advertising in 2015 – on the closedown of Atmedia
To say that the closedown of Atmedia is the end of a certain age on the TV advertisement market is not an exaggeration. The channels earlier serviced by the dead broker are further bargaining chips of TVN and Polsat. The order in which 5 top players (let’s mention Discovery, to 2012 completely self-reliant in terms of sales) competed over advertising money and the grace of thematic channels is gone. Is the “triumvirate” on the market good news for the thematic channels? – Michał Daniluk, the founder of ContentM Group analyses.
Not a long time ago, Atmedia – the company that did not cover the distribution of TV signal and did not produce content – showed how prominently thematic stations participated in viewership and how they benefit at the expense of the Polish nationwide DTTVs. And also – how much one can make leading campaigns in thematic stations and directing their message to the richer viewers (with the access to paid channels) and those from bigger cities. Atmedia was the one to divest big TV tycoons of a part of potential revenue. For example because the campaigns based on Atmedia thematic channels were often – from the point of view of generating reach and the costs of reaching – cost-attractive. In the beginning the advertisers did not believe in the power of thematic stations and that is why their participation in the campaign was lower that the market share of those channels might have suggested. Atmedia must have been working hard selling and actively promoting the represented stations for the clients to know the value of the offered product.
Direction – fragmentation
The reality of the media verified this kind of thinking a bit and the viewers showed what they are interested in a stronger way each year. And then digitization came. Suddenly all Poles were given the access to more than 20 TV channels in lieu of a few of them, which the DTT users accessed earlier. The share of “big” stations naturally decreased (in 2012 – 2013 the share of the big four fell even by a dozen or so yearly) and the share of the “smaller” ones increased even more, to exceed the magical 50 percent in 2013. Not all of those “smaller” stations were in the Atmedia portfolio, but TV Puls (their former client) or Polo TV and Eska (terrestrial ZPR stations) are worth mentioning.
TVN and Polsat immediately had to face this new reality and – it should be highlighted clearly – they did better than expected. It turned out that they should manage sales of more and more channels even better and, above all, take over the sales of the next ones to maintain higher prices in the old “big” stations. It all began with investing in their own new DTT channels and taking control of the stations from other capital groups. And shortly after that, it turned out that almost all of the available TV advertising resources were in the hands of 3 market makers, which at the same time have in their portfolios Polish DTT stations. The biggest winners are the commercial broadcasters – TVN and Polsat – who do not have to fear competition and they can shape their prices and negotiate with media houses according to the situation on the market.
Content Masters and TV advertising
From the business point of view, it is a logical flow of events. The thematic stations were given better conditions, thanks to their airtime being sold by those who can do “more”. They have financial and negotiation resources for securing that. Yet, one more thing is worth noticing here, which – in my opinion – may be the key factor in the near future. Namely, the holders of the advertising time on TV are those who are responsible also for the content and its distribution. Atmedia did not have these arguments on their side.
There is one more phenomenon happening right before our eyes. Content is becoming the indicator of what will happen to TV or, more broadly, video content and advertising n the near future. The viewers will get their favorite programs where it is convenient for Polsat, TVP or TVN and the thematic stations will not be a real threat developing new distribution channels. If thematic stations stayed out of the control of the “big”, it would probably turn out that the possibility of watching good-quality content via the Internet is influencing the big four’s position in terms of viewing rates, especially in the city and high-income groups. So those, who were always particularly important, notably for TVN. Soon the National Broadcasting Council concession will not be necessary to reach viewers on their screens, as they will be connected to the Internet on the mass scale. Atmedia have tried to take over this part of the market, selling ads in the majority of VOD platforms. Today, the most prominent broadcasters largely control the development of VOD and they have the programs and the most important platforms of distributions in the palm of their hand.
Addicted to ipla?
So far, traditional television is the key source of income for Discovery, Disney or FIC. Is it not true that both Polsat and TVN hedged themselves against the potential idea of distributing their content on the Internet in Poland? Even if they did not do so, the fact that they control the income from traditional TV advertising is sufficient to discourage them form the alternative forms of distribution or, if the occasion arises, motivate to use TVN player or ipla.
Currently, it seems that this situation is a dream one for the “big three”. They hold distribution, content and the advertisement sales. Will something change here? The answer is “yes”. The industry expects the entrance of Netflix, which – as many people claim – could be an interesting alternative for the viewers familiar with technology and tired of the next “Kevin…” for Christmas. YouTube wins the hearts and minds of advertisers, who observe online celebrities entering mass culture. Amazon with their content streaming offer is also worth mentioning. So the threats for big stations exist. Undoubtedly, the worst of them – the fragmentation of the traditional TV market became rather a chance for developing their businesses and establish their position.
Pay TV standoff
Does fragmentation aid foreign thematic channels, over which the heroic games happened? 2014 was the first year in which the cable-satellite channels stopped to grow. Their share decreased slightly (2 percentage points; to 33,8 in the second half of the year, data: Nielsen for 16-49 year olds) but it may well be the beginning of the more visible trend. The cable television and TV platforms tend to defend rather than gain new clients – the share of household with pay TV decreased to slightly above 66 per cent, that is 3 percentage points over a year (source: Nielsen), and the development of DTTV offer is not a good sing for the paid operators. What does it all mean? First of all, that groups such as Discovery, Sony or FIC will fight for shares on the shrinking market. And that they will stop growing “organically” thanks to more and more cable TV clients. That means that they will also cease to be a tidbit in terms of advertising than they have been a few years ago, when their growth was visible and real. In turn, that means that they should adapt fast to the new situation, where VOD grows the fastest among all the forms of advertising and the market is at a similar stage to that of thematic channels several years ago.
Will the “big three” – Polsat, TVN and TVP – take over the role of the educators for the market, as Atmedia did? Or maybe some new Atmedia will appear for the history to repeat itself?