantly from the enormous influx of revenue into the marketplace.

The US is ground zero for this change as marketers and content owners alike struggle to accurately measure and reach audiences in a streaming first world.

Consider this one fact: in a study that will be published later this month, Samba TV found that 97% of linear TV dollars in Q4 of 2021 were spent reaching just one half of the television audience.  This level of waste and duplication and missed opportunity from doing things the old way is giving rise to incredible innovations and to disruptive companies that are ushering in the next wave of consumer engagement.

The future of television is before us.  It will be connected, measured, targeted and engaged in entirely different ways than we have seen in the past half century.  There has never been a better time to have a direct relationship with the consumer, to connect content with advertisers and to help shape the direction of the streaming decade.  The streaming sky is not falling.

As Lightshed’s Greenfield commented this past week, “Streaming is in the Top of the 2nd globally. Not the Bottom of the 8th.” There is a lot more of this game to play and there will be many more winners in the streaming decade.

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