TORONTO – Now that the largest Canadian broadcast and specialty networks are owned by the big four distributors, look for them to start to push harder at monetizing their online presences – while trying not to negatively impact their traditional TV advertising revenue and access provider programming fees – which totalled about $6.23 billion in 2010, says a new report from Convergence Consulting.
As it currently stands, online does little to improve broadcast and specialty networks’ bottom line, says the report, the latest instalment of the company’s ongoing “Battle for the North American Couch Potato” series. Most private Canadian broadcasters and some specialty networks, due to their high programming costs (especially U.S. TV and digital rights), face challenging operating margins.
So, to further monetize, Canadian broadcasters and specialty networks will have to make available more online advertising minutes, alter the window in terms of when the show/episode is made available online for free. Or the show/episode will no longer be made available online for free- hence behind a walled garden requiring a paid subscription or only available for a fee, says the report (which sounds something like Rogers On Demand Online).
“As Canada’s four major private broadcasters and majority of specialty networks are now effectively directly (or indirectly) owned by its’ four largest TV/Internet access players, we anticipate the monetization push will begin imminently. That being said there are a number of regulatory issues that must be clarified: The June CRTC (vertical integration) hearing will be critical in establishing go-forward rules,” says the report.
Because of all this, the company forecasts the growth rate of free online full-episode viewing will slow. Although much lower than the U.S., rising Canadian PVR penetration (34% of TV subs will have a PVR by year-end 2012 up from 24% year-end 2010) also limits online viewing, as does free TV-VOD.
“Based on the full-episode TV shows (not including news, preschool and sports) that broadcasters’ CBC, CTV, Global, TVA, as well as specialty networks (including from Astral, Corus, CTVglobemedia, Shaw) made available online for free (that does not include iTunes, Netflix, etc episodes or walled garden requiring a paid subscription) in 2010, we estimate that on average 17% of the weekly viewing audience (includes TV and online viewers) watched on average between one to two full-episodes at a broadcaster or specialty networks’ website, up from 15% in 2009; we forecast 19% for 2011. One to two episodes represents for the average TV viewer just 5% of weekly viewing time,” says the report.
“We estimate broadcast and specialty networks (including Astral, CBC, Corus, CTVglobemedia, Rogers, Shaw, TVA) online TV advertising (we have not included non-TV related) revenues represented 2.7% of 2010 Canadian broadcast/specialty Network TV advertising revenue, and forecast 3.2% for 2011.”
Convergence says the 2010 Canadian online advertising market at $1.93 billion, up 19% over 2009, and puts a forecast of $2.24 billion for 2011.
Even though Canadian TV subscriber additions 2009-2010 were 25% higher than 2008-2009, based on its Canadian TV cord cutting model (which takes into account the digital transition and annual subscriber additions), the report estimates that 2011-2012 will see 1% of Canadian TV subscribers cut their TV subscriptions to rely solely on online, AppleTV, Netflix, off-air and so on.
Canadian cable, satellite, and telco TV access providers’ TV subscription revenue grew 7% to $8.3 billion in 2010. The average Canadian TV subscriber home pays its access provider $61/month and watches 240 hours of TV, equating to $.25/hour (a single person’s rate is $.51). On a comparative per-hour viewing basis, TV download pricing is at minimum five times the price of a Canadian TV subscription, notes the report, which is available at: www.convergenceonline.com.
