As the dominant force in the Connected TV (CTV) market, YouTube has long ruled the living room. TikTok's entry promises to disrupt this landscape, potentially reshaping industry dynamics. This article explores four key strategies TikTok might employ: undercutting YouTube with lower prices, competing in pre-installed app markets, acquiring premium content licenses, and enhancing third-party measurement to win advertiser trust.
The CTV Gold Rush: Why TikTok Is Moving In
Recent reports from The Information reveal that TikTok is developing a Smart TV app, aiming for launch on major platforms like Samsung, Roku, and Fire TV. At the Cannes Lions International Festival of Creativity, TikTok’s Global Product Head, David Kaufman, declared: "The living room is the next budget battleground."
Why CTV?
- 1.5 billion U.S. users watch YouTube on CTV annually (eMarketer).
- YouTube commands 25% of CTV ad budgets, surpassing mobile ad spending (Tinuiti).
- Ad budgets are shifting from mobile and linear TV to CTV, with $50–60B in annual ad spend up for grabs.
👉 How TikTok plans to dominate your living room
Prediction #1: The Price War Playbook
TikTok will likely slash ad prices to attract brands, leveraging two advantages:
- Growing CTV ad demand: U.S. CTV ad spend will hit $334.8B by 2025 (eMarketer).
- Fragmented hardware market: No single platform (e.g., Roku, Amazon) monopolizes TV access.
Price Comparison:
| Platform | Avg. CPM | Notes |
|----------------|----------------|--------------------------------|
| Netflix/Max | $30+ | Premium content |
| YouTube TV | $20–$40 | Demand-based pricing |
| TikTok TV | <$20 | Expected entry-level pricing |
Why it works: Lower CPMs let brands buy more impressions, making TikTok an attractive alternative.
Prediction #2: Pre-Installation via Revenue Sharing
Unlike Netflix (which pays upfront for remote buttons) or YouTube (which forces pre-installs via Google’s ecosystem), TikTok lacks exclusive content or OS leverage. Instead, it may offer ad revenue sharing to OEMs:
Case Study: NBCU & Roku
- NBCU reserved 85% of ad inventory while giving Roku 15% in exchange for prime app placement.
- TikTok could replicate this model, sharing ad profits with Samsung/LG to secure home-screen real estate.
Challenge: Convincing OEMs to prioritize TikTok over established apps like YouTube.
Prediction #3: Lightweight Content Licensing
TikTok won’t immediately splurge on expensive IP (e.g., live sports). Instead, it will likely:
- Partner for clip-based rights (e.g., 2025 FIFA Club World Cup highlights).
- Encourage creators to remix licensed content (e.g., movie clips + reactions).
Long-term: If successful, TikTok might bid for mid-tier licenses (e.g., regional sports) to boost CPMs.
Prediction #4: Winning Trust via Third-Party Measurement
Advertisers demand transparent metrics. TikTok’s plan?
- Cross-screen attribution: Partnering with NielsenONE to unify TV/mobile ad reporting.
- Independent validation: Working with iSpot to prove ad incrementality (58% of TikTok viewers aren’t reached by linear TV).
👉 Why advertisers are betting on CTV
FAQs
Q: Will TikTok TV replace YouTube?
A: Not immediately—YouTube’s content depth and advertiser tools are still superior. But TikTok’s lower CPMs and engagement-focused model could lure budget away.
Q: How can brands measure TikTok TV ad success?
A: Via NielsenONE integration and iSpot’s incremental reach reports.
Q: What’s TikTok’s biggest CTV challenge?
A: Changing user habits. CTV audiences prefer long-form content; TikTok must prove its short-form clips work on big screens.
Conclusion: TikTok’s Three-Phase Plan
- Enter cheap: Low CPMs to grab market share.
- Add value: Revenue sharing, content partnerships, and better measurement.
- Raise prices: Once trust is established, hike CPMs for profitability.