MIPCOM: Free TV Alive and Kicking Despite SVOD Boom

Michael Parmelee/CBS
'FBI: Most Wanted'

Strong sales and rising ad rates belie the streaming hype: “Reports of the death of free TV are greatly exaggerated.”

This year all the hype at MIPCOM, the world's largest television market, was around streaming.

The imminent launch of new SVOD services Apple TV+ and Disney+ — to be followed next year by WarnerMedia's HBO Max and NBC's Peacock — dominated panel discussions, background interviews and idle cafe chatter in Cannes as the global TV industry prepares for many think will be a seismic shift in their business.

But behind streaming's tech dazzle, the more mundane business of buying and selling TV shows to ordinary linear networks continued. In fact, that business was bigger than ever.

“Streaming is sexy, I get it,” noted one U.S. network exec when asked yet another question about the impact of SVOD on his bottom line. “But, the fact is, the bulk of our business is still in traditional TV, free and pay. And that's not going away.”

This year's upfronts — the annual New York event where free-to-air and pay-TV networks present their new shows to advertisers — was a resounding success. Most of the big players — including Fox Corp, NBCUniversal and Viacom — reported double-digit growth in CPMs — the cost per thousand viewers reached channels charge that advertisers and the currency of ad-driven TV. It is part of a four-year upward trend, suggesting that any obituaries for traditional TV are a bit premature.

“Reports of the death of free TV are greatly exaggerated,” said Rob Clark, director of global entertainment at production giant Fremantle (American Idol, The X Factor). “I see no evidence of that. If anything the market is particularly vibrant at the moment. I can't remember a time where there is more demand for programming from big, free-to-air broadcasters.”

TV audiences are flatlining, or shrinking, in many of the big markets worldwide but, following the U.S. lead, where this decline has been most pronounced, advertisers are doubling down on the networks, betting they are the only players left standing that can still reach a mass audience.

Max Conze, the new CEO of German broadcast giant ProSiebenSat.1 has been active in the digital space — in June the company launched VOD platform Joyn, a joint venture with Discovery. But the service is ad-supported, not a subscription model a la Netflix or Disney+.

“That’s not the fight we are in. I’m not in the Disney+, Netflix, Amazon fight,” Conze told reporters at MIPCOM. “I want to be the broadest broadcast network translated into a digital world provider — largely free — and that makes me largely immune to the battle of the digital subscription giants Netflix, Amazon, Disney+ and the others.” Conze noted that the trend in television advertising was moving in the direction where TV would have “lighter ad loads but the ads will be more expensive.”

“Free TV still generates 10-15 times the revenue of VOD,” noted Jay Tibursky, a buyer for Swiss commercial TV. “There is a lot of hype around streaming, but look at where the real money is.”

Even Tim Mulligan of MIDiA Research, who presented a talk at MIPCOM warning the industry to prepare for “the coming revolution” of SVOD, noted that his research sees the ad-supported business remaining the dominant force. According to MIDiA's figures, the market share of linear ad-supported TV, currently 36.7 percent of the over all global market, would actually rise to 40.1 percent by 2025. SVOD would boost its market share from 9.4 percent to 16.9 percent over the same period, Mulligan said. Adding in ad-driven video-on-demand, or AVOD, more than half of TV's global revenues will still be in free-TV six years from now, he said.

Big U.S. network shows, which in the past were the pillars of primetime programming worldwide, have lost some of their luster, as local programming, particularly big entertainment shows like The Voice or The Masked Singer replace them as the main ratings drivers of free-TV channels intentionally.

But Barry Chamberlain, president of sales at CBS Studios International, said he still sees strong demand for “big, quality network series” such as the eye's FBI and spinoff FBI: Most Wanted, The Good Fight and long-running procedural NCIS. “Even in territories where they are no longer primetime, these kinds of shows are the pillars of schedules for free-to-air networks,” he said. The continued demand from traditional networks — both free and pay — is one reason why CBS has not held back new product for SVOD, as Disney is reportedly doing, to feed its new streaming platform.

“We are not turning off the spigot for sales,” Chamberlain said, noting that CBS' international rollout for its CBS All Access streaming platform will be more piecemeal than some of its competitors. “We are looking at at territory in Europe and maybe Latin America,” he said. CBS All Access is currently in just two international territories outside the U.S.: Australia and Canada. 

Chamberlain is also bullish on AVOD. “AVOD is just another form of free-TV. And we have the content for that,” he said.

Chris Ottinger, who heads worldwide TV distribution and acquisition for MGM, says AVOD “is the big growth story” noting that CPMs for ad-supported VOD, while still well below those of broadcast networks, are starting to become competitive.

And, notes Tubi CEO Farhad Massoudi, with AVOD, which uses machine algorithms to match advertising to shows, producers can see exactly what their content is worth. It is “absolutely crazy,” he says, that Netflix should pay $500 million for the global rights to Seinfeld, “while having absolutely no idea what that show is actually worth. It is just crazy for me, as a numbers guy, that a business of this size lacks analytics.”

Advertising-driven TV, whether online or off, has built its business on doing the math. Judging by the figures coming out of MIPCOM, business has rarely looked better.