Will Linear TV Ever Be Gone For Good?

With news and sports to buoy them, cable and broadcast manage to hang on. Yet with the increasing adoption of FAST channels on CTV, an aging  demographic, and exclusive sports rights being offered up to streamers, how much longer can linear survive?

Back in July of 2022, Netflix CEO Reed Hastings declared cable would be dead in the water within the next five to ten years. 

The CEO has high hopes for the future of streaming. With better-than-expected returns from its recently introduced ad-supported tier, Netflix decided to remove its lowest-priced ad-free tier this summer, leaving just its ad-based plan at $6.99 a month and its ad-free Standard and Premium options. 

Jumping on the CTV advertising train along with Youtube (which commands the biggest chunk of streaming viewership at 9.1% of the entire TV pie), Hulu, Disney Plus, and the rest of the AVOD and FAST channels, Netflix is making use of the better-targeted, better-tolerated world of CTV advertising.

That is, when compared to the world of broadcast and cable. 

Disney is with Netflix on this, too. Having introduced its ad-supported plan to Disney Plus in the tail end of 2022, the company has seen the CTV advertising light–on an earnings call this year, Disney CEO Bob Iger said he’s exploring options for tossing out its broadcast and cable outlets. While ABC, Disney Channel, Freeform, FX and National Geographic are still profitable, all have seen decreases in profits and therefore, “may not be core to Disney” (all except for ESPN, which has actually seen increases in revenue this past year–sports remains one of the last frontiers in cable).

While linear TV remains profitable, the increasing number of cord-cutters brings its revenue lower and lower. Not only that, but the better targeted (and less expensive) advertising options of CTV are obvious to advertisers and companies alike.

So, what does that mean for linear TV? How long will it be around, and will it ever be really gone for good?

The State of TV

`With an aging demographic, entertainment content continually being moved to streaming, sports rights being sold to streamers, and free streaming services replacing the cable and broadcast experience, the TV bundle might just disappear. 

TV itself is a medium familiar to essentially every US household–almost everyone watches TV, linear or not. In a day, about 70% of the US population watches TV. In a week, that number jumps to 90%, and in a full month–nearly 100% of the US population watches TV.

About 88% of households have some CTV-connected device–whether that be a Roku, a Smart TV, a gaming console, or some other screen with internet connectivity. Compare that to the number of houses subscribed to cable, which has hit a record low this year at less than 50% of households.

According to Nielsen’s ratings, as of August 2023, streaming dominates TV viewing at 38.3%, with cable following at 30.2% and broadcast at 20.4%. Cable and broadcast TV make up just over half of total TV viewing at 50.6%–but as the number of households cord-cutting surges at a higher-than-expected rate, this number is likely to fall, too. Two years ago in June 2021, linear TV represented 63.6% of viewing–in July of this year, it represented just 49.6%.

Within streaming, FAST channels (that stands for free ad-supported streaming television) like The Roku Channel, Tubi, and PlutoTV are making up a bigger piece of the pie, within a combined total of 3.3% of total viewing. These channels, which replicate the lean-back experience of cable and broadcast viewing, are rapidly gaining traction and currently represent more per-month viewing in total than all but the top two cable networks.

On top of that, newer TV models continue to incorporate CTV tech right into TV–compare that to newer technologies supporting broadcast TV, like ATSC 3.0, which TV manufacturers typically only incorporate into pricier TV models.

All is not lost for linear yet, however. Antenna TV (completely free, except for the price of an antenna), sports, local newscasts, live events, and an older demographic are among the factors that give linear a slight majority in TV viewing, for now. When it comes to advertising, linear TV still brings in a profit–and though viewership will steadily decline, linear will continue to stick around, coexisting along CTV for at least the next decade–and probably a little longer. 

Advertising: CTV vs. linear

By far, the biggest streamers are Youtube and Netflix. The first, however, is completely free, relying on ads for revenue more than it does its Premium option. Netflix, on the other hand, only introduced an ad-based option late last year. Though it’s seeing results from the addition, it’s not in the top numbers when it comes to CTV advertising spending.

The top spot actually goes to Hulu, which is projected to account for 13.4% of CTV advertising spending in the US in 2024. YouTube follows at 11.7%, and then Roku at 10.1%, home of the FAST service The Roku Channel. Additional FAST services Pluto TV and Tubi make up 4.4% and 2.8% of advertising spending, respectively. Disney and Netflix, with their newly-introduced ad-supported tiers, are projected at 3.1% and 2.6% percent, trailing the rest.

Viewers actually prefer CTV ads. Unlike cable or broadcast, they make up a much smaller percentage of viewing time in comparison to the rest of their program, and additionally, they’re typically targeted and tailored to them. According to Statista, CTV ad spend is “expected to grow to 27.47 billion U.S. dollars by the end of 2025.”

Advertisers continue to reallocate linear TV and digital/mobile video budgets to CTV. While cable ad spots can cost as much as $783,718 for a 30-second commercial during Sunday Night Football, CTV ads are significantly cheaper (not only to place, but to produce, since they can be a lot shorter, too).

While linear advertising still manages to be a high-margin business, it’s usually only accessible to big spenders at big companies. CTV advertising can be accessible to small and mid-sized businesses, too. And alongside audience targeting capabilities and better attribution, CTV continues to draw advertisers–like their audiences–away from linear. 

CTV ad spend has increased by almost 400% since 2019. And while CTV advertising grows even beyond initially high expectations, linear TV ad spend continues to decline. According to Insider Intelligence, linear TV ad spend will fall from $61.31 billion in the US in 2023 to $56.83 billion in 2027. All the while, CTV will increase from $25.09 billion in 2023 to $40.90 billion in 2027.

