TV Advertising will grow, but who will eat the cake?

According to the USA Today, a recent report published by PWC is forecasting that traditional TV advertising sales will grow 4.5% a year to $46.3 billion in 2011. When you consider product placement revenue and fees that cable, satellite and phone services pay to carry a channel, network TV revenues could grow of 6.5% a year to $85.4 billion in 2011. Broadcast and cable networks have been reeling from dismal ratings because there are more channels to view (on average, a home gets 104), consumers are using DVRs to watch TV shows (DVRs are not counted in TV ratings, yet), and consumers are using the Internet (on a PC) more and more as a medium for Entertainment. For example, more and more viewers are using YouTube to watch amateur Internet videos from a PC.

Despite the ratings slippage for individual TV networks, TV viewing is actually up:

“We had a record year of TV viewing this past year,” says PricewaterhouseCoopers advisory partner Mike Kelley: “The online phenomenon has done a lot to bolster TV viewing because it allows people to interact with TV programs, to learn more about plot lines. We even have leaks about an upcoming episode of a program. While it can be viewed as a curse, it has also been a boon.”

So what’s going increase TV viewing? The Internet is becoming a bigger source of videos, but the following will increase TV viewership and even shift Internet Video viewing from the Computer to the TV screen.

  1. HDTV – With the high resolution and quality of HDTV, users will not just watch more TV, but also will shift to using the HDTV for watching Internet Video as well. PWC predicts that nearly 59% of homes will have HDTVs in 2011, up from 12.7% at the end of 2006. HDTV uptake will be propped up by falling prices and the FCC mandate to transmit all TV programs in high-def by 2009.
  2. DVR – DVR growth is expected to rise to 39% in 2011, up from 11.8% in 2006. With Slingbox and other DVRs, people have already started to record and watch TV, albeit with time-shifting or place-shifting (e.g. watch on mobile).
  3. Integration of Internet and TV and the Separation of the Set top Box – With Joost and Apple TV coming to a TV near you, the Internet Videos will be conveniently available on the TV.

As a result, consumers will be able to get TV/Video programming on a better screen, and be able to watch it at a convenient time.

The landscape for Broadcast and Network TV providers will change drastically, as players like Joost and Apple come in and swoop their viewership and advertising revenue. However, these same players will grow TV advertising revenue. Good news for content providers!