Online Viewing Set To Overtake Broadcast

Over-the-air broadcasting is no longer the only option available when it comes to watching TV. With smart phones, tablets, streaming decoders and now dongles, viewers have multiple ways to access programs. Ten million Chromecast dongles were sold last year and the device was used to generate more than 1 billion clicks in February, 2014. Advertisers will increasingly target ads to match both the device and viewer.

This is all starting to be recognized in surveys of the OTT video market, with screens being categorized by size rather than type, reflecting the different viewing patterns and behaviours across the spectrum from the smallest smart phones to the largest connected TVs. What is not yet broken out from online viewing surveys is the proportion accounted for by dongles that cast content via attachment to the HDMI port to standard TVs lacking native Internet connectivity. This is a serious omission given that dongles are generating a lot of the growth in aggregate online viewing as counted in surveys and witnessed by Google’s Chromecast passing the 1 billion taps mark in February 2014.

Dongles in general, and not just Google’s, are joining smart TVs as major vehicles for delivery of streaming content to the living room. They enable standard TVs to access online content without viewers having to plug in a set top box or buy a new smart model, enabling access to external signals for transformation into video content and display on the screen. They therefore constitute an increasingly important category of viewing that should be counted not just in surveys of OTT but TV as a whole.

Then there is the related category sometimes called the smart STB, comprising boxes that also connect legacy TVs to the Internet but via a cable rather than direct HDMI attachment. Alongside Amazon Fire TV and Apple TV, Roku springs to mind here, although the company has actually branched out both to the dongle sector with its Streaming Stick launched in March 2014 and then into smart TVs in August of that year. Roku recruited China's two electronics giants, TCL and Hisense, to manufacture its smart TVs. Roku wanted to spread its wings out right across the budget connected TV sector in anticipation of rapid growth here, embracing dongles, set tops and lower end smart TVs.

Although not broken out in viewing surveys there have been one or two reports singling out smart STBs and dongles as a single sector for unit sales forecasts. Analyst group TechNavio in April 2014 predicted 25% annual compound growth in unit sales for this sector up till 2018, which has been exceeded by Chromecast’s rate so far. It sold 3.8 million in the second half of 2013 after launch and then 10 million in the whole of 2014. On the other hand Apple TV and Roku have been behind this curve, while Amazon Fire TV is about level.

Online viewing will catch up with broadcast by the end of 2015 says Ooyala’s EMEA head of marketing Sarah Kiefer.

What is clear is that IP video consumption as a whole, including direct to laptops, tablets, smartphones and smart TVs, as well as via boxes or dongles to standard TVs, is growing very rapidly and accounting for an ever greater proportion of overall video content consumption. That proportion will soar from 30% in Q4 2014 to reach 50% and overtake traditional broadcast consumption by the end of 2015, according to California based online video technology company Ooyala.

This will be driven by particularly strong growth in viewing on connected TVs, according to Ooyala’s EMEA head of marketing Sarah Kiefer. This includes TVs connected via dongles and smart STBs. Desktop viewing growth will slow down, while on laptops and smartphones it will continue strongly but below connected TVs. This reflects the fact that big screen TVs will be used increasingly for longer form viewing in traditional lean back mode and so account for a growing proportion of overall eyeball time.

This trend showed up in 2014, with connected TV users spending 41% of their time on these boxes watching video for more than 60 minutes per session, according to Ooyala’s Global Video Index. That is way more than any other device category. Yet tablets are also trending towards longer form viewing, with 70% of time spent on those watching content lasting more than 10 minutes.

These viewing trends are not just of academic interest, for they inform advertisers how best to exploit these patterns for maximum impact. “For example people tend to view shorter clips on mobiles, so the ads should fit in with that and there should be an absolute maximum of two short pre rolls,” said Kiefer. On the other hand with larger screens there is a trend towards binge viewing of TV series where people watch several episodes at once. “If you can identify that in advance you can spread the ads out more smartly over time,” said Kiefer.

This means that with online delivery, ads can be targeted to individual viewers on the basis of viewing habits or consumption patterns, as well as matched to the device and known preferences.

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