Special Report: Viewer Watch 2020
After the Fall
As TV’s traditional business model fractures, programmers and distributors look to pick up the pieces

PLUS:
The New Normal: Streaming Takes Center Stage
New Strategies, Old Problems
Good News for Digital News (including online-exclusive extra)
Viewer Watch 2020: The Charts

Agenda
Five Things to Watch at CES 2019
Hieronymus Bosch Poised for Noisy 2020
The Watchman: TLC Gets ‘Hot & Heavy;’ Disney Takes It to the ‘House’

Fates & Fortunes

Freeze Frame

The Five Spot
Dee Harris-Lawrence, EP/Showrunner, ‘David Makes Man’

MCN’S MOST VIEWED
Top five stories on multichannel.com, Dec. 27-Jan. 3
1. Hearst Extends DirecTV Negotiations
2. Cable, Satellite Distributors Watch the Clock
3. DirecTV, Hearst Still Talking
4. Court Blocks Maine A La Carte Law
5. AT&T TV App Ends Support for Roku

In this year’s annual Viewer Watch special report, the president and founder of Horowitz Research, Howard Horowitz, compares the state of the TV industry to the old nursery rhyme about Humpty Dumpty having a great fall.

It’s become apparent in recent years that the traditional big bundle of pay TV programming some consumers found bloated and expensive is also much more fragile than industry executives had imagined. Those bundles have fractured as record numbers of people cancel their video subscriptions and programmers follow them by launching direct-to-consumer streaming services.

This year promises to be a pivotal one for those trends, with existing big subscription VOD services like Netflix, Hulu, Disney+ and CBS All Access spending billions on new programming and major programming groups like WarnerMedia and NBCUniversal prepping high-profile direct-to-consumer launches.

In the nursery rhyme, this ends badly. Humpty Dumpty takes a great fall. And all the king’s horses and all the king’s men can’t put him back together again.

Not surprisingly, this year’s Viewer Watch report, which once again focuses on the changing use of video and how that’s affecting the industry, explores a number of disturbing trends. Humpty Dumpty’s fall — the fracturing of the pay TV bundle — has given consumers more choice and lots of great original content. But researchers also report that many consumers are complaining about the difficulty of managing their streaming subscriptions and finding content.

Meanwhile, the high-stakes competition among these new SVOD services is raising ongoing concerns about their financial viability. Market leader Netflix continues to burn through large amounts of cash — estimated to be around $3.5 billion in 2019 — and a survey from Magid found that consumers age 18-49 said they would pay for only five SVOD services.

Nonethless, industry executives, from researchers and traditional pay TV operators to digital media players, express a level of optimism about the TV industry that hasn’t been seen in a number of years. Horowitz and others point to a number of encouraging examples of how the industry is reassembling bundles of programming for a new generation of tech-savvy consumers. The resulting synthesis won’t look much like the Humpty Dumpty of old, but it could lay the foundation for a new decade of growth.

In assessing these trends, we are indebted to many people who made our annual Viewer Watch possible, both with interviews and data. We are particularly indebted to the research companies that contributed their insights and data, including Horowitz Research, Magid, Magna, PwC and Kagan.

RELATED STORIES:
The New Normal: Streaming Takes Center Stage
New Strategies, Old Problems
Good News for Digital News
Viewer Watch 2020: The Charts

While fake news continues to compete successfully with real journalism in capturing audiences around the world, digital news has emerged as a surprisingly bright spot for traditional journalistic values, with new business models funding better news content.

Some of this simply reflects the old cliché about a rising tide that floats all boats. The hotly contested 2020 elections and impeachment coverage have already produced growing audiences.

In November, CNN’s total-day ratings from Nielsen climbed to their third-highest level in 11 years, while MSNBC grew its total-day viewers audience by 18% from a year earlier.

For the full year, Fox News Channel notched its highest-rated year in primetime in its 23-year history, with an average of 2.5 million viewers, per Nielsen.

An even bigger surge of viewing can be found on digital platforms. Fox News Digital had 102 million monthly uniques, up 11% from the prior year.

