1. Cord Cutting Picks Up

While we are still light years away from the “massive wave” of cord cutting the Silicon Valley trades endlessly fantasize about, the number of people dumping pay TV for good increased again during first quarter of 2020.

Why It Matters

Stats from the six largest publicly held MVPDs (meaning they release quarterly earnings reports, with real numbers, not random survey-based estimates) reveal that just over 2 million people left the pay TV universe during the first quarter. That’s an increase of 21% or 358,000 viewers quarter over quarter.

Not anywhere close to a massive wave, given those 358,000 subscribers represent just 0.4% of the total pay TV universe, but all those 0.4 percents start to add up.

And, I suspect, will start to increase fairly rapidly over the next year or two.

With today’s stats revealing unemployment levels unseen since the 1930s, viewers are just not going to have money for big pay TV packages, let alone medium sized ones.

Especially not when there are FASTS and Flixes.

This is key: too many industry executives keep repeating the mantra that pay TV is one of the very last things people give up during hard times.

That was likely true when the alternative to pay TV was reading, listening to the radio, or trying to convince a pair of rabbit ears to bring in an over the air signal. But that’s not the case today.

The alternative to pay TV (and I’m including virtual MVPDs in “pay TV”) is a wide range of very popular Flixes and FASTS. Since the Flixes are all available on a month-to-month basis, a cash-strapped viewer could subscribe to one or two of them at a time, while relying on the free FASTS for the rest of their viewing.

They’d have a broad array of movies and TV series, both originals and library content, along with news coverage from the likes of Cheddar and Newsy and from sources like the ABC News feed on Hulu or the sort-of-live CNN feed on Pluto, And while over the air reception can still be spotty in much of the U.S., they’d also be able to watch local broadcast in HD.

So, quite a compelling argument, one made even more compelling by the fact that there are currently no sports on TV, with sports being the key thing that kept many viewers locked into their cable package.

Unfortunately, there’s still a lot of head in the sand denial about this on the network and MVPD side, even as the reality of 14.7% unemployment sinks in.

Pay TV was expensive even in a good economy. When the choice is “random cable channels I never watch” versus “paying the rent,” it’s no secret who the winner will be.

What You Need To Do About It

If you’re an MVPD you might want to consider rolling out super skinny bundles pronto and bundle them with broadband. I say “might want to” because no one is giving up broadband right now and that’s where you make your real money, not pay TV. So, if you can give them a super skinny bundle and then sell them on some Flixes and faster internet, instead of a full pay TV package, that could work out just as well for your bottom line.

If you’re a smart TV OEM and you’ve invested in creating your own interface with lots of free viewing options along with direct links to Flixes, this is a very good time to promote that, too. With the cost of smart TVs being fairly close to the cost of two months of pay TV, you should have a lot of takers.

If you’re a cable network without much of a die-hard fan base or any well-known programming, time to consider Plan B—meaning it might make more sense to hitch your wagon to a FAST or Flix as a studio-like entity, producing content for them to use on either a themed or branded channel versus trying to keep your lights on 24/7.

2. Addressable Advertising Picks Up, Too

Verizon signed a deal with Charter, Cox and Comcast-owned Ampersand to allow the latter to sell all of the former’s addressable inventory. That makes it somewhat easier for brands and agencies to buy addressable, as Ampersand will have access to around 60% of all pay TV households.

Why It Matters

Cord cutting may be accelerating but the vast majority of households still have cable, a circumstance that is unlikely to dramatically change anytime in the next three to five years.

And while the addressable inventory available via MVPDs like Verizon is limited to just the two minutes per hour the networks grant the MVPDs, that is going to be supplemented by the network inventory being opened up for addressable by Project OAR and Nielsen.

And that’s just for linear.

All OTT/CTV inventory is addressable and that means that an advertiser that wants to target a specific audience or geography will find it increasingly easier to do so.

That matters a whole lot right now because of the situation we are in where various parts of the country are likely to open and shut at different times (“the Hammer and the Dance”) and so advertisers are going to want to have flexibility with their ad spend, targeting specific geographies along with specific demographics.

It also matters because addressable has clearly been the future of TV advertising for some time now, only there was no real reason to hurry it along—too many people felt that things were fine the way they were and so why muck them up with some new technology that they feared might cause them to lose money anyway, along with lots of fear mongering about how advertising to specific audiences was the road to hell (or at the very least purgatory) for brands.

The bright side is that addressable means better measurement, more accountability and easier attribution metrics.

It also means that you can still run big multi-million-dollar national branding campaigns aimed at just about everyone. That part of TV advertising is never going to go away.

What You Need To Do About It

If you’re an ad agency, stay on top of what’s going on with addressable—you will be a big asset to your clients if you do, as many of them will be working on trying to understand why and how it works and if it’s right for them.

If you’re a brand, there’s real value in addressable, though not for every ad you run. Figure out what the right balance is.

If you’re all the various players working on creating addressable solutions, remember that for the people you’re selling to, scale is everything. They want to be able to push a button and make their buy happen and that means everyone working together and pulling in the same direction.