the two sides of streaming

FYIFYIF R E E Y E A R - R O U N D I N S I G H T S

The Two Sides of Streaming

FUTURE OF VIDEO #1 JULY 2013

–2– FYI: The Two Sides of Streaming

Ipsos MediaCT, © 2013

Introduction

At Ipsos MediaCT, we believe that understanding the consumer is the key to understanding the future. As experts in the convergence of Content and Technology (the “CT” in our name), we are leveraging core research capabilities to help partners in these fields reach strategic decisions and monitor consequences of those decisions. Our goal is to deliver actionable insights based on a mix of attitudinal and behavioral consumer data. Beyond these insights, Ipsos MediaCT takes a consultative approach with our partners and excels in anticipating audience/consumer trends that impact consumption or purchase behavior thus providing a competitive advantage to our partners. Ipsos MediaCT has aggressively built one of the most diverse and savvy research teams made of digital media and technology experts to compliment our award winning television department, all of whom have years of experience tackling the challenges of clients from various subsectors of the video ecosystem. Without further ado, we are proud to share with you a sample of these insights in our first of a series of papers on the future of video.

The Authors

Ben Spergel – As Senior Vice President, Media and Technology Insights, Ben has over 15 years of experience on both the client and vendor side. Ben is Media CT’s resident expert in television and online video and currently works with over 40 clients on both syndicated and customized tracking projects. As the Product Manager of TV Dailies, Ipsos MediaCT’s highly successful tracker of consumer knowledge and interest in new and returning television content, Ben is dedicated to helping clients maximize content through innovative products and knowledgeable insights.

Gavin Bridge – Gavin has been with Ipsos MediaCT since 2010 and quickly became a valued member of the Television Insights group. Working out of the New York City office, Gavin manages the TV Dailies product for the East Coast and has introduced innovative ways of looking at the data to benefit both internal analysis and clients. Prior to joining Ipsos, Gavin worked at Kantar Health’s Health Sciences Practice division as a Project Analyst. He spent three years working in London, first with Business Development Research Consultants as a Research Executive, then as a Senior Research Executive at Opinion Research Corporation.

Source: Ipsos MediaCT TV Dailies syndicated tracker, March 4 – March 10 and May 20-May 26, 2013, among 2015 TV viewers aged 18-49 (2+times/week of primetime viewing) and Ipsos MediaCT Hear Watch Say Online Community, March 7 – March 13 2013 among 333 respondents age 18 to 49.



Not since the growth of cable networks and satellite distribution in the 1990s have we seen such a significant transformation in the way video content is produced, distributed and consumed in the US. The unprecedented expansion of online content has not only created new platforms for creators and distributors, it has significantly altered the way video is marketed, shared and consumed as well as the way audiences are measured. This transformation has further redefined “primetime” into “anytime” and blurred the definition of “television”.

As traditional media companies look to expand their content offerings across multiple screens and platforms; original and user generated online content is making its way across all screens, including the “television” set. As TVs become just screens and screens become TVs, can traditional (broadcast/cable) content and original online content both thrive in a single digital world?

STREAMING

Once controlled by wires, dishes and/or antennas and accessible only in specific locations, the internet has given us the ability to access content anytime, anywhere on just about any device with a screen, and has forever changed the way we think of consuming video content. The ubiquity of content and devices to view it on is slowly eroding old business models which measured consumption primarily on the viewing of specific content at a specific time on a specific device. For the purposes of this paper, we define content consumption from the internet as “streaming”.

One-third (31%) of Adults 18-49 indicate they stream video content at least once a day. Another third say that they watch at least once a week. Younger Adults (aged between 18-34) are twice as likely as those between 35-49 to view digital content at least once a day (40% vs. 21%), and are also half as likely to say that they never stream content. As content producers and distributors look to reach the younger audiences, streaming must be a part of their plan.

Ages18-34

Ages35-49

At least once a day Less than once a week At least once a week Never

40%

21% 32% 21% 26%

35% 14% 11%

In general, how often do you watch video online or stream online content?



Types of Genres Streamed

As content and technology continue to merge, the video consumer will continue to make choices on how to consume various types of content across multiple platforms. Not surprisingly, the most popular types of streamed content are mainly scripted: sitcoms (37%), animated comedies (36%), and serialized dramas (36%). Meanwhile, the types of shows least types of shows watched online are those that are live in nature and time-limited in relevance – award shows (17%) and sports (16%).