“People are consuming more news than ever before,” Fox News Digital editor-in-chief Porter Berry said. “With channel viewership and all metrics of digital up in 2019, Fox News is proving that growth in one area doesn’t have to come at the expense of another.”

Video — particularly live video — is one of the fastest-growing segments, said CNN Digital VP of global video Wendy Brundige. CNN had 542 million unique multiplatform video starts in September 2019, Brundige said.

“Video has become ubiquitous,” she said. “There is an expectation that if something newsworthy has happened in front of a camera, we will have it for them … So if you open up the CNN app you will see it chock full of video.”

Paul Shanley, global director of video products for the Associated Press, also stressed the importance of multiplatform news coverage and production. “The traditional lines of how we define news organizations are starting to blur,” he said. “All of these news organizations — radio, TV, print, digital — are now competing across platforms with video. We are really seeing a growing demand for multi-form content for multiple platforms and for immediate content, live content.”

Breaking the Bubble

While fake news and propaganda remains a major problem on social media platforms, a rarely noted trend is the increased popularity of nonpartisan news coverage via digital platforms such as CNN, NBC News, CBS News and Newsy.

VIEWER WATCH 2020:After the Fall

CBSN, CBS News’s 24-hour OTT channel, regularly produces more than 1 million streams a day, said Marc DeBevoise, chief digital officer of ViacomCBS and CEO of CBS Interactive. Total 2019 video streams also beat record levels set in 2018, notable in an off-election year.

The rapid growth of CBSN highlights a growing demand for live, unbiased hard news, CBS News Digital executive VP Christy Tanner said. “We are focused on fact, not opinion, and we have a younger audience [median age of 37 that] is choosing facts not opinion,” she said. “Many people are turned off by there being so much opinion on cable and the idea that people are living in filter bubbles.”

NBC News executive VP of digital Chris Berend agreed. A focus on nonpartisan news and facts has fueled both growth and engagement for the division’s NBC News Now app, which launched in June 2019.

Total hours streamed on the app have been growing at an average of 27% a month since launch. “We have an average session time of around 49 minutes on an average day,” with high levels even on special occasions such as the impeachment hearings, Berend said. “That is incredible engagement.”

“It is pretty clear from the research that there are a lot of people who are looking for news that — for the lack of a better term — is very Cronkite-esque, for news that exists outside the hyperpartisan bubble,” said Blake Sabatinelli, CEO of the E.W. Scripps-owned Newsy, which started as an online news service and now offers news via apps and online as well on a 24/7 cable news channel. “There is a gap in the marketplace that has led to rapid growth of this kind of coverage from us and a number of other digital players.”

Most news executives expect digital audiences, already at record levels, to hit new highs as election coverage heats up over the next year.

Fox News Digital’s Berry agreed: “The public’s appetite is insatiable, especially as we are heading into a major election. In terms of video, consumers want the ability to follow impeachment hearings, watch a viral video or view the day’s headlines wherever they are — from a crowded train in New York or on a tractor in Iowa.”

This reflects not only longstanding trends toward consumption of news on digital platforms. It also reflects a growing awareness that consumers can turn to digital news for immediate coverage not found anywhere else.

New Life for Live

“Consumers know that they can go to us for live coverage when other outlets aren’t turned on,” CBS News Digital’s Tanner said. “We’re building that capability to go live for five years and now we are at the place where we can go live on 10 p.m. on a Friday night when there is a mass shooting. That builds an expectation that viewers can come to services like ours soon as they find out something has happened.”

That will translate into much more live coverage in this election cycle. “There is a big push for more live coverage,” CNN’s Brundige said.

“We are in the midst of one of the craziest news cycles that anyone has ever seen,” she added. “One of our biggest challenges is that the news cycle is so relentless. We have to staff up for that and organize ourselves in a way to really leave no minute of the day uncovered.”

“Velocity is key,” Fox News Digital’s Berry added. “People need to be alerted to breaking news as soon as it happens. They may read in on the day’s events in the morning or during downtime, but during the rest of the day, they depend on reliable sites like ours to keep them informed as news happens.”

