Analysts expect the continued decline of the traditional TV market in 2023. They also expect connected TV ad revenue will grow strongly and should come close to making up for the decline in traditional TV.
National TV ad revenue to decline 4.4% in 2023
SNL Kagan has increased its expected decline in national TV ad revenues in 2023. The company says revenue will fall by 4.4% this year, with broadcast TV losing 5.3% and cable down by 4%. The company attributes the increased forecast loss to a softer scatter market, according to Naveen Sarma, a credit analyst at S&P Global Ratings:
“Our 2023 forecast assumes that the scatter market, in which advertising is sold on a real-time basis, remains choppy until the start of the 2023/2024 TV season because there isn’t any key sports or other must-watch programming to draw in viewers until the start of the NFL season.”
He attributes broadcast’s bigger decline to the lack of a major sporting event like the Olympics. Local TV will fare slightly better, with ad revenue down by 3%.
eMarketer also expects the TV ad market to decline. It says ad revenue will fall by $5.2 billion (-8%) from $67.6 billion to $62.4 billion.
Broadcast viewership decline worsens
Meanwhile, broadcast and cable viewership continues its rapid decline. MoffettNathanson says that in February 2023, broadcast TV viewership was down by 14% from February 2022, and cable was down by 21%. In February 2022, broadcast TV viewership was up by 4%, and cable was down by 17%. In other words, the decline in viewership has accelerated over the last year.
On the revenue side, MoffettNathanson forecasts similar declines as SNL Kagan. It says national TV advertising revenue will fall 6% in the first half but improve slightly in the second half to -5%.
Big bundle viewers continue to decline
In 2022, cable, satellite, and telco TV providers lost 6.7 million subscribers between them, a year-over-year decline of 9%. With pricing rising, turmoil with the RSNs, and the continued move of sports to streaming, we should expect a similar decline in 2023.
Virtual MVPDs like YouTube TV, Sling TV, and fubo will only partially offset the traditional pay TV losses. In 2022, they gained 1.5 million subscribers to reach 14.9 million. Expect a similar gain in 2023, reaching 16.4 million subscribers.[i]
Overall, the number of households with access to a big bundle of pay TV channels will decline by 5 million in 2023, down by 6%.
Connected TV revenue up, but by how much?
Will connected TV ad revenue growth make up for the decline in traditional TV? eMarketer says the CTV ad revenue was $21.2 billion in 2022 and will increase by a robust 27% in 2023 to reach $26.9 billion. So, the gain of $5.7 billion does make up for the $5.2 billion loss in US linear TV revenue.
However, MoffettNathanson sees a lower gain. It says that leading ad-supported services like Pluto TV, Tubi, Hulu (including Hulu + Live TV), The Roku Channel, and Peacock will increase ad revenue by 8% in the first half and by 13% in the second half.
The bottom line
So, let’s review what this data is telling us about 2023:
- National TV ad revenue will decline between 4% and 8%
- Broadcast viewership is on course to decline by about 10% and cable by about 20%
- Big TV channel bundle subscribers will decline by 6%
- Connected TV ad revenue will grow between 10 and 27% and may make up for the decline in traditional TV ad revenue.
[i] Data in this section is derived by nScreenMedia from various sources.
