Free-to-air television

Executive summary

2020 has been a challenging year for broadcast television, adjusting to a rapidly changing and volatile advertiser and viewing schedule driven by COVID-19. Sport, a key driver of the free-to-air television (FTA) schedule, was significantly impacted in 2020, and restrictions meant that production elements of key shows and international dramas were impacted or placed on hold.

The accessibility and trust placed in broadcast TV brands meant that despite these challenges, viewership remained strong throughout COVID-19, particularly for news and local reality programs. Sport once back on air has also engaged audiences, despite the many changes to both the schedules and format. Advertising revenue was not able to match this viewing trend as a result of advertisers going off air and shrinking marketing budgets overall to combat COVID-19 business impacts.

Overall, the total FTA advertising market declined 4.6 percent in 2019 followed by a 13.9 percent forecast decline in 2020 based on the mid-point forecast scenario. Broadcast Video on Demand (BVOD) remains a key growth driver and is continuing to experience strong growth in consumption overall, resulting in a 27.5 percent increase in forecast advertising revenue in 2020 based on the mid-point forecast scenario.

COVID-19 will continue to impact broadcast television into next year in terms of content and sport schedule and related viewership patterns. Allowing for COVID-19 scenarios, and for structural headwinds, Linear FTA advertising revenue is forecast to decrease 2.48 percent CAGR to 2024 based on the mid-point forecast scenario. BVOD will offset this decline, and is forecast to increase 24.87 percent CAGR to 2024, resulting in a total broadcast television market CAGR of -0.41 percent based on the mid-point forecast scenario.

Forecasts at a glance

Linear TV Market (A$ millions)

*2015 - 2018 figures have been updated to reflect recently available market information

CAGR 2019-2024 based on gradual recovery trajectory

Linear TV     -2.48%

 

Broadcast Video On Demand Market (A$ millions)

*2018 figures have been updated to reflect recently available market information

CAGR 2019-2024 based on gradual recovery trajectory

BVOD   24.87%

 

Total free-to-air (FTA) advertising market (A$ millions)

*2015 - 2018 figures have been updated to reflect recently available market information

CAGR 2019-2024 based on gradual recovery trajectory

Total TV  -0.41%

 

COVID-19 drove increased FTA viewership at the beginning of the pandemic, driven largely by news content.

Television grew as the primary medium for news consumption amongst Australians during COVID-19, with 51 percent55 of Australians citing the medium as their “main source of news”, up from 39 percent prior to the pandemic. FTA saw an 11 percent56 increase in audience consumption in the week commencing 16 March 2020, coinciding with the Federal Government’s initial announcements to place restrictions on outdoor and indoor non-essential gatherings, and this viewing pattern for news has continued across the pandemic.

Average weekly cumulative reach of Linear FTA (including subscription TV) for the period January to June 2020 was extensive but relatively flat year-on-year, with 18.42 million Australians reached weekly, slightly down from 18.75 million during the same period in 2019. However, people spent more time with the medium during the same period, with the total hours consumed on FTA (linear) for the same period growing 2.2 percent year-on-year.

It is important to balance these trends against an environment of significant schedule disruption caused by live sport going off air, a mainstay of the schedule for the Seven and Nine Networks, with winter sporting codes particularly impacted. Viewing and advertiser support has rebounded as the codes have come back on air.

Competition continues to rise from other in-home entertainment services such as Subscription Video on Demand (SVOD) services particularly in drama and the streaming services increase in reality programming content is to be watched closely. Equally challenging is the competition from other video offerings from social media platforms including Facebook, Instagram, TikTok, Twitch and Youtube.

BVOD has experienced strong consumption growth year-on-year, driven primarily by the continued popularity of reality show formats.

The average total monthly hours consumed on BVOD increased 30.9 percent year-on-year for the period January to June 2020. Consumption increased on all devices (mobile, PC/Laptop, Tablet, Connected TV), but this was most notable on Connected TVs, which saw an increase of 55 percent from the same period year-on-year.57 58

Top performing shows on BVOD include reality television franchises such as Married at First Sight, Masterchef, Love Island and Big Brother.59

Despite strong audience results for FTA, ongoing pressure on advertising budgets - accentuated by COVID-19 - has driven a forecast 13.9 percent decrease in total advertising revenues for the sector in 2020 based on the mid-point forecast scenario.

Linear TV advertising revenue declined in 2019 to A$3.489b and is expected to contract more rapidly in 2020 due to COVID-19 to A$2.934b. Linear TV accounted for 95.5 percent of overall TV advertising revenue in 2019 but as a result of forecast decline to 2024, and the parallel growth of BVOD, is predicted to account for 86.0 percent of the overall television market in 2024 based on the mid-point forecast scenario.

Future growth will depend on the BVOD platforms’ ability to offset declines in FTA audiences, and the networks’ ability to monetise these audiences.

As consumers’ choice of on-demand video content rapidly increases, and off the back of the acceleration of digital behaviours as a result of COVID-19, the BVOD services’ continued investment in both their content catalogues and platform usability will be key to future growth. We expect to see the BVOD market in Australia continue to mature, with new content and series being added to the platforms to fill the catalogue as the market continues to converge and compete with SVOD offerings.

As consumption grows and the product matures, we expect to see the continued increase in BVOD advertising revenues at a CAGR of 24.87 percent. Advertising on the BVOD platforms has brought new opportunities for advertisers to buy commercials based on location and demographic data, with user sign-on profiles often required to log in and view free content online. This has allowed the TV networks to sell their inventory in the same way that online inventory is sold, thus allowing it to more effectively compete with advertising budgets that have migrated online.

As the consumption of BVOD services continues to rise, the ability to buy and measure total television consumption - across all platforms and screens - will be increasingly important to advertisers.

The industry has announced the development and release of two tools to facilitate ease when buying and measuring consumption across screens, which are critical to the future growth of the sector. Nielsen and OzTam are working together to launch Virtual Australia (VOZ), a measurement tool which seeks to measure TV viewing across all screens, and as a result, provide both linear and online ratings with demographic data across all connected devices. VOZ released its first data set in February 2020, and has stated that daily data will be available from late 2020.

In December 2019, the television industry announced that VOZ data will feed into 9Galaxy technology to power a Demand Side Platform (DSP). This will provide media buyers with the opportunity to buy and optimise reach across television content on all platforms and screens, including FTA, BVOD and live streaming. The technology is expected to be released to the market in mid-2021.

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