This article is part of CMO.com’s September series on the state of media and entertainment. Click here for more.
Nearly 80 years ago, the 1939 New York World’s Fair opened, hyping “the world of tomorrow." The event served as the perfect backdrop for the beginning of television content consumption, with Franklin D. Roosevelt becoming the first U.S. president to televise a speech.
Advertisers soon caught on to the opportunity for making an emotional connection with consumers via site, sound, and motion. On July 1, 1941, NBC-owned WNBT (now called WNBC) broadcasted the very first television commercial during a baseball game between the Brooklyn Dodgers and Philadelphia Phillies.
Times have certainly changed, as have television consumption habits. Cable and satellite services, streaming options, and OTT devices are now the norm. Behaviors including binge-watching and mobile viewing have become commonplace as well, as consumers continue to clamor for on-demand content.
What’s next? Matthew Anderson, CMO of streaming entertainment heavyweight Roku, shared his three predictions for the future of television with CMO.com.
Prediction 1: All-Smart TVs And A Big Move Toward Streaming
Moving forward, streaming consumption will continue to grow, as will adoption of smart TVs, Anderson told CMO.com.
The latter appears to be mimicking the evolution of the mobile phone, he said. According to comScore, it took approximately 10 years for the United States to reach 80% smartphone penetration. Similarly, we’re now just over nine years since the launch of the first smart TV, and, according to IHSMarkit, 69% of TV shipments in 2017 will be smart TVs.
Deloitte’s 11th annual “Digital Democracy Survey” also found that Millennials and Generation Z are quickly flocking toward streaming. Forty-nine percent of U.S. consumers and nearly 60% of Gen Z, Millennials, and Gen X subscribe to at least one paid streaming-video service, the survey stated.
“The challenge for marketers is how to be present and relevant as billions of hours of entertainment gets viewed this way,” Anderson said.
Prediction 2: Personalized TV Will Be The Expectation
As content recommendations become more accurate and personalized, software will essentially be responsible for shaping what programming people watch, Anderson said.
“You’ll instantly find shows you’ll like, easily continue where you left off, and know what’s trending,” he said. “Most TV will be on-demand, and appointment TV will represent fewer viewing hours. But the scarcity value of premium sports and breakout shows that must be viewed live will be enormous for programmers and marketers alike.”
Think about it: As TV becomes more of a data-driven business, it also will become a much more measurable environment for marketers, “bringing all the brains of digital together with the beauty of TV,” Anderson said. He expects that programmers will do things like customize trailers for a range of viewer segments based on what is most likely to pique their interest in new shows.
Additionally, rather than simply exporting hit national shows, expect a huge rise in original content developed for regional and international audiences, he said.
Anderson pointed to the Netflix show “Narcos” as a great example of original programming developed with a large international and U.S. audience in mind. In addition, streaming services such as Yupp TV, which specializes in South Asian content, are making it much easier to view local programing outside the initial market.
Prediction 3: More Free, Ad-Supported Content
The TV is still the primary screen for viewing video in the home, Anderson said. According to data from Nielsen’s Total Audience Report, viewers 18 to 34 years old watch six times more video on OTT devices on average per week than on their mobile phones. The report also found that this demographic spends 10% less time watching traditional TV each week YOY. Meanwhile, TV-connected devices have grown 2% in the same time period.
For that same group, viewing on OTT devices has gone up 7% YOY, while traditional TV viewing has declined 7% YOY. In addition, the number of “cord-nevers” is growing. According to Parks Associates, 12% of 18- to 24-year-olds said they never had paid TV and were not likely to use a paid TV service. Additionally, just under half of Roku customers don’t have cable or satellite, Anderson said.
“As cord-cutting continues, OTT viewing will increase with more free, ad-supported content being viewed,” he said. “This opens the door for massive innovation in TV advertising.”
Deloitte’s research confirms that this trend is already starting to come to fruition. In fact, despite the growth of paid streaming services, U.S. consumers still spend more time streaming video via free services (40%) than paid streaming subscriptions (35%).
Anderson believes that eventually all TV content will be available through streaming. “And, as a result, we also believe this presents a large market opportunity for streaming TV advertising,” he told CMO.com. “There is already a growing audience of younger generations that marketers can no longer reach on linear TV.”