According to Reed Hastings, CEO of Netflix, linear television is in its last decade. After the end of analog television in France in 2011, linear television (DTT, satellite and cable) may also disappear soon. Why? The rise of online streaming services: OTT, VoD, pay-per-view, smart TVs… In addition, 2022 will mark the abolition of TV licence fees in France. But can we really announce the end of this traditional media? Will streaming supersede television?
Streaming services VS linear television
To answer these questions, a little background is necessary. In the 1970s, only 1 in 10 households owned a television. However, this innovation was a real success, as only ten years later, 9 out of 10 households had one. Forty years later, television is now part of daily life for many of us. However, the number of users has dropped slightly from 2019.
Online streaming has become possible thanks to the access to very high speed internet in homes, and has gradually become part of viewers’ routines. Shortcuts can be found in the main menu of most TVs today, and even on remote controls. In 2020, 8.3 million people watched content through a video-on-demand (VoD) service every day. That’s almost twice as many as in 2019 when the same study counted 4.5 million users. These platforms allow you to watch the latest movies and series without having to follow a set schedule. Whereas linear television forces viewers to be on time to watch their favorite TV shows.
What about fees?
Online streaming services can be divided into two categories: paid platforms without advertising (VoD, OTT, Set-Top Box) and free platforms with advertising (Catch-up TV). In France, the average budget for these paid services is €15.20 per month. This expense varies mostly by age. From €14.70/month for the youngest (15-24 years old) to €19.90/month for those over 50 years old.
Regarding TV, the Senate recently voted to abolish the audiovisual fee of €138/year (€88 overseas). For some, the end of this contribution to public broadcasting goes far beyond the end of alternative financing for France Télévisions, Radio France, Arte France, France Médias Monde, TV5 Monde and the INA… It is also the end of an era when public multimedia is no longer the majority on our screens.
Time spent in front of the television
According to the SNPTV (National Union of Television Advertising), a 2021 study shows that the time spent on SVoD programs is still much less than that of TV channels, with 3 hours and 58 minutes compared to only 49 minutes for online services. However, 8 out of 10 people in France browse video sites and applications every month. In addition, 14.2% of people watch videos on these platforms every day. As a result, this number has increased by 89% in one year on all screens.
Netflix, Disney+, Amazon Prime Video, OCS… are also adopting a “user-centric” strategy. In practice, the user’s choices are studied in order to suggest the programs that are most adapted to their preferences. A strategy that linear TV is not yet able to implement.
For TV channels, streaming services are their first competitors. A few years ago, online streaming platforms had already worried the movie industry. In 2017, two films (Noah Baumbach’sThe Meyerowitz Stories and Bong Joon Ho’s Okja) were not screened in theaters but were still shown at the Cannes Film Festival. A first for this ceremony. Nevertheless, in early 2022, an agreement was established between Netflix and the French cinema industry. The latter has reduced the distribution of films on the platform from 36 months after their release to only 15 months.
- See the article: A new media chronology for 2022
What Netflix has to say
Netflix recently released its second quarter results for the year. In France, since the launch of the platform in 2014, the trend has been more towards “Netflix and Chill”. As a result, the number 1 streaming service has passed the 10 million subscribers mark in France. It was during this publication that the co-founder of Netflix took the opportunity to predict the end of linear television. According to Nielsen (a research firm dealing with audience insight, data and analytics), in just one year, Netflix’s share of the U.S. TV audience will grow from 6.6% in 2021 to 7.7% in 2022. An impressive progression with the result that its share is now equivalent to the two most watched American TV channels combined, CBS and NBC.
These encouraging numbers for Netflix led to one conclusion for Reed Hastings: “Everyone is pouring in. It’s definitely the end of linear TV over the next five, 10 years.” Ted Sarandos, Netflix’s co-CEO and chief content officer, added, “Our biggest hits have all come out in the last 12 months, which is a phenomenal sign of progress.”
Although Netflix remains the world’s streaming leader, the report shows that the platform lost as many as 970,000 subscribers in the second trimester of 2022. This loss is in addition to the 200,000 people who unsubscribed in the first quarter. However, the American giant anticipates the gain of one million subscribers after the implementation of advertisements. The arrival of advertising on streaming services is nevertheless close to the way linear television works.
Ross Benes, an analyst at eMarketer, says: “They are facing market saturation […]. They will continue to test different levers such as advertising, video games and password sharing restrictions to improve their revenue.
How TV channels are fighting back
However, television remains a major traditional medium and is still the number one means of communication for news and entertainment with many live events. The programs broadcast are increasingly available to watch in replay or “catch-up”. They can generally be viewed on different devices, such as your TV, smartphone, tablet or computer.
In addition, TV programs are streamed continuously. Something that Netflix cannot, for the moment, offer. That’s why many users turn on their TVs to have a little background noise.
To counteract the threat of online streaming services such as Netflix, Disney+, Prime Video, etc. the French TV channels France Televisions, TF1 and M6 have created Salto, a new streaming platform. Released at the end of 2020, it is intended to be “absolutely essential for French content ” according to Thomas Follin, founder of Salto. This service has been created to meet this new trend while cohabiting with the television format.
However, will the exclusive programs on the TV channels remain television-specific? Remember that the French Open was, for the second year in a row, broadcast on Prime Video. The MLS (Major League Soccer) sports competition is broadcast via the Apple TV+ application.
In any case, linear TV and online streaming services will have to coexist for a few more years. But until when? To be continued…