Traditional TV viewing is falling off a cliff.
According to the latest data from Nielsen, linear TV viewership fell below 50% in July for the first time. Broadcast and cable each hit a new low of 20% and 29.6% of total TV usage, respectively, to combine for a linear television total of 49.6%.
Time spent streaming (via a television) increased 2.9% in July compared with June, according to the data, to reach a record of 38.7% of total TV usage. YouTube (GOOGL), Netflix (NFLX), and Amazon Prime Video (AMZN) all saw month-over-month viewership increases of 5.6%, 4.2%, and 5%, respectively, in July.
"Linear TV [is] past the point of no return," Macquarie analyst Tim Nollen wrote in a note to clients on Monday, adding the revenue line for cable and satellite operators is "probably permanently negative" as pricing fails to drive upside while TV advertising growth stalls.
"We think the metrics for linear TV are all bad," the analyst continued. "Ad revenue across our media network coverage fell 13% on average in Q2, down from -8% in 1Q, which included the Super Bowl. We forecast the second half of the year will get slightly better, but to remain negative including an off-political year comparison."
The data comes as more consumers drop their cable packages in a trend known as cord-cutting and instead opt for streaming services that are traditionally less profitable for media companies.
Still, streaming is not exactly outperforming either, Nollen warned, explaining subscriber numbers at major direct-to-consumer services (DTC) including Peacock, Disney+, Hulu, ESPN+, Paramount+, Max and Discovery+ were down by about 500,000 combined.
"Global DTC subscriber growth was 8.5% year-over-year (YoY), slowing to single digits for the first time," he wrote, adding the growth was aided by Netflix's password-sharing crackdown, which helped the streamer add 5.9 million subscribers in the second quarter.
Comcast's Peacock (CMCSA) was able to grow its subscriber base 84% year-over-year to 24 million, up from the prior 13 million, as the streamer works to catch up to its peers amid a significant lag.
"June 26 was the last day for Xfinity subscribers to get Peacock for free," Nollen noted, citing that deadline as a likely catalyst for the subscriber additions. "This pricing trend follows Disney's collective price hikes, with Hulu soon to be the most expensive ad free platform at $17.99. As land grabs for subscribers have slowed, companies have turned to pricing increases to fuel revenue growth."
Another area that's fueling revenue growth? Direct-to-consumer advertising, which grew 27% on average across media companies including Disney (DIS), Comcast, Warner Bros. Discovery (WBD), and Paramount (PARA). That's double from the 13% growth posted in the first quarter.
Nollen said Comcast is the farthest behind, as only 14% of its estimated revenues are expected to come from DTC in 2024 with the other 85% stemming from its linear networks. Disney is the farthest along, with DTC revenue expected to surpass linear network revenue for the first time in 2024.
Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on Twitter @allie_canal, LinkedIn, and email her at [email protected].
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