Fox News Digital, for example, ended the year with 2.5 billion video views, up 39% over 2018. It also saw multiplatform views jump 13% to 18.1 billion and multiplatform minutes includes to 43.1 billion up 38%

Another key development is improved multiplatform coverage of stories. This reflects the fact that traditional news organizations like CBS News, Fox News and NBC News are ramping up their OTT offerings on mobile, connected TVs and other platforms as well as online players like Newsy moving into traditional TV channels and outlets.

For example, Fox News launched the Fox Nation on-demand streaming platform in November of 2018 and over the last year added thousands of hours of content, with lifestyle and sports content more than doubling.

Newsy’s Sabatinelli noted that after its acquisition by Scripps, the platform launched its own 24/7 TV channel and started sharing content with the station group’s local outlets.

“OTT provides a TV-like environment and there are a greater number of people expecting these [OTT apps] to act more and more like regular channels,” Sabatinelli said. “Having the linear channel helps us program more effectively to a broader multiplatform ecosystem.

Multiplatform Politics

Providing better multiplatform storytelling has been a key strategy at AP that will play a major role in the content it provides its clients during the 2020 election. “As a result of the popularity of social media, we are seeing an increase in the need for immediate content,” said Shanley at AP. “News consumers want to see an event as it unfolds, live. So we have focused on structuring ourselves and getting the right tech in place to respond faster than ever before and increasingly our capability for live video.”

This has meant equipping their journalists with LiveU backpacks that allow them to stream video over mobile networks and with apps to live stream from their smartphones. In addition, the AP has moved to a cloud-based editing system, allowing its journalists to edit stories faster from almost any location.

At the same time, AP has revamped how it approaches stories to provide an array of content for multiple platforms for its clients, Shanley said. Often this means providing live coverage while also providing stories for mobile, social, TV and other platforms.

“We’ve been trying to meet those challenges by focusing on speed and getting content out to customers quickly while at the same time following up with stories that have more context and character driven stories,” to show the human impact of the event, he said.

“We have to approach any story as a cohesive comprehensive user experience,” added Brundige at CNN. “We are able to learn from our digital audiences to make sure we are able to get our journalism to them in the most impactful way and iterate that story as the audience changes and the technology changes.”

Mobile-First Is Still First

Among those platforms, mobile is still key. “The growth in our mobile audiences for video has been rapid,” Brundige said. “Five years, we thought of our video for digital really as a desktop audience first. Now video on mobile is a really great experience and we are thinking about mobile first and how to serve that audience with video.”

But that doesn’t mean simply focusing on short-form content. “People are using their phone from the minute they wake up to the minute they go to bed,” Tanner at CBS said. “So it is not surprising that they are comfortable watching news at length on their phones. The idea that people only want short-form content on their phones is a myth. When there is something compelling, they will watch for an hour.”

Rising consumption on connected TVs is also fueling growing demand for longer-form content and for apps that encourage longer viewing times by serving up a wheel of stories. “We and others are really seeing a move towards long engagement experiences,” said NBC’s Berend.

The news organization reports that users accessing the NBC News Now app on Amazon Fire TV averaged 63 minutes of view time per visit in November.

“If news happens in the middle of the day we are seeing audiences turn on an Apple TV or a Roku to find out what is going on,” he added. “We are seeing weekday, middle-of-the-day spikes in audience when by logic people are at work and not watching TVs.”

“There is an amazing amount of traffic on mobile, Berend added. “The vast majority of unique viewers come through a phone, but when it comes to watching live and when it comes to video or live video in particular, it is quickly moving towards the connected TV.”

This is good news for the economics of the news business. “Connected TVs have the advantage of tapping into an ad inventory we are very accustomed to selling,” Berend said.

Always Connected

Another example of the increasingly diverse array of content likely to be hit digital platforms during the 2020 elections is the growing popularity long form content. “We are seeing a growing demand for archival footage as our clients are producing more long-form content,” said Shanley at AP.

“We are now in our fourth year of producing [longer form] originals and they’ve grown every year — first six, then twelve and then 18 the past two years,” said Tanner at CBS.

This allows CBSN to dive deeply into topics and subjects that are often ignored in the frenzied news cycle, a tactic that will become even more important during the election. CBSN recently aired its 50th original documentary.

