Comscore, in what it called an industry-transforming deal, has reached an agreement with Comcast to integrate set-top-box viewing data from Comcast homes into its local and national measurement services.

Comcast has not made its consumer data available to audience research companies, limiting the accuracy, granularity and geographic coverage of set-top-box data-based ratings, which has been touted as a census-level approach to measurement. Comcast’s NBCUniversal unit has sold some advertising products that targeted viewers based on Comcast set-top data.

The deal is also a boon for Comscore, which is emerging from several years of turmoil and management following the discovery of accounting issues in its financial reporting. Last September, Comscore settled fraud charges brought by the Securities and Exchange Commission against the company and its former CEO Serge Matta.

“This is a game-changing moment in the history of television measurement,” said Bill Livek, who became CEO of Comscore in November.

“Comscore’s partnership with Comcast is a significant step in our transformation of television measurement, as we have built the largest viewing dataset of second-by-second viewership data that is aggregated across all premium video providers from the device, to the household, to zip, to the market and to the nation,” Livek said.

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Comscore said the Comcast data will make its audience ratings, impressions, advanced audiences and Exact Commercial Ratings products more stable and predictive. That should help its national and local clients attract more revenue from advertisers looking at more trustworthy data.

“As media costs continue to rise, advertisers and agencies are under increasing pressure to demonstrate results,” said Bret Leece, global chief data & innovation officer at Havas Media Group. “This agreement is significant because it strengthens Comscore’s already-massive scale and eliminates uncertainty around TV measurement. For Havas, this combination gives us the confidence to use Comscore as we help grow our client’s business.”

“Comscore has always had the objective to fulfill census-level measurement for TV viewing and with the addition of Comcast, they are well-positioned to deliver on their goal,” said Keith Kazerman, executive VP, digital sales, advanced advertising and research at Discovery. “Bill Livek is already making an immediate and positive impact on Comscore and the industry.

The Comcast data should be incorporated into the Comscore data by the end of the year, Livek said.

"The story is that Comcast believes in what we’re doing, how we’re changing the face of measurement for the benefit of everyone in the ecosystem,” Livek said. The data will help Comscore know what shows people watch and be able to link that to the products they consume.

Comscore’s ratings system, which is based on the big data approach, contrasts with Nielsen’s panel system, which used to base national ratings on the behavior of a few thousand Nielsen homes. Nielsen supplements its panel with set-top box data, but adjusts it based on meter reading coming out of those Nielsen homes.

Using set-top-box data has been criticized because there were some cable operators like Comcast that did not provide data, leaving gaps in national coverage that had to be mathematical models. Big data has also been criticized for under-representing non-cable and minority homes.

“Now we will have a complete view of what everyone is doing and that takes the last objection away on why people were not using us to buy. They were using us to plan [ad campaigns], but this is a gamechanger,” Livek said.

Livek said that the Comcast deal is an indication that after years of being distracted as Comscore went through an expensive and time-consuming re-audit, in the last four months, the company is on a growth trajectory.

Comscore was set to report its quarterly earnings Thursday afternoon and it was expected to report a big gain in local ratings revenue and a small gain in online measurement, which has been declining the past couple of years. In recent months, several online clients have returned to Comscore, including Buzzfeed, the PGA, Publishers Clearinghouse, Revolt Media and Accenture Digital.

“It shows that customers believe again. They’re coming back,” Livek said.

In January, Carol Hinnant was promoted to chief revenue officer, reporting to Chris Wilson, who as chief commercial officer is focused on new initiatives including the measurement of direct-to-consumer platforms.

“We realigned our sales efforts and our product efforts, which is important as we go to market,” said Livek. “The company is going in the right direction, resuming growth, focused again on our customers, improving products and doing what we believe is a transformative deal, not necessarily for Comscore, but for the industry which finally has what it’s been asking for.”

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.

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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.”