Time With Mobile Apps Now Beats TV As Apps Become The New Networks
There's a fundamental shift in video consumption well underway.
TV has resisted the internet in multiple ways that have eluded other media. It has been able to hold on to its audience and ad revenues while other traditional media have seen fragmentation and revenue declines.
All that is coming to an end however as cable TV faces increasing pressure from cord cutters, over-the-top video services and mobile devices. Even the traditional ad-based business model of TV is under treat from Netflix, iTunes, Google Play and Hulu, which just introduced a new premium service ($11.99 vs $7.99) that eliminates most advertising (except at the beginning and end of some programming).
Last week Apple introduced its new tvOS that brings apps to the screen in the living room (Google did this some time ago with Google/Android TV). Tim Cook proudly asserted during his keynote, “We believe the future of TV is apps” — and by extension the future of content distribution on TV is app stores.
Cook may or may not be correct about the “future of TV” being tied to apps but the future of video content distribution certainly is. By the end of the year apps on mobile devices will be the dominant way people in the US consume video content. In an ironic sort of way we’re returning to a model not unlike the early days of TV, with fewer distribution points.
Originally video content distribution consisted of CBS, NBC and ABC (and later PBS and Fox). That all changed with the explosion of cable. Suddenly there were hundreds of channels and new segmented networks (e.g., HGTV, History Channel, Food Network, etc.). Now we’re witnessing a re-consolidation of distribution into fewer consumer entry points, via apps: Netflix, Hulu, YouTube, iTunes, Google Play. Facebook could soon join them. And while most video content producers have or will have their own apps (i.e., HBOGo), these larger “channels” are the new networks.
Last week Yahoo’s Flurry unit posted that “for the first time ever, time spent inside mobile applications by the average US consumer has exceeded that of TV.” The chart above reflects only time spent with apps and doesn’t include time spent on the mobile web.
This is a watershed moment because time spent with apps new exceeds all other media channels. Mobile media time has exceeded the desktop (the second screen) for two years.
Flurry also points out that while advertising on mobile devices is a fast-growing market, increasingly consumers are paying for content (I have done this on Pandora and Hulu to avoid ads). Paid content and app-store revenues are expected to exceed mobile advertising this year. Mobile advertising is itself going to exceed desktop-based digital advertising next year and, according to an aggressive estimate, capture three-fourths of all digital ad spending by 2019.