One of these, A Climate Reckoning in the Heartland, covered the impact of climate change on farmers in the Midwest. “It was our most popular documentary of the year,” Tanner noted. “The numbers were 150% over our typical original.”

Several of the digital news organizations are also expanding their local content, which will allow them to provide better coverage of developments in key states during 2020.

For example, CBS News Digital has already rolled out local streams from their owned stations in New York, Los Angeles, San Francisco and Boston into its CBSN app.

“We’ll have nine additional local streams in the first part of 2020,” Tanner said. “So much of the 2020 election is going to require intimate knowledge of what is happening in state and local races and in the regional and local nuances as it related to the national election. Having 13 local streams means that we are to be providing much more granular insights not only to those who live in the region but others outside those areas.”

Newsy’s Sabatinelli agreed. “Being acquired by Scripps means that we can tap into a tremendous network of newsgathering operations at 60 stations in 42 markets and share content back and forth,” he said. “Having a station in a large majority of the top 25 markets means that our footprint is better and us being a national news network means that Scripps’ footprint is bigger.”

The growing popularity of these apps also highlights a generally positive trend towards more objective journalism on digital platforms like CBSN, NBC News Now, CNN and Newsy.

Panel discussion and partisan debates “are certainly a staple on cable news outlets,” said Berend at NBC News. “We have purposefully positioned NBC News Now right down the middle and very based it on expertise and field reporting and having people on the ground. It is much more about the newsgathering footprint than about studio chat.”

The fact that many people are taking the trouble to find and use these app. means that the demand for more non-partisan coverage continues to grow, Berend and others believe.

“OTT app users are true superfans,” said Sabatinelli at Newsy. “They made a choice, not just to turn you on but to find the app, download it and to install it.”

These superfans, he said, are hungry for nonpartisan news focusing on the issues. “We have no pundits or opinion commentary or large desks of people arguing with each other,” Sabatinelli, CEO of Newsy, continued. “From the moment you turn us on, you’ll see something that looks very different. From an actual coverage perspective it is really about stripping away surface ideas and digging into real policy positions of the candidates so that the viewer has a better understanding of what they are voting for and make a decision for themselves. That comes down to the core tenets of why we get into journalism in the first place.” 

Almost everyone agrees that 2020 will be a landmark year in the history of television, with all the major programming groups spending billions to launch or tout new streaming video services, politicians planning to make record political ad buys and analysts predicting that pay TV operators, after suffering the biggest customer losses in their history in 2019, will see more declines in 2020.

These massive changes — almost unimaginable 10 years ago — promise to further disrupt already fraying traditional business models. Yet many of the industry’s largest major players, from traditional pay TV operators to TV programmers, are embracing the new streaming landscape with hefty investments.

Cable operators, including industry leader Comcast, are now touting broadband-first strategies that include new offerings designed specifically for cord-cutters who’ve dropped traditional pay TV packages as programmers are set to spend record sums on new content for subscription video-on-demand services CBS All Access, Disney+, HBO Max, Netflix and Peacock in 2020.

RELATED STORY:Built for Streaming

Both trends are highly likely to accelerate the movement of subscribers out of the traditional pay TV ecosystem. “You’ve got Disney+, AT&T with WarnerMedia and HBO Max, Comcast NBCU with Peacock, the CBS-Viacom merger,” said Scott Rosenberg, senior VP and general manager of the platform business at Roku. “Those are all examples of traditional media companies finally putting the full force of their balance sheets and their brands behind streaming services. … That is important because the additional investment in streaming is going to further drive more customers out of pay TV into streaming.”

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“Disney, Warner, NBCUniversal and all the others are going to be spending huge sums to market these services,” Pluto TV CEO and co-founder Tom Ryan said. “That is just going to build awareness for streaming and be great for ad-supported services like Pluto.”

Usage is increasing pretty much across the board. Roku, for example, now has about 32 million active accounts and average users are now watching about three and a half hours of content a day on their Roku devices, Rosenberg said.

Likewise, Ryan noted that for Pluto TV, “users have nearly doubled from 12 million to 20 million from the start of 2019 to October, but consumption in total viewing hours has actually tripled year-on-year.”

