Consumer spending on Video On Demand (VOD) services in the US has increased by more than 60 percent in just a few years. The average household uses 1.3 scheduled linear TV services, it also uses 3.8 VOD services. Can ATSC 3.0 address these changing audience dynamics?
In October, 2016 Ericsson released the results of its study, “TV and Media 2016.” The report showed a rapidly changing landscape for media providers. The study shows an evolving role of TV and media in viewer’s lives with OTA broadcasters and cable channels challenged to retain those “eyeballs”.
Mobile viewing is “yuge”
To parse a popular phrase shared by one presidential candidate, Bernie Sanders, and president-elect, Donald Trump, these viewer changes are “yuge”. While total TV and video viewing time has increased, it is because of a massive growth in mobile viewing, not linear TV.
Since 2012, globally, the average consumer has increased their viewing on mobile devices by 4 hours a week, while their fixed screen viewing has declined by 2.5 hours a week. This means that today, viewers spend 1.5 hours more time watching TV and video than they did 4 years ago. Perhaps even more telling is that 20 percent of the increased mobile viewing time in the US is paid-for premium content.
Consumers’ mobile viewing increases with the perception of unlimited video streaming. Forty percent of consumers globally are very interested in a mobile data plan that includes unlimited video streaming capabilities. At 46 percent, millennials are the group most interested in such access, as they typically use multiple on-demand services and appreciate mobility.
Linear TV viewing is for old folks. Also, scheduled linear TV viewing declines as millennials increase their use of streamed user-generated content (UGC). Consumers aged 16-34 spend almost 2.5 hours more each week watching streamed on-demand UGC, compared to 35-69 year viewers. At the same time, millennials spend almost four hours less time watching live and linear broadcast content than does the older population.
Caption: Figure 1. Linear TV viewing is down by 16 percent over the last six years. Short clips, UGC viewing, is up by 86 percent. Click to enlarge.
This shift in consumer expectations and habits is clearly visible in Figure 1. The portion of total viewing hours for scheduled linear TV content has decreased by 16 percent since 2010. At the same time, VOD viewing including; streamed TV series, movies and other TV programs, has increased by 50 percent. Viewing of short video clips have grabbed a growing portion of the total viewing time, increasing by 86 percent.
In total, all types of on-demand viewing now make up 43 percent of all active viewing, out of which movies, TV series and other TV programs account for 74 percent. With these shifts, it is clear that the definition of TV is changing and growing – both technically and in the eyes of consumers.
500 channels and nothing is on
The first challenge for the viewer is finding something to watch. US viewers spend 45 percent more time choosing what to watch on VOD than they do with linear services. Even so, these viewers rate VOD services higher than linear services in terms of satisfaction. In fact, 63 percent of consumers are very satisfied with content discovery in their VOD service, while only 51 percent say the same about linear TV.
The time-consuming discovery process can be frustrating, yet viewers say it is acceptable because VOD enables consumers to find content they want to watch, when they want to watch it.
About 44 percent of broadcast TV viewers in the US say that they cannot find anything to watch on TV at least once every day. This is a negative change from the findings in Ericsson's 2015 report, which demonstrates that content discovery continues to be an unresolved issue for consumers. In fact, the average person in the US spends 23 minutes every day trying to find something to watch on broadcast TV. In total, that person will spend 1.3 years of their life swapping channels and navigating the TV guide.
In comparison, only 34 percent of VOD viewers say they cannot find anything to watch. While perhaps counter-intuitive, VOD services such as Netflix, Amazon Prime or Hulu nevertheless require more time from consumers to find the content they want to watch, as the on-demand viewer has to actively pick something to view.
The consumer frustration with hundreds of linear channels and nothing to watch, can thus be contrasted with viewers spending 45 percent more time searching in VOD services. And yet, 63 percent are satisfied with the content discovery in their VOD service, while only 51 percent of consumers say the same for their scheduled linear TV service.
The time-consuming on-demand discovery process can be frustrating but is an acceptable activity, as it implicitly promises consumers they will find something they want to watch when they want to watch it.
ATSC 3.0 will deliver many benefits to viewers. Can VOD be one of them?
Can ATSC 3.0 meet younger viewer demands?
So far, virtually all of the discussion about the ATSC 3.0 solution has been focused on the out-bound benefits the technology will deliver, and we recognize there are many. In addition, the FCC spectrum auction may allow stations to best-position themselves to offer new services to a wider audience. This combination could provide broadcasters with sufficient new tools to serve the changing audience demands.
If the Ericsson study shows anything, it is that younger viewers expect, use, and will pay for VOD. The media landscape is shifting rapidly. Broadcasters should ask, how will ATSC 3.0 address these (younger) viewer expectations?
This material is from Ericsson’s TV and Media Report, October 2016. The report is available here.
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