It's no longer a question of whether TV networks will be available on an à la carte basis through streaming-video services, but how powerful those services will get.
Everyone from satellite companies to tech players to TV networks are devising ways to make TV programming more attractive to younger viewers who aren't seduced by traditional cable bundles with bloated offerings and bills to match. The result is a sudden flurry of products -- including Sling TV, HBO Now and CBS All Access -- that threaten to undermine the traditional TV model. While it's still early going, the new services are already requiring marketers to reexamine how they advertise on TV.
Here's what CMOs need to know to prepare for advertising in an "over-the-top" world.
|CONTENT||PRICE||HOW TO ACCESS||ADVERTISING|
|SONY'S PLAYSTATION VUE||Up to 85 channels, including CBS, Fox, AMC, TBS and USA. Live and on-demand content currently available in New York, Chicago and Philadelphia.||$49.99 to $69.99 per month||PlayStation 4 and PlayStation 3||Same commercial breaks and national ads as linear TV channels delivered via cable or satellite TV service.|
|DISH NETWORK'S SLING TV||Basic package includes 19 channels, such as ESPN, AMC, A&E, TNT, TBS, CNN, Food Network and Disney Channel. HBO available for $15 extra. Broadcast networks not available. Live and on-demand content.||Starting at $20 per month||Roku, Xbox One, Amazon Fire TV, Android phones and tablets and iOS phones and tablets||Same commercial breaks and national ads as linear TV channels delivered via cable or satellite TV service. Sling is also testing dynamic ad insertion.|
Launch: Slated to bow this summer
|20 to 30 channels, including Viacom networks and new shows from YouTube network AwesomenessTV||TBD||TBD
Initially only on mobile devices
|The service will reportedly include 25 channels, including ABC, CBS and Fox.||$25 to $35 per month||Limited to iOs devices||TBD|
Launch: This month
|HBO series and movies, as well as a Vice channel||$14.99 per month||Apple devices and Cablevision Optimum Online subscribers||Ad-free|
|CBS ALL ACCESS||Live and on-demand access to most current CBS programming as well as a library of older content. NFL is not included.||$5.99 per month||CBS.com and CBS app through Apple and Android||Current seasons of shows will have full ad load; prior seasons of shows will have 25% less commercial time; older CBS classics will be available ad-free.|
|NICKELODEON'S NOGGIN||Aimed at preschoolers, the platform includes older Nickelodeon and Nick Jr. shows.||$5.99 per month||iPhone, iPad and iPod Touch||Ad-free|
Launch: Fourth quarter
|Original comedy series and some NBC Universal programming||About $3 per month||TBD||Will likely be ad-free.|
|WWE NETWORK||Live WWE events and on-demand wrestling content||$9.99 per month||Roku, PlayStation, Xbox One, iOs, Android, among other devices||Commercials air in between live-streamed programming; one ad is served for every fourth stream of on-demand content.|
The term refers to delivering content over the internet instead of through cable pipes or satellite signals. OTT offerings include direct-to-consumer services from individual networks like HBO (HBO Now) and CBS (CBS All Access) that don't require a pay-TV package, as well as slimmed-down multichannel TV services from the likes of Dish Network (Sling TV) and Sony (PlayStation Vue).
While most providers are keeping mum on just how many people have signed on to these services, Sling TV reportedly has about 100,000 subscribers, while CBS CEO Les Moonves says All Access boasts even more than that.
The goal of OTT is to reach the approximately 10 million broadband subscribers who do not also have pay-TV packages. These viewers tend to be younger consumers who advertisers may currently struggle to reach on TV. The age of the audience for CBS All Access, for example, is in the high 30s to early 40s, according to Marc DeBevoise, exec VP-general manager, entertainment, sports and news, CBS Interactive. That's younger than the traditional broadcast-TV audience.
Providers are also balancing the innate risk that these services will encourage pay-TV subscribers to cut the cord. To combat this, there may be a limit to just how many people can sign up for some platforms.
Dish's agreements with content owners limit Sling TV to 2 million subscribers, Discovery Communications CEO David Zaslav said at a media conference last month.
The services that include advertising are for the most part simply airing the same commercial load and national spots that appear in the linear TV feed. Some, like Dish Network's Sling TV, are experimenting with dynamic ad insertion, which allows ads to be swapped out.
Moving forward, however, the web-based model presents new opportunities for advertisers who have been limited by linear TV, like shorter commercials and interactive ads.
CBS All Access reduced its ad load by 25% for on-demand viewing of episodes of current series. Mr. DeBevoise said the network felt comfortable with the lighter load because the platform provides access to more detailed viewing data, allowing CBS to better deliver on advertisers' targets.
Ultimately, the hope is these services will give marketers a much clearer picture on who is watching and what they are watching, allowing them to more efficiently reach their desired audiences and tailor messages to individual viewers.
All this means marketers need to start better understanding their core audiences and get their data in order right now. While viewers will likely become even more fragmented in the new video ecosystem, a deep knowledge of consumer targets should help marketers better reach the consumers who are actually inclined to purchase their product.
Marketers can also start adopting a native advertising mindset. Since it's not clear exactly what the ad models will be in an OTT world, with some services excluding ads, Cynthia Machata, managing director-digital strategy, Initiative, said advertisers need to find ways to get their messaging embedded in the content.