After the Fall

The rise of streaming to center stage among consumers’ viewing habits marks a big shift from the traditional pay TV channel bundle to a disaggregated world where much content is available via separate apps, Horowitz Research president and founder Howard Horowitz said.

“The dynamic between disaggregation and aggregation is the biggest trend in the industry right now,” Horowitz contended. “There is a lot of choice for consumers with all the different content available on the different apps and at the same time, a lot of confusion in what’s available.”

This is both a major problem and an opportunity. “The consumer and the industry is looking for a way to put Humpty Dumpty back together,” Horowitz quipped. “The fact that we’re seeing the industry trying to create a synthesis should be viewed as a very positive trend for the future.”

A key part of this is an explosion of new content on streaming services. “We will be expanding original content from seven series in 2019 to 14 in 2020, with a major release every month and a tentpole each quarter, starting with Star Trek: Picard on Jan. 23,” said Marc DeBevoise, chief digital officer of ViacomCBS and president and CEO of CBS Interactive.

CBS also won the bidding for U.S. TV rights to UEFA Champions League soccer, which will give CBS All Access streaming rights to about 440 games starting in 2021. It recently announced a significant investment in kids and family programming, with more to come. “The merger [of CBS] with Viacom is going to be a tremendous help,” De Bevoise said.

Aggressive Aggregation

Another major trend is the rise of “super-networks” or “super-aggregators,” which are bundling together massive amounts of content, said Otter Media CEO Tony Goncalves, who is overseeing Warner Media’s SVOD service, HBO Max, expected to launch in May.

“We live in a world with pay TV, where there are 500 channels but the average consumer only watches 15 or 17,” Goncalves said. “If that is really the case, having six large OTT services in the marketplace might actually be better for consumers … In a way, we are solving some of the fragmentation issues by aggregating content into less destinations.”

At launch, HBO Max is expected to offer 10,000 hours of content with a wide array of shows from AT&T’s owned operations such as HBO, Warner Bros., New Line Cinema, DC Comics, CNN, TNT, TBS, truTV, TCM, Cartoon Network, Adult Swim, Crunchyroll, Rooster Teeth and Looney Tunes.

Operators have also embraced the trend towards streaming with new ways of aggregating content. In recent years, Comcast has added Netflix, Hulu and many other OTT apps to its X1 pay TV platform and recently launched Flex, a free service for broadband-only subscribers that bundles free streaming apps with high-speed internet access.

“We are really focused on the rapidly changing needs of the consumer and the real abundance of new content, programming, services and apps,” Rebecca Heap, senior VP of video and entertainment at Comcast, said. “We believe we can really play a huge role [in bringing together the consumer and all the available content] to create a great consumer experience in a much more challenging content environment.”

Such flexibility has been a key part of the success of virtual MVPD Sling TV, which added 214,000 subscribers in the third quarter of 2019, VP of operations Seth Van Sickel said. Sling TV makes it easy for subscribers to move in and out of different tiers.

“We didn’t want to build a product that replicates traditional pay TV because customers are leaving traditional pay TV,” he said. “We built a product around cord-cutters and cord-nevers who have completely different expectations.”

Behind the Numbers

If the industry is now squarely committed to creating new products for some long-standing consumer trends, there remains much debate about what is actually driving some of these trends.

One key issue is the pay TV industry’s video subscriber counts. Traditional multichannel video subscribers fell from 90.9 million in the third quarter of 2018 to 85.1 million in the third quarter of 2019, a record subscriber loss of 5.8 million, said Ian Olgeirson, research director at Kagan, a unit within S&P Global Market Intelligence. Virtual multichannel subscribers grew from 6.9 million to 8.5 million in the same period but that failed to fill the gap, producing a record decline.

“We had a bigger loss in the first three quarters of 2019 than we had in 2018,” Olgeirson said. “With more content and options outside the traditional subscription packages becoming available in 2020, there will just be more pressure on the traditional multichannel model.”

More losses may be on the horizon. In 2020, the bank UBS is predicting that about 6.2 million subs will leave the pay TV universe.

Olgeirson and others stressed, though, that consumer video consumption trends aren’t the only important factor in subscriber losses.