This opens up new opportunities as well as challenges for content producers, especially writers, who in 2008 went on a 100 day strike over internet royalties.

Future Growth

A quarter (26%) of those 18-49 who stream say they expect to increase the amount of time they spend streaming in the next 6 months, with only 8% saying that they envision to stream for less time than they are currently doing so.

Sitcoms

Animate comedies

Serialized Dramas

Documentaries

Procedural Dramas

Reality Personality Shows

Reality Competitions

News Programs

Talk Shows

Award Shows

Sports

37%

36%

36%

33%

31%

23%

23%

20%

19%

17%

16%

Thinking about how you watch TV shows in general, please tell us which viewing method you typically use to watch the following types of TV shows.

(Shown for stream/view online)



50%

40%

30%

20%

10%

0%

Weekday Weekend

6 am – 12 n 12 n – 4 pm 4 pm – 8 pm 8 pm – 12 m 12 m – 6 am

During what time(s) of the day do you typically watch video online or stream content?

Full–lengthMovies

Cable or BroadcastNetwork Content

Original Series/Content> 10 minutes

User–GeneratedVideos

Original Series/Content< 10 minutes

62%

45%

38%

28%

19%

What types of online video or streamed content do you watch between 8pm and 12 midnight?

The “good news” for the traditional model is that a majority of the streaming activity in primetime is still traditional content such as movies and “television” programming, ahead of both user generated and original online content.

The Impact of Streaming in “Primetime”

Because of the ubiquity and ease of streaming, it is happening throughout the day in places where on demand viewing of video content was once thought impossible. However, much like the traditional model of video consumption, streaming activity increases during the day and reaches a peak in the evening “primetime” period. The definition and exclusivity of primetime has been eroding for some time, but its importance in the traditional business model, especially for broadcasters, is still undisputed.



Also noteworthy is that, a majority of video consumption in primetime is still going to “live TV” where the majority of ad revenue sits for traditional providers. However, this model is evolving to monetize time shifting consumption via DVR and VOD playback, both of which are losing to streaming in primetime video consumption. The indication is that streaming is becoming the alterative time shifter of traditional content, though unfortunately not one that is easily monetized.

ORIGINAL ONLINE CONTENT

With the growth of internet consumption has come an explosion of new content, independent of the broadcast and cable networks that dominated video consumption for two decades. Original online content is still in its early and experimental phases, much like original content was for cable networks in the 1990s. While the reported reach of this online content is impressive, the overall consumption is relatively small and likely is not making a significant impact on traditional content viewing. However, as we have seen recently with Netflix, Hulu and Amazon, as original online content becomes more “network quality” and migrates back to the larger screens, it certainly has the potential to increase the impact of streaming on traditional content viewing. In doing so, many online content distributors will have to move to either a subscription or dual revenue model just like their cable counterparts did. This will make it challenging for original content to achieve the same reach, and will likely result in greater pre-launch marketing spends to generate awareness.

Time Spent Consuming Original Online Content

Still, much of the online content, whether user generated or original, is short form. As a result, the overall time spent with such content is relatively small. A majority of Adults 18-49 (53%) watch one hour or less of original online content per week. Related to this is the fact that a majority (52%) of the original online content consumed per week is 25 minutes or less in duration. Short-form or “snackable” original content appears to rules the roost currently, but with the announced “full-length” original content at this year’s New Fronts being released later this year, one would expect the overall time spent with this content will increase, as will its impact on the traditional viewing models.

Live TV

67%

Video online/Stream content

47%

DVR content

36%

Video onDemand

28%

During what time(s) of the day do you typically watch...? [Primetime (8pm-12m) (Weekday/Weekend)]



Devices Used to Consume Original Online Content

As we saw earlier, streaming mimics the traditional video consumption pattern of increasing during the day and reaching a peak in the late evening. A majority (59%) of the consumption of original online content is done via a laptop/desktop computer (the original streaming devices), not surprising given that this is still the most connected device by time spent.

Currently, 41% of original online content viewers watch via both the small screen (tablets and smart phones) and the large screen (Smart TVs and and proprietary connected devices such as Xboxes, Rokus or Apple TVs).

Much like certain genres lend themselves to streaming more than others, content usually adapts to the technology. As the diversity of original online content and the ability to consume it across multiple platforms increases, small screens and large screens will likely each get a greater share of the original online content consumption, while the original online screen (computer/laptop) decreases.

36%

Under 1 hour 1 hour 2 hours 3 hours 4 hours 5 hours 6 or morehours

15% 14%9%

4% 6%

15%

Approximately how many hours per week do you spend watching “Online Video” content?

