In an era where technology is continuously reshaping consumer behavior, the television industry is undergoing a significant transformation. The once-dominant linear TV, defined by scheduled programming accessed via satellite or cable networks, is witnessing a gradual decline in favor of digital alternatives. According to eMarketer’s March 2024 forecast, linear TV ad spend is expected to reach $58.99 billion this year. However, this figure is on a downward trajectory as streaming platforms gain more ground.
Linear TV, traditionally composed of over-the-air (OTA) and pay TV, has been the cornerstone of television viewing. OTA TV, the free broadcast television accessed through an antenna, still maintains a significant audience with 39.9 million US adults, or 14.9% of the population, tuning in as per the February 2024 forecast. Major TV stations such as CBS, NBC and ABC offer OTA channels, continuing to provide a no-cost option for viewers.
Pay TV, often synonymous with cable TV, encompasses TV bundles and digital live TV services. In 2024, it’s projected that 157.1 million people will be pay TV viewers. This audience is segmented between traditional pay TV viewers, numbering 111.1 million or 41.5% of the US adult population, and digital pay TV viewers, which stand at 46 million or 13.4%. The landscape within pay TV is shifting with a decline in traditional cable bundles and a rise in digital pay TV viewership, highlighting the growing appeal of virtual multichannel video programming distributors (vMVPDs) such as YouTube TV, Hulu + Live TV and Sling TV.
Parallel to the evolving dynamics of linear and pay TV is the ascent of streaming. Defined by on-demand programming delivered via the internet, streaming platforms are carving out a substantial niche within the advertising sphere. The US subscription over-the-top (OTT) advertising spend on connected TV (CTV) is set to soar to $9.48 billion this year, marking a 31.1% increase from 2023. This surge is indicative of the shifting preferences towards ad-supported video on demand (AVOD) services like The Roku Channel and Netflix Basic with Ads, as well as subscription video-on-demand (SVOD) platforms such as Netflix. Moreover, an increasing number of services are embracing a hybrid model through ad-supported SVOD, blending the best of both worlds.
An emerging trend within the streaming domain is free ad-supported streaming television (FAST), offering content over the internet without any subscription fees. Platforms like Pluto TV, The Roku Channel and Tubi are leading this trend, providing an alternative to traditional and digital pay TV models.
The transition from linear to digital reflects broader shifts in media consumption patterns, driven by the desire for more flexibility, personalized content and the convenience of on-demand viewing. Live sports events and significant news occurrences, such as the Olympics and the US presidential elections, continue to bolster linear TV viewership temporarily. Yet, the overarching trend suggests a gradual move towards digital platforms.
For marketers and advertisers, this transition presents both challenges and opportunities. The fragmentation of the television audience across various platforms necessitates a more nuanced approach to ad placement and content strategy. Advertisers must adapt to the changing landscape, leveraging data analytics to target audiences more effectively and crafting content that resonates across different viewing platforms.
As we look to the future, the television advertising ecosystem is set to become increasingly complex, with a blend of linear, digital and streaming formats coexisting. The key to navigating this new terrain will be flexibility, innovation and a deep understanding of evolving viewer preferences. The shift from linear to digital is not just a change in technology but a reflection of a broader transformation in how we consume media, shaping the future of advertising in the television industry.
Graph provided by eMarketer.com