The pay TV industry, including the virtual MVPDs, lost about 1.74 million net video subscribers in the third quarter of last year, compared to a pro forma net loss of about 975,000 subscribers in third-quarter 2018, Leichtman Research Group president Bruce Leichtman said. Losses among the top seven cable operators reached a record 410,000 in Q3, up from 245,000 a year earlier.

“AT&T accounted for 79% of the net losses in the third quarter of 2019 … and they accounted for 62% of the losses over the past year,” Leichtman said. “When the No. 1 pay TV company reports those kinds of numbers, that has a huge impact on the market and the way the market is perceived.”

In AT&T’s case, these remarkable declines reflect a major shift in strategy. “They are really focusing on profitable subscribers and retaining and acquiring profitable subscribers,” Leichtman said. That strategy led AT&T to sharply cut its promotional efforts and retreat from the satellite business.

This stands in stark contrast to Sling TV parent Dish Network, which had the smallest net satellite sub losses in Q3 2019 since Q3 2016.

All About the Consumer

Similar complexity can be found in the TV and digital ad business. “If you look at the 25-to-54 demo, we are projecting that in 2020 about 40% of all video time will be streaming in some capacity,” said Brian Hughes, executive VP of audience intelligence and strategy and media agency Magna.

In contrast, TV viewing continues to decline. “If you look just at primetime across broadcast and cable for the 18 to 49 demo, viewing has dropped about 28% in the past five years,” Hughes said.

How this affects the ad market for TV and digital is both obvious and complex. Magna, for example, is predicting ongoing declines in linear TV advertising, from about $59.4 billion in 2019 to $48.6 billion in 2024. “We see it decreasing at about 2% going forward,” excluding cyclical events like political advertising and the Olympics, said Michael Leszega, manager, market intelligence at Magna.

There are a number of countervailing trends, though. “In 2019, TV advertising remained strong, largely because consumer spending has remained robust,” despite the declines in viewing, Leszega noted.

Likewise, the linear TV ad market is likely to remain relatively strong in 2020. Advertising Analytics and Cross Screen Media are projecting political advertising to hit a record $6 billion, with broadcasters pulling in $3.26 billion in 2020, up from $1.7 billion in 2016, and cable racking up $1.02 billion in political ad sales, up from $450 million in 2016.

While economic growth was supposed to slow in 2020, Magna prejects that “TV advertising could be strong again in 2020,” thanks to consumer spending, which is set to grow by about 4.3%, Leszega noted.

“TV definitely remains the most efficient and best way to get your message out to a large audience in a short amount of time,” Leszega said. “So there are definitely some tailwinds that are helping to grow and stabilize national television. The problem is that the other side of the equation is too powerful. Fewer people are watching, ratings are down and there is cord-cutting.”

On the other hand, Magna predicts digital video advertising will hit about $25.5 billion by 2024, up from $15.8 billion in 2019, and PwC says subscription video revenues are expected to jump from $11.6 billion in 2019 to $17.8 billion in 2023.

The next article will explore how those trends will impact the business climate and the strategies that companies are developing for the new streaming landscape.

If streaming media is a revolution in the way video is delivered to consumers, it is also an example of how old issues can become new again.

Take churn, a familiar problem in the pay TV industry that is likely to explode into a much bigger concern in the streaming world.

VIEWER WATCH 2020:After the Fall

Magid executive VP Jill Rosengard Hill said consumers clearly love the choice offered by the newer streaming world, and Magid research shows them preparing to abandon the traditional pay TV universe at record rates. “In 2019, we saw that 8.9% of pay TV subs are planning to get rid of their pay TV service and not get another one,” she said.

But a Magid consumer survey also showed 42% of those aged 18-49 are finding that managing the complexity of all their SVOD subscriptions is a problem. Many of these subs are likely to churn in and out of these services, with 43% of the 18-49 age group saying they’re likely to cancel a service in less than six months. Nor are they willing to spend huge sums of these services. Magid’s 2019 research finds that 18-49s are likely to subscribe to only five services.

“We are seeing a fatigue in subscription and hitting a ceiling in terms of what the consumer is willing to pay as well as a fluidity in and out of many subscription services,” Rosengard Hill said. “The pain point of churn and how that is going to impact these services is a major issue.”

