SVOD continues to strike telling blows against TV
One day, we may look back at 2018 as the year that the TV industry, so long an imposing figure in the media landscape, began to topple. Of course, the signs have been visible for years – the rise of streaming services, the trend towards cord cutting – but last week, something dramatic happened: TV ad spending turned negative for the first time since the recession.
For TV, ad-revenue is everything. It’s decline – forecast to continue to 2021 save a small positive blip in 2020 due to the next U.S. electoral cycle and the Summer Olympics – indicates that sponsors have lost faith in the medium. Even worse for television execs, TV’s decline stands in contrast to the wider advertising world. And within that world, there is one clear outperformer: digital, whose piece of the pie is set to increase by 19% this year.
If the big TV networks – which still wield considerable power – don’t get their act together, they will become a distant memory. Their Streaming Video On Demand (SVOD) competitors are going from strength to strength. Despite a challenging month for FANG stocks generally (Facebook, Amazon, Netflix, and Google), Netflix is still up by an incredible 46% so far this year.
Meanwhile, even in the face of social network scandals, and the introduction of increased EU oversight regarding what online services can and can’t remember about their users, digital spend is on the rise.
Google and its peers are offering a more powerful, better-targeted, advertising service than TV at a fraction of the cost. Netflix, and its peers, are offering award-winning original content, once more at a fraction of the cost of a full TV subscription service. In a world where these services have already achieved incredible penetration, how much space does this leave for traditional TV?
Dominion holds Netflix, Amazon, and Google, in its Global Trends Ecommerce Fund.
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