Linear TV Consumption Is Growing, But Is Ad Spend?

Television

When you consider the internet, on-demand services, games consoles, mobiles, apps and [fill in your personal favorite here], we have more ways than ever before to watch TV content whenever and however we want. But despite the growth of services like Hulu, YouTube (NSDQ: GOOG) and Netflix (NSDQ: NFLX), it appears that most of us have remained tied to the old broadcast model for delivering video.

Research from consultancy Oliver & Olhbaum Associates, which earlier this month published its annual media outlook, shows that TV viewing is still on the rise, despite the growth of so many other, competing ways of watching that same content.

In 2010, the most recent full-year figures available when the report was published, people in the UK collectively watched 93 billion hours of TV, which works out to around 28 hours per person per week. That’s an increase of 14 billion hours compared to 2006.

While services like time-shifted content have definitely contributed to the growth of TV consumption, the basic broadcast service has continued to grow in popularity: it accounted for 80 billion hours of viewing time in 2010, compared to 76 billion in 2006.

The trend for growth in TV viewing, in fact, is borne out across almost all countries surveyed by the UK regulator, Ofcom, in its latest annual report, also released this month. It found that the U.S. watches the most TV, at 283 minutes per day, with the biggest growth in viewing minutes taking place in the UK, rising by 7.6 percent between 2009 and 2010 to 242 minutes. Interestingly, the three countries whose TV viewing declined were the BRIC nations of Brazil, Russia and India.

Advertising, meanwhile, is not exactly keeping pace with this growth in linear. O&O notes that in the UK, the top TV advertisers are gradually (very gradually) shifting their investments in ads online: in 2010 they spent 2.3 percent of their budgets online, compared to 1.9 percent in 2005. Ofcom notes that in 2010, when £239 billion ($368 billion) was made in the TV sector in the UKglobally, £99 billion ($153 billion) came from ads, while £121 billion ($186 billion) came from subscriptions. And, because this is the UK we are talking about,It estimates that £19 billion ($29 billion) came from public funds by way of TV licenses and other subsidies for organisations like the BBC.

Still, while subscriptions are now a bigger revenue generator than advertising for the TV industry in the UK, that £99 billion actually represented an increase greater than the overall growth of TV revenues. Ads grew by 9.9 percent over the year before, while overall TV revenues grew by 7.7 percent.

More details in the slideshow below:

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