The Bundle Is Back

Consumer concerns about the complexity and costs of finding content among many apps highlights the importance of content aggregation in an increasingly fragmented streaming world. “The consumer is finding it increasingly confusing, chaotic and a lot of work to curate their own video experiences,” Horowitz Research president and founder Howard Horowitz said.

This opens up opportunities to reimagine the bundle for a new generation of tech-savvy younger viewers, Horowitz and other observers noted.

To that end, Comcast has added more than 100 streaming services to its X1 and Flex platforms, with plans to add Peacock and Hulu to the platforms in 2020.

Rebecca Heap, Comcast’s senior VP, video and entertainment, noted that the cable operator’s relatively new Flex product is bundled for free with broadband service. “We have launched 10,000 free TV and video programs on a range of different apps,” she said.

The operator is also working to improve the consumer experience with universal search across all those apps on both X1 and Flex. Voice search was averaging 1 billion commands a month in 2019 and is on track to hit 12 billion hours for 2019.

Making content easier to access has led to increased use of Comcast’s traditional VOD platform, which is on pace to top 7 billion hours viewed in 2019. It has also boosted engagement with outside apps like Netflix that are available on both X1 and Flex. In 2019, Comcast’s X1 was the top platform for accessing Netflix, Amazon Prime Video and YouTube within its footprint.

David Gandler, co-founder and CEO of fuboTV, also stressed the growing consumption of streaming video, particularly on connected TVs. Their users average 103 hours in October of 2019, up 135% year on year.

A key part of that growth, he added, is related to improvements in their bundles, content offering and user interface. “The future is optimizing the bundle for users,” Gandler said.

The importance of bundles is also making alliances between streaming services and traditional MVPDs increasingly important. “We are distributing on a direct-to-consumer basis and for that you still need distribution partnerships,” said Otter Media CEO Tony Goncalves, who is also the top executive overseeing WarnerMedia’s HBO Max.

Those partnerships will include smart-TV manufacturers and connected-TV devices like Roku and Apple TV, but he believes “a good amount of those distribution partnerships will still be through the pay TV ecosystem.”

“I had an old boss who used to say to me that the consumer and the industry aren’t always aligned, but that the consumer tends to win,” Goncalves added. “Consumers are voting for choice and I think we are seeing the industry meet the consumer where they are, which is refreshing and encouraging.”

Roku is particularly keen to work with programmers in a variety of areas ranging from marketing and ad sales to app development and better search, said Scott Rosenberg, Roku’s senior VP and general manager of platform business.

“We see the aggregation of content into a smaller number of apps as a very important trend,” Rosenberg said. “So in addition to being a host and partner to big services like Netflix, Hulu, Disney+, etc., we can also act as an aggregator and use our capabilities as a platform to help drive audiences to content with our direct consumer relationships, rich data and marketing tools.”

Such alliances helped CuriosityStream increase its subscriber tenfold in 2019, from about 1 million at the start of the year to 10.5 million in early December, noted Clint Stinchcomb, president and CEO of the nonfiction programmer. In 2019, the service inked over 15 deals with operators to add CuriosityStream to their streaming-video offerings.

“The big trend we see is going back to the bundle and the bundle of bundles,” Stinchcomb said. “We are getting approached by distributors who were frustrated by the big legacy TV network groups who were jacking their rates way up.”

International growth has been particularly strong. More than half of CuriosityStream subscribers are located outside the U.S., with the service set to launch in nine Latin American countries this month.

I Want My Antenna

Many uncertainties about pricing and profitability remain, however.

In 2019, Sony shuttered its PlayStation Vue MVPD service, while other providers were forced to raise prices dramatically in the past year. “A lot of those services hit the market with fairly aggressive pricing and now are coming to terms with the economic realities of licensing this content and turning a profit,” said Ian Olgeirson, research director at Kagan, a research division within S&P Market Intelligence. “In 2019, we saw some of them announce as many as two rate increases.”

To address those issues, Sling TV has focused on reducing costs, improving the user interface and providing consumers with a great deal of choice and flexibility. They can add a sports package during football season and then drop it when the games are finished, Sling TV VP of operations Seth Van Sickel said.

