The future of linear TV channels in an on demand world: Presentation for Teleste| September 2020
Information Classification: General
© 2020 OmdiaPage 2
The end of the 500-channel universe?
Netflix (in Long Term View):
‘Now internet TV - which is on-demand,
personalized, and available on any screen
- is replacing linear TV.’
John Hendricks, founder of Discovery and
CuriosityStream, at NATPE in January
2020: ‘There will only be 40 channels in
the US, mainly showing news and sport.
All other content will be on demand.’

Online subscriptions will overtake pay TV this year
© 2020 OmdiaPage 3
• Pay TV has hit a plateau, while SVoD
is continuing to grow
• On demand has grown fast: Netflix
Watch Instantly launched in 2007,
Netflix and Amazon Prime Video
switched on globally in 2012
• Traditional media companies around
the world are following their lead and
launching D2C
0
200
400
600
800
1,000
1,200
1,400
1,600
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024Millionunits
Online video subscriptions Pay TV subscriptions
Source: Omdia

Cord-cutting has caused a steady decline in the US channels market
© 2020 OmdiaPage 4
Leading groups forecast to lose 12% of domestic subscribers in next five years
-
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
US pay TV subscribers (millions)
Disney Sony ViacomCBS NBC Turner Fox Corporation HBO Fox Viacom

The challenge for the studios
© 2020 OmdiaPage 5
Hollywood studios have evolved into channel-owning businesses
c
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Networks Filmed entertainment Parks, Experiences and Products
US media companies: 2019 revenues by segment (%)• Cable TV allowed major studios to exploit their libraries
to launch thematic channels
• Relaxation of ‘fin-syn’ rules in US meant they could also
own broadcaster networks
• Growth of pay TV in international market saw US groups
export channel brands worldwide
• Channels have brought new revenue streams from
advertising and subscription
• There are now no major studios which don’t own
channels (though size varies widely)

But studio responses to Netflix have so far varied in strength…
© 2020 OmdiaPage 6
Competition
Disney
Ended output deals with Netflix
Acquired its own streaming platform
Launched D2C: ESPN+, Disney+, Star
(in 2021)
Closed some linear channels
Co-operation
Sony
Still producing and selling content
to Netflix (worldwide rights to
Seinfeld)
Does not have own D2C platform
Hedging their bets
Warner Media, NBC, ViacomCBS
Warner and NBC ended Netflix output
deals
D2C platforms have advertising
element
ViacomCBS producing for Netflix

© 2020 OmdiaPage 7
TV and online companies are increasingly competing for the same
funding
Funding sources Public
broadcasters
Commercial
broadcasters
Pay channels Platforms Studios
Public Yes No No No No
Advertising Yes Yes Yes Yes Yes
Subscription Yes Yes Yes Yes Yes
Content Yes Yes Yes Yes Yes

Exclusive content has become the key battleground
© 2020 OmdiaPage 8
• Netflix and Amazon investment in originals
• Global platforms which are amortising
their spending across the world
• We expect Netflix to spend $12.3 billion
on content in 2020
• Arrival of big-spending online platforms
has sparked increase in original content
worldwide
• All US D2C platforms, Facebook and Apple
making original content
• This is on top of traditional media: US
networks continue to invest in refreshing
their schedules every season
0
500
1,000
1,500
2,000
2,500
3,000
2012 2013 2014 2015 2016 2017 2018 2019
Original first-run productions on SVoD platforms
(hours)
Netflix Amazon

How about the rest of the world?
© 2020 OmdiaPage 9
• Local players with local
content are usually
market leaders
• Legacy terrestrial
broadcasters still
aggregate large
audiences
• Pay TV operators and
telcos moving into TV
• Local platforms
entering SVoD
• International DTC
brands will tailor their
approach to the market

TV channel reach (free and pay TV) remains far bigger than D2C
© 2020 OmdiPage 10

How about the rest of the world?
© 2020 OmdiaPage 11
• Traditional media
players are pursuing
diversification strategy,
boosting production
and distribution and
launching D2C services

The worldwide pandemic has seen linear TV viewing boosted
• Short-term phenomenon with people stuck at
home
• But underlines continuing ability of news events
and sport to command mass audiences
• Hiatus in production of scripted series will see
resurgence of formats
• Live entertainment franchises have become a
key part of TV
Western Europe: TV viewing lockdown comparisons March 2019-2020
© 2020 Omdia
Notes: TV viewing includes: Linear, TSV & Catch-up.
Week number adheres to the ISO-8601 standard.
Source: Omdia. Reference: Spain: Kantar, Italy: Auditel, Germany: AGF, France: Mediametrie, UK: Barb, NL: SKO
30.2% up
(Week 13)
20.5% up
(March)
21.9% up
(March)
8% up
(March)
34.1% up
(March)
8.6% up
(March)

Conclusion
• We will see a reduction in number of linear TV channels in our forecast period,
especially with genres which can be timeshifted
• There is an oversupply of channels with the pay TV market shrinking
• However, while Disney is closing channels in favour of D2C service, other studios are
not pursuing the same strategy
• Traditional media companies will continue to operate linear channels
• But they will also continue to diversify to control content and reach viewers online

Thank you!
Tim Westcott
askananalyst@omdia.com

The future of linear TV channels in an on-demand world

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