Another reason to cut the cord: TV advertising is losing revenue to online advertising, which will push up cable rates.
Yes, advertisers love their ELECTRICAL SUPERSTORMS!!!
How can TV advertising compete long-term with the perfect accountability of online ads?
Online ads are more efficient, which means less money to content producers, which puts more pressure on any ad-based business vs subscription, which is immune from all this. In fact, it works out to Netflix and Amazon's advantage, since they are online ad buyers, not sellers.
The analysis today from Nomura Equity Research’s Michael Nathanson could dampen the mood at TV networks as we head into the big upfront ad sales season. The most startling discovery: total ad revenues didn’t grow at all in 2012 at the Big Media companies he tracks.
Meanwhile Internet-based media are taking market share, and driving ad rates down. “In effect, online advertising — specifically online display advertising — is enabling advertisers to reach their ‘eye-ball targets’ with less (and sometimes even no) ad dollar budget growth.” For example, last year media and entertainment companies cut their ad spending 4.2% — even as box office sales hit a record high.
With ad growth slowing, Big Media likely will feel more pressure to raise the prices they charge pay TV distributors — putting pressure on them to raise subscribers’ monthly bills.
As if greedy sports franchises driving up cable costs weren't bad enough.