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A year late, but the Tokyo Olympics are finally here. The opening ceremony was full of fireworks and pageantry, crowned by US tennis star Naomi Osaka, who lit the Olympic cauldron to start the official competition.
The ceremony had almost everything … except spectators.
TV viewers for the Tokyo Opening Ceremony were 17 million – 36% less than the 2016 Rio Games and significantly lower than the 2012 London Opening Ceremony, which drew 41 million viewers.
A predictable drop in viewership?
There are a number of reasons why audience numbers could drop: timing differences, live audience restrictions, off-year planning, pent-up wanderlust after being locked up for a year, and feeling some Americans should have canceled the pandemic.
But none of these explanations explain the fact that live events were seen across the border Audience numbers are falling.
- According to Nielsen, the NBA’s viewership has declined 25% in the past two years.
- NASCAR Daytona 500 viewership is down 35% from last year’s record low.
- The average World Series viewership dropped to 10 million last year, a 30% decrease from 2019.
Even soccer hurts. At the college level, the Alabama-Ohio State National Championship was the least-seen game in history last year, and the NFL’s Super Bowl was the worst-rated game since 2007.
Is television dying …? It’s complicated
These numbers are remarkable, but also somewhat predictable if you’ve been following the cable industry. In 2013, more than 100 million households were paying for cable services, according to eMarketer; by 2023 this number is expected to drop to 67 million.
That is a third fewer households! Additionally, eMarketer expects this trend to continue through 2025, when it predicts only 60 million households will pay for cable services.
Even worse for cable companies is the demographics of cable cutters: Last year, the Super Bowl audience under 50 declined 11% … as game hours and Netflix subscriptions skyrocketed.
Simply put, television is dying and youth is moving on. These digital-native consumers are increasingly turning away from traditional TV cable packages with poor on-demand capabilities in favor of instant access to video content.
TV is dead; long live content
Of course, the cable model was lucrative for television content providers. Not only do these programmers receive first-party revenue (subscriptions), but they also receive lucrative advertising revenue from brands looking to capitalize on a trapped viewer audience.
After Netflix saw the success of creating their own content, other providers quickly moved to creating their own streaming services to avoid even more disruption and continue to generate subscription income.
Now Viacom CBS ‘Paramount +, NBC’s Peacock and Disney’s Hulu have 30 million or more subscribers. Disney + has more than 100 million subscribers.
Insane Statistics: Disney + Has More Subscribers Than US Cable Subscribers Total!
However, advertising of streaming and networked television is an area that is ripe for disruption. The methods and technologies used to buy and place advertisements on old school television are fundamentally different from those used in streaming and digital channels.
1. The trade desk could revolutionize digital marketing
- The trade desk (NASDAQ: TTD)
- Price: $ 81.91 (As of July 30, 2021)
- Market capitalization: 38.970.536.123
The death of traditional (aka linear) television is a huge opportunity for The Trade Desk. The company supports marketing departments in buying and placing their ads in digital formats. It is the largest independent digital programmatic advertiser.
The trade desk is already benefiting from the emergence of digital display and mobile advertising, which are robbing the print media of market share. And we are also increasingly seeing the development of video advertising. In the past, traditional television relied on human negotiation to price advertisements.
The rise of Over-the-Top (OTT) and Connected TV (CTV) has increased the demand for The Trade Desk’s programmatic ad buying technology.
So here’s your investment game: we’re still in the early stages of CTV advertising. It’s estimated that streaming will increase to 33% of total television time this year, up from 20% last year … but we are already at a tipping point.
At the beginning of the year, 78 million US households had a cable subscription, 84 million households could be reached via connected and streaming TV services.
Marketers have noticed this, and this has led to a marked departure from “normal” television.
Ad buyers are getting fewer pre-calls for linear television this year in favor of CTV, desktop and mobile outlets. According to eMarketer, 2021 was hot for ad-supported video-on-demand companies like Tubi, Pluto and Hulu … and upfront media deals are expected to double!
As the largest independent digital advertiser, The Trade Desk will continue to benefit from increasing digital advertising on websites, but has also carved out a real niche for itself in the high-growth CTV space. His enviable roster of clients includes Disney, NBC Universal, and even data analytics company Nielsen.
