From Millennial to the Mainstream: Four Fast Facts about OTT, Connected TVs & the Cord-Cutting Revolution
OTT isn’t just for the kids anymore.
By the end of 2019, it will be almost impossible to buy a “dumb” television.
Video has moved from the TV to the computer to the phone and now coming full circle back to the television sets around the world.
We’ve compiled a few fast facts about the proliferation of connected TVs and OTT programming to show why leading media companies are turning back to the tube to help grow their audience and monetize their shows and content.
Fast Fact #1: 74% of American Households have a Connected TV
A 2018 study from Leichtman Research Group showed that 74% of American households had at least one connected TV.
With smart televisions becoming the default, cutting the cord is no longer just for millennials, but instead has gone mainstream. With linear cable subscriptions averaging between $85 and $100 per month, it’s no wonder that Americans increasingly turn to OTT apps to watch their favorite content.
Subscription, or SVOD, services will create the next generation of “skinny bundles” with premium content subscriptions like Netflix, Hulu, HBO, and the newly announced Disney+ service.
Fast Fact #2: By 2022 55.1 Million People Will “Cut the Cord”
According to eMarketer, and a lot of outlets who reported on it, linear TV is going by the wayside. With the quality of streaming apps now on par with traditional cable distribution, people are “cutting the cord” or canceling their cable subscriptions at record numbers.
The same reporter from eMarketer goes one step further and predicts cord-cutting will grow more than 30% this year alone. As an indicator of the speed with which this change is happening, this is also the second time they’ve increased their growth projection in less than a year - and there’s no sign of slowing.
So it’s no question that the next generation of digital video will happen on the television set, but where does advertising fit in? Well, that’s where our next Fast Fact comes in...
Fast Fact #3: 74% of Ad Buyers Will Increase Their Spend on Connected TVs in 2019
Advertisers see this shift happening in mass. Almost three-quarters of advertisers surveyed by Digiday Research said they would increase their spend on connected TVs in 2019.
With the average annual U.S. income $56,500 there is an incredible opportunity for a variety of advertising-led, or AVOD, content creators to thrive. With advertising CPMs for connected TVs in the mid-$20s range, media companies are looking at much higher rates than for desktop and mobile. We’ve already seen some media companies making their AVOD bets - most recently with Viacom’s $340 million acquisition of PlutoTV - an advertising-funded live-streaming service.
With more traditional linear television breaks, and the ability to more accurately reach and segment audiences, there is an incredible opportunity for linear television to come to digital in a real way. With long-form content being consumed in the traditional “lean back” setting that was lost with much of desktop and mobile viewing.
Fast Fact #4: 24% of the U.S. Population 18-35 Never Owned Cable TV
Finally, there is an entire segment of the population from younger millennials to Gen Z that are “cord nevers.” These are the children of cord cutters and have never had a classic television set in their house where they had to wait for an upcoming show - everything was already on demand!
They look at services like Netflix, Hulu, HBOGo, Sling, etc. as their entry point for video content.
By building a brand today on devices like Roku, AppleTV, Amazon Fire, and Chromecast, media companies will be able to break through to a generation of consumers who never had to scroll through the TV Guide.
A recent example of this is Cheddar who has distributed themselves across every major digital channel including spaces like Twitch for specialized content. Their ability to cast a wide net has positioned themselves nicely for reaching a younger demographic that advertisers are increasingly trying to get in front of.
What it All Means
For those media companies who have not built for OTT there’s no time like the present. While many of these trends are taking flight you’re not too late!
Join the OTT revolution because what was once millennial is now mainstream in 2019. Get in touch to see how we can help if you’re ready to make the jump into OTT.