What’s keeping linear alive?

While viewers aggregate to streaming services for episodic, scripted content, they continue to flock in droves to their cable networks for news broadcasts and sports. Additionally, many love the lean-back experience of cable, and older demographics just simply won’t part with the familiarity of cable and broadcast. However, CTV is managing to make headway here, too–not only by drawing sports to streaming, but through rapid expansion into FAST channels, which simulate the cable experience and yet are completely free.

An older demographic

Linear TV is dominated by the 65-and-older age group, with each individual spending roughly 4 hours and 58 minutes watching linear TV a day. Younger age groups, by contrast, spend 1 hour and 12 minutes on linear TV daily. CTV use is over 80% in users between the ages of 25 and 54, yet only 4 in 10 US senior citizens are CTV users. CTV use remains the grounds of the under-50.

 The average age of a linear TV viewer? 55. And with those over 50 years old accounting for more than 50% of US consumer spending, cable still has a massive audience to hold onto.

Yet still, 60% of adults 18-34 are either cord-cutters or cord-nevers. As Gen Z becomes older and starts choosing to stream over buying a cable bundle and older generations gradually lose spending power to this growing generation (or choose to switch over to streaming themselves), linear will eventually get phased out.  

Sports

The NFL is, hands down, the biggest thing keeping linear afloat today–and at least for the next decade. Last year, 22 of the 27 top-watched segments on linear were NFL games–and they made up 82 of the top 100 telecasts (sports in general made up 94. The other six? Live news events, the Macy’s Thanksgiving Day Parade, and the Oscars). The television rights to the NFL are the most expensive rights not just of any US sport, but of any US entertainment property entirely.

According to a prediction by Deloitte Global, “streamers will spend over $6 billion on exclusive major sports rights in the most significant global markets.”

Streamers are spending big bucks to bring the NFL away from cable and into the exclusive hands of their platforms. The NFL made exclusive deals both with YouTube and Amazon to stream the NFL Sunday Ticket and Thursday Night Football on YouTube TV, YouTube Primetime Channels and Amazon Prime Video through this decade. Google is paying $2 billion annually for that privilege, costing more than $500 million extra per year than previous broadcaster DirectTV, who held the rights for the 8 years before 2023.

Even so, the big networks–FOX, NBC, CBS, and ABC–have contracts locking in NFL on linear at least through 2033. YouTube and Amazon have significant streaming deals until then in their own right, but it’s far from the majority of NFL games. And when Thursday Night Football moved to Amazon, it experienced a 42% viewership decline.

Even Disney is clinging on to ESPN even as it talks about discarding the rest of its cable and broadcast suite. As live sports continue to be gobbled up by streaming, we can expect sports to keep cable alive for a lot longer. Yet CTV platforms are not backing down.

Apple, for example, “has committed to spend at least US$2.5 billion for the sole rights to stream every US Major League Soccer (MLS) game over the next 10 years via a dedicated Apple TV app.”

So with sports television audiences keeping cable alive at least for the next decade, we can expect sports to be the last piece of entertainment to completely move to streaming.

FAST channels

FAST channels emulate linear TV watching–and in a sense, actually ARE linear, in that they stream according to a predetermined schedule with all viewers watching at the same time, same as cable and broadcast. Unlike video on-demand streaming, where viewers watch what they want, when they want, FAST channels are more akin to traditional cable. And because they’re free and possess giant content libraries, they’re rapidly drawing bigger and bigger audiences.

FAST has grown increasingly quickly over the past several years, and we can only expect it to be one of the strongest growing sectors in the industry in the forthcoming years.

With entire channels dedicated to shows like Keeping Up With the Kardashians, Cake Boss, Saturday Night Live, The Real Housewives, Top Chef, and reruns, FAST is becoming a neverending rabbithole for 24/7 niche content that plays the same way it does on cable TV–no need to pick which episodes to watch, or scroll through dozens of shows. There are over 1400 individual FAST channels worldwide, with over 1000 in the US alone. 

FAST content continues to draw cord-cutters away from cable. This is causing companies to rush to capture this audience by bringing high-quality content to these channels, which is great for advertisers, too. This June, NBC Universal added 48 FAST channels to another FAST service–Amazon FreeVee, and Xumo Play. Roku and Warner Bros. Discovery also made a deal this year to bring more FAST channels to The Roku Channel. 

Offering on-demand content alongside their scheduling, the three biggest FAST services reported in the Gauge in aggregate account for more viewership than Amazon Prime Video. And as one of the fastest growing prongs of the CTV market, FAST revenues are proceeding at a breakneck pace, forecast to reach $17 billion globally in 2029, up from $8 billion this year.

How long will linear stick around?

Linear will cling on for a long time before it truly bites the dust. With NFL games locked up on cable for at least the next decade, a large audience in those over 50, and live news events and awards shows still drawing millions of viewers to cable, it’ll be a while before the bright-eyed and bushy-tailed streamers take over.

Yet streamers won’t back down anytime soon. With episodic and scripted content increasingly moving to CTV (and its audience with it), original content appearing on streaming services, the increasing lure of FAST channels, and streamers investing big budgets for sports rights, they’re fighting tooth and nail for a bigger piece of the TV pie–and getting it.

We can expect that a lot of forms of content will find simultaneous homes on linear and streaming for the time being. Linear viewing will continue to decrease incrementally, and like radio before it, it might find a niche audience letting it hang on for a long, long time. It might be forever before we see the true, complete disappearance of linear. Even so, CTV has the limelight–and the power of streaming will continue to grow and grow.