Needham & Company recently released their Future of TV report, which “calculates the economic upside and risks for the incumbent TV ecosystem as well as the nascent online premium video ecosystem that seeks to replace it. It also highlights key datapoints that impact valuations and looks around the corner at what?s next.”
“Key conclusions quantified in this report:
1. Unbundling dwarfs any other risk to the TV ecosystem, as we calculate that ~50%of total TV ecosystem revenue (about $70 billion) would evaporate and fewer than 20 channels would survive in an a la carte world where consumers are required to bear 100% of the cost of the channel. Today, advertisers bear ~50% of TV content costs.
2. A sports tier would be a partial unbundling of today?s TV ecosystem, driving $13 billion of lost revenue annually, we calculate.
3. Video on Demand (VOD) represents $10 billion of annual advertising revenue upside, if VOD viewing with full commercial loads replaces DVR viewing (where most commercials are skipped) over time.
4. We calculate that TV advertising upside from Internet advertisers is $5 billion (6% of 2012 TV ad revenue) annually by 2015, driven by growing competition among Internet companies on desktop and mobile devices.
5. We think TV Everywhere has the best chance of elongating TV subscription lengths, potentially adding $4 billion per year to subscription revenue.”
Read the full report here.
– via the Needham Insight