Login
Login is restricted to DCN Publisher Members. If you are a DCN Member and don't have an account, register here.

Digital Content Next

Menu

InContext / An inside look at the business of digital content

Digital media in 2020: What lies ahead?

January 3, 2020 | By Todd Krizelman, CEO – MediaRadar @ToddKrizelman

From the boom of direct-to-consumer (DTC) brands to the introduction of new OTT streaming services such as Disney+, 2019 brought significant innovation to the digital media space. As we begin 2020, it’s time to think about which media trends will shake up the new year. Here’s what the MediaRadar team sees on the horizon.

The year of paradox for linear TV

In 2019, it was estimated that 6.4 million paid subscribers stopped paying for television. In 2020, as OTT streaming services continue to gain control, an almost equal, incremental decline in number of paid subscribers is predicted. However, despite “cord-cutting” in the TV industry, linear cable and broadcasters are poised to have a successful year. This is due in part to several major TV events set to occur throughout 2020.

The 2020 presidential election will have politicians spending significant amounts of ad dollars to get their messages across. Some estimate that spending will approach as much as $10 billion – or almost $6 billion more than the 2010 election. Advertisers are also predicted to allocate heavy ad spend towards the Tokyo Summer Olympics, as well as other large tent-pole sporting events like the Super Bowl. This year’s Super Bowl is expected to deliver strong financial results, as Fox reported in early December 2019. In fact, 80% of the inventory had already sold at a reported $5.6 million per 30 seconds. That marks a 7%  jump from last year.

Amidst the evolving TV landscape, providing viewers with real innovation will become crucial for success. Keeping that in mind, in 2020, it’s believed that nearly all major broadcasters will either reboot or unveil their paid streaming businesses. While this is just the start, this shows broadcasters are committed to re-engaging with their audiences and future proofing subscribers.

Politics’ role in digital media

An exploding ad spend isn’t the only way the presidential election will shape the industry this year. The election is expected to take over much of the news cycle and political ads. Every platform will be scrutinized for accuracy more than ever before. Ahead of the election, digital ad companies are expected to face strong public pressure to ensure their political ad policies are tightly “buttoned up.”

Twitter recently announced they will be opting out of politics, disallowing political ads entirely. Google announced that they are restricting targeting capabilities for political ads and Facebook is predicted to follow suit, despite pressures to go further.

Based on these companies’ decisions, it’s likely that other media will feel the same pressures in 2020. It will be up to these companies’ leadership to navigate this evolving digital landscape during the election cycle. Foremost: an emphasis on clear and ethical business decisions.

OTT remains hot

Over the past few years, investment in the OTT space has been heavy and rapid. It shows no signs of slowing down in 2020. UBS estimates a combination of 16 media firms will spend $100 billion to produce content in 2020. Of that $100 billion, just three firms – Netflix, Disney and WarnerMedia – are projected to account for 25%, producing unique content for their viewers.

For the financial health of the companies competing in the space, it’s likely that this investment cannot last long-term. Bob Iger, Chairman and CEO of The Walt Disney Company, has acknowledged that Disney+ will probably not break even for at least the first five years. Meanwhile, AT&T has said the same of upcoming streaming platform, HBO Max.

Eventually, it’s predicted that end user prices will rise, ad-supported models will become more common – SVOD versus AVOD – and spend on content will decrease to ensure profitability. Being in the early days of the streaming wars, however, the major players are willing to gamble with losses now to gain profits later. In the fight to capture the attention, and monthly payments of consumers around the world, and to make the investment worth it, not all can win.

2020 outlook

2020 looks to be both an exciting and transformative year for digital media. The TV industry will shift focus as they seek to re-engage with audiences through paid streaming businesses and offerings. Major TV events, specifically the 2020 presidential election and flagship sporting events, will help sustain linear cable and broadcasters through the year. Investment in OTT is only expected to increase, especially as “cord cutting” continues.

Perhaps the biggest change in 2020, though, will be as a result of the state of politics. With politics playing a larger role in the space than ever before, media companies will begin adjusting their strategies and policies accordingly – a change that could have a lasting impact on the future.

Print Friendly and PDF

Liked this article?

Subscribe to the InContext newsletter to get insights like this delivered to your inbox every week.