Like all stocks, The Trade Desk is risky. The biggest one is its expensive reviews as it currently trades at 45 times its sales. Competition is also fierce as the big tech monsters Alphabet, Apple, Amazon, and Facebook offer competing services in their own “walled garden” ecosystems (meaning they limit the data and experience of third parties).
However, digital advertising isn’t going to be a winner-take-all situation … and The Trade Desk is one of the best ways to capitalize on the emerging trend of CTV marketing.
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2. Disney’s acquisition strategy makes it a winner
- Walt Disney (NYSE: DIS)
- Price: $ 176.02 (As of July 30, 2021)
- Market capitalization: 319.816.380.849
Advertising is absolutely prone to disruption as cable television dies, but don’t ignore content providers! Whether via traditional cable, live streaming, social media or connected TV, great content will always catch the eye. When it comes to premium content, it doesn’t get any bigger than The Walt Disney Company.
Disney’s evolution from wired to one of the largest streaming providers has not been easy. In fact, no company was more tied to the mega bundle than the House of Mouse. A decade ago, Disney’s ATM was powered by media television, including the features of ABC Broadcast and the ESPN family of networks.
In fiscal 2011, nearly 70% of the company’s operating income came from the small screen. In 2019 (before the pandemic) that number dropped to 50%.
The seeds for Disney’s reinvention began 15 years ago when CEO Bob Iger acquired Pixar, then bought iconic brands like Marvel, Star Wars studio Lucasfilm, and eventually Fox’s television and film resources (including a majority stake in streaming provider Hulu).
These transactions reduced Disney’s reliance on linear television in favor of the theater industry and streaming services. Now Disney + alone is estimated to have sales of $ 4 billion by 2022, and along with other Disney streaming services (Hulu and ESPN +), Disney is well on its way to conquering Netflix as the largest streaming provider.
Granted, Disney is still exposed to cable cutting. (Last year, as the pandemic decimated its movie and park revenues, Disney’s media networks business delivered steady returns.) ESPN is an acute cause for concern for Disney management as expensive rights deals from the NFL, NBA, NCAA and NBA cut margins have shrunk.
So yes, the company’s media networks division will be antagonistic to growth, but Disney is quick to monetize its content via streaming. Cutting wires was the greatest risk Disney has faced in decades, and the company embraced it right away thanks to Iger’s brilliant acquisition strategy. Disney is well positioned to benefit from the rise of streaming.
3. Magnite becomes a pure CTV advertising technology company
- Magnite, Inc (NASDAQ: MGNI)
- Price: $ 30.3 (As of 7/30/2021)
- Market capitalization: 0
Another investment idea: the death of television will eventually disrupt the old television marketing ecosystem.
The new, networked TV marketing ecosystem is still in its infancy, but is prepared for significant growth. Here’s why … Streaming skyrocketed in popularity because consumers were fed up with expensive cable bills. At this point, however, streaming has not fully lived up to the promise of cheaper access to content. The direct-to-consumer streaming model certainly gives viewers more choice, but comes at the expense of higher costs for users looking to repackage the traditional cable bundle.
While there are some high profile objecters, especially Disney + and Netflix, streaming services will continue to monetize content through a hybrid approach of subscription fees and / or through promotional videos on demand (AVOD).
Keeping subscription costs low is quickly becoming important in order to gain market share, which is why AVOD is becoming the industry standard. According to Digital TV Research, US AVOD sales are expected to triple between 2020 and 2026!
This is the opportunity for Magnite: The company was formed as a merger between programmatic digital advertiser The Rubicon Project and CTV specialist Telaria to help websites and video providers manage and monetize their advertising inventory.
Magnite doubled its stake in Connected TV by acquiring competitor SpotX in a cash and stock offering for $ 1.17 billion earlier this year.
The acquisition created the largest independent CTV and video advertising platform with a customer base that includes FOX, AMC Networks, A + E Networks, Discovery, fuboTV, LG, Roku, Samsung, Sling TV and Vizio.
Magnite stocks are down more than 50% from their 52-week high; some investors are concerned about the company’s propensity for acquisitions (two large acquisitions in as many years). Still, the stock is up about 450% over the past year.
Despite these exciting gains, Magnite is still only a $ 4 billion company. The stock price will continue to be volatile, but for long-term investors, Magnite could be one of the biggest winners from television’s death.