23% of U.S. TV Now is Viewed Online
About 23 percent of daily U.S. TV consumption now happens online, according to GlobalWebIndex.
The issue now is likely which of the expected revenue sources will drive most of the revenue. Advertising and subscription fees are the obvious drivers of most of the revenue, but much remains to be decided, in particular the role of advertising.
Traditionally, consumers have tolerated advertising because it defrayed the cost of viewing. But some important formats--HBO, Netflix and Amazon Prime--have eschewed advertising to concentrate solely on subscription fees.
There likely is room for both models, but strategies around the amount of tolerable irritation is likely to grow. The perhaps obvious example is what is happening on many linear TV services, where the amount of time devoted to advertising has grown significantly.
To the extent that advertising is “irritation,” distributors are irritating their customers more. And since so many people now use Netflix, Amazon Prime and other services without commercial interruptions, the contrast literally is easy to see.
That is one reason YouTube plans to launch a commercial-free service.
One indication that commercial-free products might have appeal is that the next version of Apple’s IoS will allow its device users to block ads, though that will not be the default setting.
For Apple, which makes its money from devices, ads are seen as content elements that degrade end user experience.
For Google, Facebook and many content providers, ads are a primary or important revenue source. The estimated loss of global revenue due to blocked advertising during the first half of 2015 was $21.8 billion, according to Pagefair.
Ad block usage in the United States resulted in an estimated $5.8 billion in blocked revenue during 2014. It is expected to cost $10.7 billion in 2015 and $20.3 billion in 2016.
Globally, ad blocking is expected to result in a loss of $41.4 billion in potential ad revenue by 2016.
Use of ad blocking software is increasing. Globally, the number of people using ad blocking software grew by 41 percent between 2013 and 2014, according to Pagefair.
Ad block usage in the United States grew 48 percent in 2014, increasing to 45 million monthly active users (MAUs) during the second quarter of 2015.
Ad block usage in Europe grew by 35 percent in 2014, increasing to 77 million monthly active users during the second quarter of 2015.