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Free-to-air television (FTA) networks saw a temporary increase in audience numbers during COVID-19, but revenue was detrimentally impacted as marketing budgets contracted across much of the sector. While the recovery of revenues began in late 2020, the ongoing fragmentation of audiences across FTA, Broadcast Video on Demand (BVOD) and Subscription Video on Demand (SVOD) continues to create a competitive environment for viewers' attention and advertising revenue.
The FTA television networks sustained, and in many instances grew their audience across the period of the 2020 bushfires and throughout COVID-19. In April 2020, viewing of linear news and current affairs programming was up 79 percent compared with the previous year.1 However, the time that consumers had to trial other forms of screen entertainment during lockdown, whether it was gaming or streaming video, meant that the FTA sector emerged from the pandemic into an even more competitive landscape in which the competition for audience, let alone revenue, was even more challenging.
The total FTA advertising market declined -9.8 percent in 2020 due to a significant contraction in marketing budgets. Within this number, linear TV revenue declined -12.1 percent to A$3.1 billion, whereas BVOD offset some of this contraction with growth of 38.8 percent on the prior year, with a revenue contribution of A$229 million.
Looking ahead, the total market is expected to return to growth in 2021, followed by a CAGR of 2.5 percent based on the midpoint forecast scenario. Linear TV will see a CAGR of -0.7 percent to 2025, whereas BVOD continues to be the growth engine for the networks with a CAGR of 32.7 percent to 2025.
At the end of 2020, the gradual return of sports to a more normalised format and schedule assisted in driving stability in ratings for the networks.
Viewership was boosted at the end of 2020, with the AFL Grand Final in October achieving a total audience of 3.9 million 2 for Seven, and 1.9 million3 achieved by the Nine Network in November for the State of Origin deciding game.
Despite the challenges of some sporting codes moving from FTA to paid subscription services, and the postponement of events due to the pandemic, the gradual return to a more normal format and schedule saw a steadiness in viewership for the networks - with overall AFL viewership up 0.2 percent year-on-year, though NRL did shed 3.5 percent of its audience. 4 This stability was seen in early 2021, though there was a short term change as the Australian Open - a tentpole in scheduling - was moved from January into February.
Supplementing the return of sports, the networks further developed their secondary channels with ongoing repositioning and refinement of content to viewers and advertisers. With the advent of connected television and increased use of digital guides, having a clear value proposition in the secondary channels is critical to keep audiences within the network stable.
Broadcast Video on Demand (BVOD) continues to experience strong consumption, however growth is expected to taper within the forecast period.
While linear TV suffered significant revenue decreases across the networks in 2020, it was partially offset by the growth in BVOD which grew 38.8 percent to A$229 million, albeit from a much lower base. This growth was spurred by increased audience demand during the lockdowns coupled with advertisers increasingly accessing BVOD inventory via programmatic buying platforms - which offers advertisers flexibility, a differentiator compared to linear TV. It is expected that advertising buyer demand for BVOD inventory will continue to grow over the forecast period, offering an offset to the longer term lack of growth expected in linear TV.
According to industry body ThinkTV, average total monthly hours consumed on BVOD increased 39.9 percent year-on-year for the period July to December 2020, however consumption across screen types remained consistent with the first half of the year. Top performing programs included SAS Australia, Bachelor in Paradise, Farmer Wants a Wife, The Block and The Undoing. 5
The pressure applied by the growth of streaming services had a major impact on the whole media landscape in 2020 and into 2021.
The improved content libraries, user experience and range of programming saw Australia become one of the most competitive SVOD markets in the Asia Pacific region. The increasing competition for audience was exacerbated by the talkability and social currency of many SVOD shows and may have been a key driver in changing people’s television viewing routines. Equally, as more people purchased connected televisions, it is clear that the biggest screen in the house is no longer the exclusive domain of linear TV, but rather an extension for all services also including, BVOD, SVOD, Premium Video on Demand (PVOD) and other forms of online video such as YouTube.
Audience measurement is of increasing importance in helping advertisers better target consumers.
OzTAM has invested in expanding its audience measurement to include online ratings across connected devices in recent years. In September 2020 the company introduced connected TV data to its Video Player Measurement reports. OzTAM stated that viewing via connected TV sets accounts for around half of BVOD consumption, leaving a large proportion previously unreported. Such developments could help advertisers better target consumers via online video and exacerbate the shift away from linear TV advertising spend. The Australian market is awaiting the long-promised launch of OzTam’s Virtual Australia (VOZ) reporting platform. This reporting has been delayed a number of times in recent years but, due in June 2021, is purported to offer Australia’s first national picture of total, de-duplicated audience television viewing across both TV and connected devices.
Revenue for television networks, as measured by SMI, recovered well in the first quarter of 2021, although audience declines pose a challenge for the networks as competition for attention increases.6
Ongoing debate regarding how television ratings are issued (nightly versus weekly) and measured comes at a time when the market awaits the launch of VOZ.
In June 2021, Seven West Media announced its decision to stop disclosing its advertising revenue to ThinkTV, Australia’s TV industry body.7
Access to sports rights will continue for FTA networks, with the Australian Government delaying expiration of the anti-siphoning list until 2023.8
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