Smart TV

Connected Devices

Smart Phone

Tablet

Computer or Laptop

5%

9%

10%

12%59%

Of the time you spend in a typical week watching “Online Video” content, what percentage of time do you spend watching on...



Drivers and Barriers for Viewing Original Online Content

The biggest drivers to viewing original online revolve around social buzz and filling immediate and short-term needs; this helps explain the success of short form content and its ability to reach so many people so quickly. The most common driver of original online content is “boredom” (49%), followed by word of mouth/recommendation (47%) and wanting to share a video with someone else (41%). Though not daypart specific, 40% of Adults 18-49 said that they watched or streamed digital content because there was nothing on “regular TV” they were interested in watching at the time.

Clearly, original online content lends itself to a consumer base used to on demand viewing and easy sharing. However, these drivers may not hold up for longer form content or content that requires a subscription to a service. Also as content quality increases, larger screens may be preferred viewing platforms which can also limit the ability to consume in every location. As previously discussed, the migration of longer content to larger screens also presents a new challenge for traditional content as this viewing behavior is less complimentary and more competitive.

At the same time this migration will also help overcome some of the current barriers to viewing original online content. The most frequently mentioned barrier to watching more original content online was that there is already enough TV content out there to watch, without adding more digital content to the mix (57%). Small screens were also a factor; with 43% of Adults 18-49 citing this as a reason not watch more original online content. A lack of interesting content is also a concern, with 33% mentioning this, but as we have seen there is a large push for higher quality, talent driven content. This will likely create increased competition as original online content begins to migrate into territory where traditional TV content still dominates. At the same time, traditional content producers and distributors are making a push to venture into more original online content, using their established brand identities to reach the online audiences across all screens.

32%

40%

41%

47%

49%Bored and neededto pass the time

Someone told meabout a video

I wanted to show thevideo to someone else

There was nothingon “Reguar TV”

Limited time & wanted towatch something short

Think about the last time you watched “Online Video” content. How much did each of these statements apply to your reasons for deciding to watch “Online

Video” content at that time? (Top 5 drivers)



Conclusion

We are still in the early stages of understanding the full impact of streaming and original online content on video consumption. With technology advances opening the door for “TV Everywhere”, traditional media content from broadcast and cable networks is slowly migrating from its home base on the “TV set” (including DVR playback and VOD) to other screens and from predominately long form scheduled content to a mix of both long and short, as well as a combination of repurposed and original on demand content. While this no doubt leads to a reduction in “live TV” viewing it appears to have a bigger impact on the older alternatives of DVR and VOD for traditional viewing, with streamers using available content as their own digital library. As further erosion of the once valued “primetime viewing” continues, traditional media companies scurry to find ways to monetize their content across the screens as well as convince advertisers to be more multi platform and less day and date focused.

Original online content providers are moving in somewhat of an opposite direction in their screen and content strategy and with advances in Smart TV technology and the ubiquity and speed of the internet on both large and small screens, original online content is moving from its base of computers and laptops to the smallest of smart phones and largest of HDTV sets. As content evolves from inexpensive short-form ”snackable” content to higher quality longer form, a new threat emerges for traditional media companies. However, this type of content also brings challenges as it is more difficult to consume and share this content quickly, therefore reducing the potential reach of the content while at the same time costing more to produce and relying more heavily on larger or multiple revenue streams.

As an industry, we must take a moment and remember when cable television was going to “kill” broadcast, when DVRs were going to “kill” the 30-second spot and when computer screens, tablets and smart phones were going to “kill” TV set manufacturers. Guess what… nobody died. But the consumer got smarter and forced the industry to adjust accordingly. Similarly, streaming and original online content has not killed traditional television, if anything; it is providing consumers with additional content that meets their needs in times and places where content previously did not exist.

In the end, the consumer will ultimately decide what this new media world will look like. If history serves as an indication of the future, the most successful players will be the ones that can identify current attitudes and behaviors as well as future trends to continuously meet consumer needs and expectations.

For more information on how Ipsos MediaCT can help your business prepare for the future of video, please contact:

Gavin BridgeDirector of Media InsightsIpsos [email protected]

Ben SpergelSenior Vice President, Media InsightsIpsos [email protected]

1 3 - 0 7 - 0 2

the two sides of streaming

Documents

ipsos mediact tv dailies

introductionat ipsos

ipsos mediacts

technology insights

television content

online video

way video content

future of video