To further control costs, Dish Network-owned Sling TV works with AirTV so consumers can get free over-the-air TV signals along with a program guide, which keeps their packages less expensive than operators who must pay retransmission fees to stream the affiliated stations.

A recent study from Horowitz Research found that more than four of 10 TV antenna users got their first antenna in the last three years and three out of 10 antenna owners say they got it to avoid having a pay TV subscription. “The rise of OTA over the last three years has happened under the radar because all of the big players don’t want to promote it because retransmission fees are so important,” Horowitz said.

The pressure to control costs is also driving two other significant trends: globalization and advertising on streaming platforms.

A recent report from the Motion Picture Association of America found that SVOD subscribers have now surpassed MVPD subs, as global streaming services added 131.2 million new subscriptions in 2019 for a total of 613.3 million worldwide.

There are also major growth opportunities for ad-supported services in the U.S. and internationally, Pluto TV CEO and founder Tom Ryan said, particularly since the acquisition of his company by Viacom (now ViacomCBS) in early 2019. “We’ve already launched in Europe but we are accelerating that rollout in Europe and launching in Latin America in the next quarter,” he said.

Closer to home, Ryan and others see a major opportunity for ad-supported video-on-demand services (AVOD) as subscription bills begin to mount for SVOD services and advertisers become more familiar with the medium.

“AVOD is a very hot space right now and growing like a weed, but the market is clearly in its infancy,” Ryan said. “Currently, about 29% of all TV viewership is happening on ad-supported OTT, but only 5% of the ad dollars are going to it.”

Roku’s Rosenberg agreed. “For a long time, the industry debated whether streaming would be ad-free,” he said. “But if you look at our own revenue growth and the fact that the ad-supported segment of viewing is the fastest growing segment, you see powerful evidence from a business and consumer perspective that advertising is here to stay as a vital part of the TV experience.”

As cable operators shift to broadband-first strategies, emphasizing high-speed internet access, industrywide tech organizations CableLabs and SCTE-ISBE are looking into the future to build next generation infrastructures.

A key part of that is upgrades to broadband networks, including 10G networks that will offer speeds of 10 gigabits per second. “10G is a major initiative for us and you will see the first trials in 2020,” Society of Cable Telecommunications Engineers-International Society of Broadband Experts president and CEO Mark Dzuban said.

Some of this is being driven by the move to higher-quality video formats, including High Dynamic Range (HDR) formats that offer much improved color and higher resolution formats like 4K and 8K. “We have a number of members that are working to prepare to start broadcasting in 8K around the 2020 Olympics,” explained Phil McKinney, the president and CEO of CableLabs.

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The move towards streaming, internet-protocol video and a host of other services — ranging from gaming to video conferencing, education and telemedicine — are also driving demand for faster networks. “Low latency is a critical part of improving the gaming experience,” Dzuban said. “If you have multiple 4K terminals [TVs and other devices] streaming 4K or 8K video, that can exhaust bandwidth very quickly.”

Cord-cutting is another major factor. In a recent study of operators, OpenVault found that broadband usage hit 275 gigabits a month in the third quarter of 2019, up from 228 GB a year earlier.

Even larger increases were found in homes that cut the cord. OpenVault found that broadband customers who cut the cord in March of 2019 increased their usage from 387 GB a month to 488 GB by June of 2019. “Cord-cutting and consumers going on broadband only is going to have a major impact on their networks,” Mark Trudeau, CEO and founder of OpenVault, said.

Further down the pike are also new technologies like light field displays, noted Dzuban and McKinney. These light field displays show full, volumetric 3D images with no need for glasses.

McKinney noted that some smaller displays, about one foot wide, are already in operation and that CableLabs has been working on the technologies with members such as Charter for three and a half years. He said the first consumer applications should become available in the next three to eight years.

But those applications will require huge amounts of bandwidth and data, which makes the 10G initiatives even more important. “A five-minute clip will take up hundreds and hundreds of terabytes,” McKinney said. “To deliver that into a reasonably sized TV you need a gigabit network or maybe something a little faster.”