Global TV ad market to cross $200bn mark
Television business model is under pressure from likes of Netflix, Amazon Prime and Google’s YouTube
Viacom in Times Square, New York City. Stock prices of media companies have dropped as consumers cut back on traditional media usage and turn to internet-based entertainment. Photograph: Andrew Burton/Getty Images
Media stocks in the United States endured a two-day rout on Wall Street last week, triggered by Disney’s comments about falling subscriber numbers at its sports cable network ESPN, but it was concerns about the long-term trend for television advertising that prompted the likes of Nickelodeon-owner Viacom, Time Warner and Twenty-First Century Fox to take a bath.
But, while the US television advertising market might be under pressure from the likes of Netflix, Amazon Prime and Google’s YouTube, among others, global television advertising revenues are still likely to continue to grow over the next five years, according to a forecast by analysts Ovum.
The $174 billion generated by TV advertising in 2014 will increase to $224 billion in 2020, predicts Ovum, which says this testifies to the medium’s enduring strength at a time when it is being challenged on multiple fronts.
“While digital advertising is providing strong competition to TV, the established TV players are innovating and countering threats that would otherwise have led to a much greater level of revenue cannibalisation,” says Adam Thomas, Ovum’s lead analyst for global TV markets.
For reach and impact, there is still nothing that beats TV. But those plummets in media stocks didn’t come from nowhere. The threat from digital is “significant and persistent”, Thomas adds, and its impact is being “keenly felt in the more mature digital advertising markets such as the US”.